Here Philippe discusses his current work with Qualys, where he Chairman and CEO.
SM: Earlier you mentioned Don Dixon. Was Don someone you had worked with before? PC: Yes, he is one of the VCs who has a good view of what is important. He does not try to manage the company for you. A lot of VCs micromanage everything and they are on your back constantly. This doesn’t work with me.
SM: You are an experienced enough entrepreneur. PC: I have always focused on the customers. Let me satisfy the customers and you will get a good return. So, Don took the chance, and we cashed out the previous investor. Interestingly enough, our competition at the time had started exactly like us, and their VCs bankrolled for them to go right back into enterprise software.
So, we as of today are in a very unique situation, to be the only company in security which has an internet delivery platform, and no competition. We scan networks, an analogy is like iTunes and iPod; you connect to a service. Our strategy is similar, but instead of being an internet delivery for music it is for security.
SM: You invested a lot of money in building this scalable internet delivery platform for security, to scan networks. PC: We have an Internet delivery infrastructure which is at the scale of the planet. We spent $65 Million to build it. Like Google, it’s a datacenter that is highly scalable and robust. Now we offer services to scan networks and store reports into our database, and then we provide views of your network into your browser.
SM: So, Philip, over the last 2 years, Microsoft has started entering the security market. In my assessment, one of the ways they could have entered the security market would have been to do something like Qualys or by acquiring Qualys, and it probably would have made a lot of sense. Has there been a discussion? PC: Let me give you the bigger perspective and I will get back to your question; I am not running away from it.
What we see today in the enterprise is a huge consolidation of companies. We would not be surprised to see big companies swallow smaller companies. The competition will accelerate because it is not economical anymore to build and maintain enterprise software. It is like the days with the mainframe, where eventually there was just one company surviving, IBM. The weak companies are disappearing, getting swallowed by the big guys.
Today, obviously, you are seeing Microsoft become a much bigger acquirer than they have ever been. You have Microsoft, HP, IBM and Cisco as the big four. Then you have a slew of other ones, and then maybe one of the smaller ones will become one of the big five which may ultimately be reduced into the big two or big one. This is hard for the customers because when you go through the transition the product that you were going to use has been acquired and you do not know what is going to happen to it.
Then there is a new generation of companies that are emerging, the Googles, Qualys, which are internet delivery platforms. A platform like YouTube, is built to the scale of the planet. This is the new generation of the application, and some are going to try to take their enterprise software and make it ready for an internet delivery model.
For Apple to add enterprise features is a no-brainer, they have the architecture and it is much easier than for Microsoft which does not. That is the big paradigm shift. The big guys realize that you need to move into the software-as-a-service model as well, and that is a transition. Some, like Symantec, understand that and you can see that in their services today, they are not pushing products and they are now pushing services. McAffee is pushing products, which is difficult and costly to do. McAfee does not have the service plan, and they are missing that game.
When you look at Microsoft and security, they have two ways. They just do some themselves; they are putting it back into the operating system. They have to do that like everybody in the industry because you cannot continue with all the security holes. Then they look at the security marketplace and they have moved big time into antispam, antivirus, and are commercializing that layer. For them to do it the way Qualys does would require a lot more time and effort.
Qualys has been approached by the big guys for acquisitions. Our answer has been that we have a unique model, and if they buy one of our competitors it will not do them any good because for them to do it the way we do it, would cost them a lot of money. So, we invite them to partner with us, and that has been very successful. We have good partnerships with IBM, Symantec, and they look at us as a building block. I can deliver to them an immediate application which can be delivered the next day to enterprises.