Digital transformation — the process of transforming outdated apps and processes with cloud technologies and digital workflows — can be a risky undertaking. In 2023, Harvard Business Review reported that while 89% of large companies have a digital and AI transformation underway, they’ve only captured 31% of the expected revenue uplift and 25% of anticipated cost savings from the effort.
Rob Mee, previously the CEO of Pivotal, says that he was inspired to tackle the challenges around digital transformation after spending years working with enterprises dealing in old infrastructure. In 2022, Mee founded Mechanical Orchard, a startup that uses “AI-enhanced” tools and cloud instances to build modernized copies of companies’ aging apps and services.
“The stakes involved in modernizing critical legacy systems have left many IT leaders feeling the risk is simply not worth the reward,” Mee said. “But, with aging software increasingly becoming an existential threat to business, there is simply no more road to kick the can down.”
Pivotal had a rough go. The company’s stock lost more than 40% of its value in one day after a poor earnings report, and the stock price never fully recovered; eventually VMware bought the company for an enterprise value of $2.7 billion, well down from its peak.
But Mee assures TechCrunch that Mechanical Orchard is on a strong growth trajectory, with large enterprise customers in retail and logistics in the pipeline.
“There’s interest and opportunity across many sectors where legacy IT is a challenge, like manufacturing, transport and financial services,” he said. “Our approach is all about risk reduction — IT leaders can see continuous proof that the migration is working, which builds confidence in the process and reassurance that there will be a positive outcome.”
In a vote of a confidence, Mechanical Orchard this week closed a $50 million Series B round led by GV (formerly Google Ventures), Alphabet’s corporate venture arm, bringing its total raised to $74 million.