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Why Brad Garlinghouse Left Hightail

The company received several buyout offers this year, but Garlinghouse and the board disagreed on what to do with them.

Brad Garlinghouse resigned as the CEO of the cloud file sharing company Hightail over sharp differences of opinion with the company’s board of directors, people with direct knowledge of the matter told Re/code.

Hightail, the company formerly known as YouSendIt, had received several buyout offers this year, and while Garlinghouse wanted to sell, a majority of the board disagreed, these people said.

Hightail had been approached by at least three companies about a possible buyout, including Barracuda Networks, a data security company; NetApp, an enterprise storage company; and computing and IT giant Hewlett-Packard, as reported last month.

The company hired investment bank RBC Capital Markets to explore the offers and possibly shop it around to other potential acquirers.

Garlinghouse, sources familiar with the matter said, favored selling the company. He argued the cloud storage industry was fast becoming dominated by much larger and better-funded companies like Dropbox and Box, and it had become a crowded and hyper-competitive business. Hightail’s board of directors disagreed, prompting Garlinghouse to respond that it was “time for a transition,” according to the sources.

His exit from the company was first reported by Re/code on Thursday. Hightail named co-founder and director Ranjith Kumaran as its new CEO.

Hightail is on track to book revenue in the range of about $60 million this year and is burning cash at a rate of “less than $1 million a month,” according to people with direct knowledge of the company’s finances.

Both Garlinghouse and Hightail declined to comment.

The company last year rebranded itself, discarding its previous name YouSendIt, which focused on using the cloud to send large email attachments. By mid-2013 it had built a solid user base of 43 million in 193 countries.

With its new name it switched its focus to cloud storage and file-sharing, entering a marketplace dominated by the cloud storage behemoth Dropbox, the IPO-bound enterprise filing sharing company Box, Google Drive, Microsoft SkyDrive and numerous smaller competitors like Egnyte, as well as the security-focused SpiderOak.

Garlinghouse is a former Yahoo executive who rose to prominence as the author of the “peanut butter manifesto,” a leaked memo that detailed numerous problems at that company.

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