Sramana Mitra: Given that that is what you do, what trends do you see in the market right now? What are trends you are anticipating?
Rick Tinsley: The number one trend is affecting our business and all networking businesses right now. It is the move towards virtualizations. Servers and applications started being virtualized about 10 years ago. VMware has led the charge with that by redefining how enterprises deploy compute resources, and how they deploy applications, operating systems, and servers. Virtualization has created a much more cost-effective model for compute infrastructure. Just recently the same types of techniques have started to be applied to networking and other IT infrastructures as well, but we are focused on the networking space.
Traditionally networking functions have been delivered as hardware elements. But now with new virtualization technology, some networking functions, like ours, can be delivered with equal functionality, performance and dramatically superior cost and flexibility with virtualized functions – pure software functions. Two years ago the products we solved were 100% delivered as hardware products. Today, well over half the products we sell are delivered as software – pure software that our customers are downloading and running on the same virtualized server infrastructure that other applications run on. This is remarkable and disruptive to traditional economic models as well as the traditional expertise required for various networking functions.
The types of functions we delivered historically were criticized because they were complicated, difficult to employ, difficult to manage, and complex to configure. By virtualizing these products, they don’t just become dramatically less expensive, they also become dramatically simpler, easier, and faster to deploy, and more cost effective to manage over time.
The same changes that redefined the computer application infrastructure over the last decade are now going to be redefining the networking infrastructure and ecosystem and a lot of vendor market shares within the networking sector over the next decade. We are pleased to be at the forefront of that. In our space, we are by far the leader in terms of unbundling our software from a traditional hardware environment and delivering it as a purely virtualized solution. We are very pleased and pleasantly surprised at how rapidly the market has accepted this solution. It happened much faster than we would have expected just one year ago.
SM: If you were an entrepreneur today, looking at the universe you spend time in, what would you focus on?
RT: I spent 15 years working in the semiconductor space. We often consider ourselves the dinosaurs of Silicon Valley – we are the old men of Silicon Valley. Today the more topical industries have to do with web services, consumer services, mobile data, life sciences, etc. Networking and semiconductors definitely seems old school. But the reality is that there are many relatively old, large, and mature industries that are going through dynamic changes and are ripe for change.
In many cases the existing and competent vendors that dominate those industries are not going to be the pioneers. They are not going to be leading those transitions, because they are too disrupted by traditional business models. If I was starting a company today with a clean slate, I would identify an industry that is essentially still dominated by the same vendor over the last 10 years, with the same business model that hasn’t really changed, recognizing that there is most certainly a latent demand for a different business model to deliver the same functionality.
Within the networking sector there are many examples like that, which is why you see many large established companies like Cisco, which traditionally have done very well with one business model, being at risk to lots of new disrupted competitors that can deliver pieces of Cisco’s value proposition in a far more cost effective fashion. That is what we are doing with our little piece of the networking sector – the WAN optimization piece. But there are many other examples. Applying these same disruptive techniques to other sectors with an aging business model are the things I would be looking for if I was a venture capitalist or an entrepreneur looking for the next big idea.