Acquisitions

Sources Say Pivotal Labs Has Been Contemplating a Sale For Years, Wants To Scale to ‘Sapient-Levels of Huge’

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Pivotal NYC (via foursquare/connellmcgill)

Update: Pivotal Labs was acquired by EMC Corporation.

Late Monday night, Om Malik, GigaOm’s top (and only, as far as we know) Om, broke the news that Pivotal Labs was in talks to be acquired.  The San Francisco-based company, which Mr. Malik described as “one of the smartest Web consulting firms, known for its pioneering work in agile development,” he said, is “in talks to be acquired” by a large technology company.

Pivotal currently has offices in San Francisco, Boulder, and, of course, its beloved local outpost in Union Square, which frequently hosts Skillshare classes and, until recently TechStars NYC. Pivotal has an interesting business model. It helps technical teams from clients like Groupon, TaskRabbit, and even Best Buy and the Associated Press by working in tandem with Pivotal staffers. After a few months, they leave with progress on their product and training in agile development so they can do it all over again.

“The thinking behind this move,” a source familiar with the company told Betabeat, “is to scale pivotal to Sapient levels of huge,” adding that Pivotal SF was up for sale. (Sapient is a publicly-traded interactive services agency.)

Another source familiar with the company, who also requested anonymity, mentioned Sapient randomly as well. The source said he had talked to former VP of technology Ian McFarland about selling Pivotal numerous times “through the years.”

“He’s not been uninterested,” said the source said of Mr. McFarland by email. “I’ve also told a MILLION companies to buy them through the years, but most of them never pursued it. I don’t know the details of the sale, but it wouldn’t surprise me. It WOULD surprise me if it was someone like Google or Facebook, mainly because Pivotal is all Ruby, but Facebook’s been stalking all the independent SF scene lately, so who knows. I always thought his best bet was to park it somewhere like Sapient as an independent holding, but we’ll see!”

Josh Knowles, Pivotal NYC’s managing director, would not comment on the possibility of a sale, but did clarify that Pivotal focuses on Ruby, typically Ruby on Rails, for its web application projects and iOS and Android for mobile projects.

On GigaOm, Mr. Malik revealed that Digital Garage, a Tokyo-based incubation center and investment house (boasting early investments in Path and Twitter), purchased Pivotal Singapore, but is not buying Pivotal San Francisco.

Rather, earlier this year Digital Garage, cofounded by MIT Media Lab director Joi Ito,  announced the creation of New Context, a software development consultancy focused on “lean” design run with Lean Startup pioneer Eric Ries as a general partner. As GigaOm points out, Mr. McFarland is now president and founder of New Context.

Regardless of acquisition rumors, Pivotal, whose leadership team is out in San Francisco, is growing fast. The space that TechStars NYC used to occupy was filled immediately after managing director David Tisch moved his brood into Foursquare’s old office at 36 Cooper.

Any more intel on the sale? Emails tips@betabeat.com

-Contributing reporting by Adrianne Jeffries