SM: What was Fortinet’s revenue last year?
KX: We had $250 million in revenue. We are as large as NetScreen was when Juniper acquired them.
SM: You have better fundamentals; the environment is just not as good as it was then. Your market cap is a little over $1 billion whereas Juniper made the purchase for $4 billion.
KX: Juniper paid 17 times the revenue. They were growing fast. They had the currency to support those acquisitions.
SM: Tell me about the product side of Fortinet. What was the competitive landscape like?
KX: Fortinet is all about network security, we just take it deeper. We still have network-based products and use some ASICs, but we also go to the content layer. There is a software component to it, and that requires a x86 processor. We use the ASIC to accelerate the network layer and the x86 for the content. When we launched our first product in 2002 we also started launching in all three regions at the same time. Most companies launch only in the United States first. This company is much more of a global company.
SM: What about competitors?
KX: Cisco got into our space by acquiring companies. They have acquired more than ten companies, but we have not seen them integrate them together. They have not done that on the product or solution side. They have five to ten products to compete against our products, but we can integrate them into a single feature. That gives us a big advantage.
SM: How do you compare with TippingPoint?
KX: They are focused only on intrusion. Other companies, such as Check Point, are software based. TippingPoint does have hardware, but they only focus on intrusion. We have a larger portfolio of products.
SM: What about Barracuda?
KX: They have acted very quickly in the market, but I do not think they are big enough to develop enough scale in their product side.
SM: Do you see them in deals?
KX: We see Cisco, Check Point, and Juniper. Sometimes we see TippingPoint. The biggest difference when we compete against them is that we have the ASIC hardware acceleration that they do, but we also have a tightly integrated suite of offerings. The development may be slower, but once we have the feature perfected we can be a lot faster.
SM: Now that you have a public company that is doing well and has good fundamentals, how much control do you still have?
KX: I have 16%. I have much more control than in the past.
SM: Is this a company that you want to build to a much larger scale?
KX: I would prefer to build a long-term company that can change the landscape of the entire industry.
SM: What is that direction?
KX: It takes three to five years to realize the benefit of a product that we have developed. We don’t just acquire some company. The long-term advantage is the entire focus. The investment in ASIC chips require a three-year return because of the amount of time to takes. If we do invest in that area, we have a much better long-term advantage compared to Cisco or Juniper.