CRN Interview: Veeam CEO McKay On Displacing Legacy BackUp Rivals And Doubling Down On Channel Relationships

Veeam CEO Peter McKay says his company is positioned to move from the "boring backup market" of yesterday and into the considerably hotter data availability market focused on hybrid and multi-cloud environments.

Hyper-Available

Veeam President and Co-CEO Peter McKay is presiding over a celebration of sorts this week at the company's VeeamOn conference in Chicago. For the first time, the data backup and recovery software firm is making its aggressive plans for the enterprise market known and is putting substantial energy behind its strategy to become not just a backup software firm, but the go-to 'hyper-availability' vendor.

The company is bumping up against the $1 billion annual revenue mark, and has its sights on doubling, and even tripling that in short order, McKay said, and it is continuing its hiring blitz by bringing on two high-profile executives – Mark Twomey and Jeremiah Jenson – onto its roster.

Dell EMC stalwart Twomey tweeted that he'll begin a new position at Veeam next month. Jenson, an HPE veteran, took a position as channel sales director at Veeam earlier this month.

With the right people on board, though, Veeam is positioned to move from the "boring backup market" of yesterday and into the considerably hotter data availability market focused on hybrid- and multi-cloud environments, McKay said.

The transition offers significant opportunities for channel partners, McKay said, especially around services related to migrating customers to Veeam from legacy competitors like Veritas, Commvault and others while doubling down on major partnerships with hardware heavyweights like Cisco and HPE.

You're growing like crazy, and you've got a sizeable base of channel partners. What's your message to those partners as you push the 'hyper-availability' strategy into the enterprise?

We made a push a couple of years ago to go deeper with fewer [partners]. It's about picking where we want to invest more, and we've picked people who want to get aggressive with us. We're investing in them. The ones that do Commvault, or do a little bit of this and a little bit of that, we'll replicate. If you do a little, we'll do a little. The ones that say Veeam is my solution and I'm not going to do any of that stuff, I'm going to go aggressive with you and I'm going to put my eggs in your basket, those are the ones we're investing in. The deeper you go with us, the deeper I'm going to go with you. I'm going to put dollars around that to make sure this is an incredibly profitable business for you. We need your services capability. Migration services off of legacy onto Veeam, or onto the cloud are becoming more critical. We don't have that. We need these partners to pick that up. We're investing $5 million to enable our channel to be able to deliver our service, to deliver the messaging, to position this for our customers. We can only do that with the ones that actually want to invest with us. It's a critical part of how we're going to be successful.

You've made two more high-profile new senior-level hires in Mark Twomey and Jeremiah Jenson. What can you tell me about bringing those execs on?

This market is rejuvenated. This has been the boring backup market for many years, and it's evolved into recovery and availability. It's a hot market again. People are getting excited. The market has become more mission-critical than ever before. There's a lot of companies that need more help. They're looking to companies like Veeam to help make that transition, and we need more talent. As we're growing up into $1 billion, $2 billion, $3 billion, it's about finding the smartest people we can add. We always say hungry, humble and smart. We want to find those people that fit our culture, that know how to work with our ecosystem, our channel partners to take that message and promote it in the market and make sure we're able to deliver on it. We are constantly looking for that really strong talent to add to the mix. If you're growing at 36 percent year-over-year, every three years, you're doubling in size. That's a massive need for not only individual contributors, but managers that can help scale this business. Whenever we can find talent, we're getting them.

Do you think execs at larger firms see Veeam's growth and its momentum in the market and find that it's something they're attracted to?

The door is open. We've got another 500-600 [positions] out there that are waiting for more people to fill. The growth is there. We are actively looking to recruit the best talent we can find in the industry around the globe. This is not just an Americas issue. This is a global initiative we've had, investing a significant amount on talent and recruiting where we have skillset gaps or where there's good, insightful knowledge that we need to bring in, thought leadership that can help us and our channel go to the next level.

What do you look for in a senior-level hire?

It's a different mix. For me, it starts with have they done the scale? Have they been in an environment where we're going, not where we're coming from. Two, have you done something smaller. We still act like a young, scrappy, earlier-stage company. I think people who are 15 years at an IBM or an EMC are not necessarily the right fit for us, because you need to have that start-up mentality, that entrepreneurship mixed in with that massive scale to do things right. All of us get our hands dirty. All of us are into the details. All of us are not asking anybody to do anything we wouldn't do. Hungry, and humble is an important part. Sometimes you get these people who've been VPs at these big companies for so long that they forget how to get work done. It's not easy to find the skill that fits our culture and can go at the pace. They don't go at the pace we go. We are at an unbelievable pace that's hard for a lot of people to keep up with. That requires someone who can handle a lot of balls at the same time.

How does Veeam's product set have to evolve to support the 'hyber-availability' vision and enterprise focus you've laid out here today?

There's definitely more we have to do. That's why we're adding another 200 engineers to the mix. We actually have that opportunity to expand, and we want to expand quickly. We want to continue to add depth and breadth. Depth in terms of massive scale. We want to continue to add functionality, and companies that are adjacent to us are really opportunities for us to go after and add to the mix. We have 300,000 customers, 300,000 buyers who are interested in what we have to offer, and we'll buy other things. We're looking to organically and inorganically add, as well as third parties that complete the solution. There's definitely more we need to do. The opportunity is huge. The cloud is next. We rode the wave of virtualization, which continues, but that next wave is cloud. Back-up to the cloud, DR in the cloud, to-and-from the cloud is in every conversation we have. Backups are the best workload to go to the cloud for many companies, whether it's the public cloud, or a managed service provider.

It must be one of the first things a customer wants to know about when they're considering a move to the cloud.

Absolutely. I want backup on-premise, and I want backup in the cloud. I want to be able to recover. I want to be able to switch. I want to be able to move it. I want to be able to burst. These are things that we are purpose-built for. That's the next wave. Just like we capitalized on the virtualization wave, we want to capitalize on the cloud.

It seems like customers are becoming more savvy about the cloud. What role can Veeam play in making sure customers aren't overpaying for public cloud, or making sure they're not overprovisioned either in the cloud or on-prem?

It really depends on the segment of the market, and what the workloads are. We've learned a lot over the last two or three years about how to optimize for Azure and how to optimize for AWS. We bought a company, N2WS, that is purpose-built for AWS, to optimize for the AWS environment. It is a big driver. It's on the [AWS] Marketplace, and it has taken off. We see doing the same thing we do for AWS for Azure. We also have 19,000 managed service providers that run Veeam on their own as a platform. Whether it's public or private, there's not company from the availability space that knows how to optimize better around public and private clouds than we do. But we need to get better, as well, because it is expensive. The reality of the situation is it's expensive, and we need to make sure we're doing this the right way. When we do things like DR, let's optimize for when we really need to do DR. Let's make sure the backups are being done the right way and are changing when they need to. A lot of the skillsets we're bringing into Veeam are around helping customers optimize around the cloud.

What are you seeing generally in the cloud market? Are businesses bringing workloads back on-prem?

You can't go into any conversation with a customer without a hybrid-cloud story. Many of them don't even want to go to the cloud, but want to know that when they do go to the cloud, they're ready for it. We never go in and fail to talk about the cloud story and the multi-cloud story. They'll pick off certain things they want to start doing, and we'll help them with that. Here's how you move to Azure, here's how you move to AWS. Most of them already have a relationship with both of them in some way, especially in the enterprise. We try to just optimize. That's why acquisitions like N2WS, that come to us with deep knowledge of AWS, is something we're going to do a lot more of in terms of acquisitions. They have that skillset that nobody really has. It's becoming a bigger part of the customer shift, definitely in the enterprise, and a little less in the mid-market. A lot in SMB.

What are you seeing from customers as far as their general financial condition is concerned? What's their willingness to spend? How are IT budgets looking?

First, I think the overall economy has gotten better globally. I think IT spend is coming up. Our space is up. In total, I think the market is growing at about 5- or 6 percent, but I think a lot of it is displacement. I think there's a massive displacement. The $7 billion that people are spending every year, a lot of it is coming away from this legacy and over to this new. A lot of what we're doing is take-out. For the price you're paying for maintenance on Veritas, or Commvault or Avamar, you can get a three-year deal with Veeam for less. That's virtual, physical and cloud for less than the price of maintenance. If you bought something over the last three or four years, it's probably so much more expensive than you could ever get today. Customers want to cut that down so they can do more with these applications and these services that we're driving. We're seeing a massive shift of the old world to the new.

That's got to be a big opportunity for your partners.

It's huge. When it comes to migration services from Veritas to Veeam, or migration from Veritas to Veeam on-premise or Veeam in the cloud. That is a huge opportunity for the channel to take advantage of, to really optimize this refresh of data centers to this new world. It's not just Veeam software, it's the hardware. That's why Pure [Storage] and Nutanix are huge parts of this new refresh that's going on. All of these companies are looking at data center refresh as a huge part of their strategy, and it's all based on this new world around data and data intelligence.

We hear a lot from partners who are big partners with the big legacy players about how they're selling Pure hand over fist.

That's why we have such a great relationship with Pure. They're aggressive. They've got a great value proposition. The teams work really well together. It's a great story for us. Nutanix is another one. It's not as long a relationship as we have with Pure, but it's very strong and it's growing very quickly. We just integrated with AHV, which is their hypervisor. Now, 30 percent of their deployments are on AHV. That's a big move for them and for us. We can bundle solutions together on Nutanix. Being the neutral Switzerland on optimizing for the hardware is really important. We also integrate with [Microsoft's hypervisor] Hyper-V. I would imagine that not too far down the road, we'll be the default standard for all these hardware guys. We help them sell their solutions. We help them make more margins on their solutions. They also help us. It's a really good relationship we have with all the alliance partners. We don't compete with them. We do with Dell and we do with IBM, but we drive far more compute and storage for them than they lose on the totally underinvested [Dell EMC] Avamar business, or the [IBM] TSM business.

You've got a tight relationship with HPE. How did that develop out of what probably should have been a competitive relationship?

They sold off all that stuff. They spun off Micro Focus. They had competing solutions, but the [HPE] salespeople wanted to work with Veeam rather than their own solutions. They spun all of that software off to Micro Focus. Before they even spun it off, we became their data management solution. We are the specialist organization for their sales team around data management, data protection, their hyper-availability solution. We just became that default solution, and it's gone really well.

Are you making inroads with Dell EMC? Do you envision them being in that group of Veeam alliance partners with HPE and Cisco?

We work in the channel together really well. On the storage and compute side, it's actually worked really well. When you get into the traditional EMC sales teams, a little piece of Avamar tends to slow us down. Everybody's afraid of stepping on anybody's toes, so we're not getting what we'd like to get. We're having conversations, we're having discussions, but it's more meet-in-the-channel. It's the same with IBM. IBM storage and compute are great relationships with good channel interaction, but you've got these competitive solutions. Yes, they're declining, but they're not investing in it. They're not putting any dollars into it, so it's all profit. It's a depreciating asset on both their books. They have to protect it. In the Dell case, it's funding the debt. If I'm getting 90 percent margins on Avamar, it's paying bills.