Q&A

Veeam Software Chief Timashev Opening Financial Kimono

Profitable firm aiming for $200 million in 2012 revenues.

• By Bruce Hoard
• 01/01/2012

Veeam Software President and CEO Ratmir Timashev is no stranger to success. Before starting Veeam, he created Aelita Software and sold it to Quest Software Inc. Virtualization Review Editor in Chief Bruce Hoard recently spoke to him about his plans for Veeam, which include making the privately held Veeam behave more like a public company.

VR: What are the market forces shaping Veeam's product strategies?
Timashev: Virtualization is the most disruptive technology. Virtualization backup is the hottest spot of the hottest market, so our product strategy is to capitalize on this huge change that's going on in virtualization, be-cause IT is dramatically being transformed with virtualization, which is also the foundation for the cloud. So our product strategy is to stay on top of this technology.

VR: What are the biggest challenges you face in the data protection market?
Timashev: Our competitors have done a good job educating the market but, still, there's a lot we have to con-tinue doing in educating the people and the market about how to take full advantage of virtualization, especially in the backup space. Sometimes people ask me if virtualization makes IT less expensive -- is virtualization backup less expensive than physical backups? My answer to this is a question: Is the iPhone less expensive than a regular cell phone? Probably not, but with the iPhone you can do 10 times more, and some things that were not even possible with a rotary phone, so virtualization -- and specifically virtualization backup -- is changing how things are done.

VR: How far away are we from a tipping point, where the cloud is actually going to be some-thing that's happening, as opposed to being fairly limited and something that's still talked about more than it's actually implemented?
Timashev: We have to wait a few years, at least two, three, four years until we reach the same point as we have already passed in virtualization. Many people look at the cloud as describing different things. For example, Salesforce.com is also described as cloud, but I think the true cloud is enabled by virtualization, where you can move the workloads more freely than Salesforce.com. So if in the cloud something is based on virtualization -- the ability to flexibly move and use the computing power -- we are far from the tipping point in that definition of the cloud.

VR: Veeam has no chief technology officer by name. Do you fill that bill?
Timashev: No, this function is performed by my partner, Andrei Baronov. He's the chief technology officer, but by his nature he's not a public figure. He's the product visionary. I think he's one of these unique people that combines a very brilliant technical mind with very strong common sense, and what he calls very strong pragma-tism. He really truly understands what the people need, and what administrators of VMware really need, so he can create those products exactly.

VR: Describe how Veeam is customer-driven.
Timashev: That's an excellent question. I just started reading an interesting article that discussed how some-times you shouldn't be customer-driven. Look at it this way, all sales people are trained to ask the question, "What is it that keeps you up at night?" And the customer doesn't know what keeps him or her up nights, so sometimes -- especially in virtualization -- when there are many things that nobody has done before, you should be both, customer-driven as well as innovative. By innovative, I mean let's think for the customer -- what they might need -- so we think sometimes for the customer, and in that sense we're customer-driven.

VR: Why are you now offering Veeam Backup & Replication for Hyper-V?
Timashev: We think that Hyper-V will be a substantial market, especially in what we call the VS -- very small -- market, which is even below SMBs [small to midsize businesses] in size. Today, very small customers don't do virtualization at all because they have between five and 15 servers, and they don't see a lot of benefits in vir-tualizing. For them, virtualization is too expensive, not just from the licensing perspective, but more from the perspective of the time and energy required to run new technology, to buy the storage, and to implement more sophisticated things like shared storage and networking. So the VS user is managing maybe10 servers in a small company with between 50 and 100 employees, and they don't see a lot of benefit from virtualization. We think that in this VS market, Hyper-V will take a substantial market share, as it will in the SMB market, especially in the small segment of that market. This is because these very small and small users are familiar with the Windows environment that Hyper-V comes from. However, I would think that Microsoft has to simplify Hyper-V even more, but we think it's ready today, that it's good enough to take a substantial market share in VS and small markets.

VR: Veeam products are designed for virtual infrastructures only. Why not cover physical envi-ronments as well?
Timashev: That's an excellent question, and our competitors use that against us because they say Veeam is a niche vendor. We say, "Exactly. We want to be the niche because virtualization is the niche. And this niche has become already the mainstream, the foundation."

VR: Is Veeam profitable?
Timashev: Very profitable.

VR: What are the pros and cons of taking the company public?
Timashev: First, we're not thinking yet about taking the company public, at least in the next two or three years. Our goal is to build the technology leader and the market share leader in virtualization backup, in virtual-ization technology, but coming back to your question, what are the pros and cons? Starting with the pros, going public provides the liquidity for founders, investors and employees through the stock options plan, and you get more visible in the industry. I think you can also achieve visibility by publishing your financial results the way the public companies do, and I think we'll start doing that soon -- maybe in the next 12 to 18 months. Our com-pany is already watching a lot of other small companies that are doing IPOs, and normally technology compa-nies go that route when they reach something like $50 million, maybe $100 million. We'll be over $100 million this year. Not in [gross profit margin] revenue, where we will do about $80 million, but in what we call invoicing or revenue bookings. So there's nothing to be ashamed of when our competitors cannot say that Veeam is a small company. At the same time, we're growing over 100 percent per year, and we'll double again, going from $100 million to $200 million.

VR: What about the cons of going public?
Timashev: When it comes to the cons of going public, it's more compliance, more regulations by the Security Exchange Commission, which means more rules and less flexibility in many things. Plus, these days it costs probably a few million dollars just to comply with all the rules and regulations. It would be some distraction for us, and we don't need the pros that I mentioned. We don't need to get on the cover of Forbes or Fortune. We don't need the liquidity, because we can provide this liquidity internally to our employees and the founders through dividends and so on. As for more visibility in the industry, as I said, we can achieve that by providing the financial results openly, which we might just start doing at any point. However, nobody should dictate, or can dictate to us when we should do that because we're still a private company.