>> From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. >> Hello everyone, and welcome to this week's episode of theCUBE insights, powered by ETR. In this breaking analysis, I'm going to provide a little detail on the recent announcement that Insight Partners was acquiring Veeam for five billion dollars. There was a lot of information on the announcement in press releases and in news articles, so what I really want to focus on is what it means for the industry generally, and for the data protection community specifically. So, very briefly this was a five billion dollar exit for Veeam on top of a five hundred million dollar investment lead by the same Insight Partners last year. I think it had earlier investments, kind of a rent, with an option to buy. New management is being promoted from within, which I think is significant, to replace the two founders. Andrei Baronov and Ratmir Timashev are going to step down after the transition and give up their board seats. Veeam is a fascinating company. It started in the 2006, 2007 time frame, after the two founders, who met in college, formed and sold Aleta software to Quest. Then they started a company called AMUST Software, from which they created Veeam. You never hear about AMUST, but I believe it's the engineering and development arm of Veeam. Now the new CEO of Veeam, Bill Largent told theCUBE that AMUST is now a wholly owned subsidiary of Veeam and it won't effect any of the engineering assets that exist in Prague and in Russia. So this I the thing about Veeam, it's a very closely held company controlled by it's two founders, with a domicile in Switzerland. My understanding is Baronov is, well he's the technical guru, and he's a resident of that country in Switzerland, and the HQ there is very lean, the sizable engineering teams, as they say, is in Russia and Prague. Timashev resides in the US, and he's a marketing genius, who helped create this company, and it's always punched above it's weight class with, epic parties, and great products. Now interestingly, Veeam's rise, it coincided with the ascendancy of VMware. Veeam became the standard backup software for small to medium size companies within VMware shops. Their products are renowned for being simple, and working as advertised, and their customer support is outstanding by all accounts. But the US business lagged, despite the fact that most of VMware's business is in the Americas. You'd think you think if they super glued themself to VMware their Americas business would be higher. So a few years ago they decided to really go hard after the enterprise and they brought in Peter Mckay, from VMware, and he began to build up a US presence. But the enterprise business, it requires a lot of things that were kind of antithetical to Veeam. So think about long sales cycles, expensive sales people, belly to belly selling, with the expectations of, road maps, and clarity around enterprise feature sets. Now McKay was named CEO with Baronov, who continued to run engineering. So it was a bit of a culture clash. You got the sales oriented leader wanting the engineering team to turn on a dime and help close large deals, and satiate partners like HPE and Sysco, and you've got this genius co-leader, slash engineer, with an incredible track record of delivering features that the customer loves. So it really didn't work out and then Veeam scaled back on it's ambitions some what. At it's annual user conference in Miami last year, Ratmir came on theCUBE, and he talked about how Veeam's act one was all about dominance in virtualized environment. Let's listen to what he said about act two and then we'll come back and talk about it >> That was act one, we dominated it, we grew from zero to one billion within 10, 12 years. We added three hundred fifty thousand customers over that time frame, and now it's act two. What is act two? Act two is the, again, the new major industry transformation to a hybrid cloud. What are the similarities? Again, Veeam is in a great position because we're at the right time at the right place with a brilliant product. >> Now what we know is that act two is about a few things, one, as Ratmir said, hybrid cloud, multi cloud management, etcetera. But it's also about an awesome exit for it's two founders. Wow five billion dollars, five x revenue multiple, handing over the reigns is really the third thing this is about and creating more traditional governance structure for Veeam. Now they're moving from a governance structure that was closely held and opaque to one that is still going to be closely held, but ideally somewhat less opaque. Which brings me to inside partners. In the money world, you basically have a spectrum of investors. On the one side you've got banks, who are the most conservative. On the other side you've got VCs, now they're the most aggressive, of course. Now somewhere in the middle, you have private equity firms. Now they traditionally invest in companies, and they squeeze them for EBITDA, and they suck money out. But inside is more of a hybrid. They invest in a number of companies as VCs, they take a portion of the ownership. And to me they're more of a rule of forty PE, meaning it's not just about EBITDA, it's about growth plus EBITDA. So a rule of thirty or a rule of forty PE company, they can dial down EBITDA and go for growth, or dial up EBIT and moderate growth. So it's a great model. So I would expect Insight to bring structure and leadership to Veeam, with the goal of taking the company public at some point, because they like to sell to companies for all cash, I don't see a logical buyer at these kind of price points for this company in this market. It's growing market but it's still not a giant market. All right let's shift gears a little bit and get into some of the ETR data. Here's a narrative they put out recently that, to me, sums it up well. ETR said Veeam is one of the few vendors growing share among customers vs previous surveys in the storage sector. And that said, spending intentions are decelerating and continue to look poor in the largest sectors and Veeam trails Rubrik and Cohesity, although on a larger user base. So you can see by this statement that Veeam is of course doing well, but there are some cracks in the enterprise armor that I want to talk about and drill into a little bit. Now this now this Arline customer quote also, to me, sums up one of the reasons for Veeam's success. What this person said is if I want to do a Veeam back up to the cloud, it's basically point and click, very easy to use. Now I've talked to dozens, if not hundreds of Veeam customers, and they all say the same thing, it just works, that's kind of their motto. So this is the big reason why Veeam has steadily gained gained share over time. Now take a look at this chart, which shows the progression over time of Veeam's progress in terms of what ETR calls market share. Now remember, market share is a measure of pervasiveness in the ETR data set. And you can see, in the data, that Veeam has had a steady rise since ETR started tracking them at critical mass back in 2014. And you can see the steady decline in the survey for Veritas and Commvault and what appears to be, rapid momentum building for Rubrik and Cohesity, two companies that I said in my 2020 predictions breaking analysis that would continue to do well this year. Now notice I had to black out the January 2020 survey, which is ending shortly, so stay tuned for those results. But let's drill into Veeam's performance a little bit more. What this chart shows is a candlestick of net score and market share across all the respondents in the ETR survey for Veeam. Remember net score is a measure of spending momentum that subtracts customers that are spending less, the red, from those spending more, the greens. And it's represented over time by this blue line that you see. You can see that this blue line, it bounces around but it holds steady in the past couple of years pretty generally, and really in that thirty to forty percent range which you see on the left hand axis. Now that yellow line, is market share or pervasiveness, it also continues to climb steadily as I showed you in the previous chart. Now again this is amongst all respondents. Let's now take a look at this chart which isolates Veeam's performance in the largest companies, that enterprise push. Notice the pictures is somewhat choppier. Market share is okay, although unlike the previous chart, it's not steady. This is stunning. Peter McKay left in October 2018, and that's when Veeam really pulled back on it's big enterprise push, and you can see, there's a noticeable and steady drop there based on ETR data. So what's happening here is we are entering a new chapter for Veeam, act two so to speak. With new leadership and new governance. Danny Allen is taking over CTO, he previously ran strategy, Bill Largent is going to be CEO, the HQ is moving into the US. So in my opinon, Veeam's issues in the US have been more execution related than anything else. Veeam is a leader. So partnerships with Nutanix, Sysco, HPE, NetApp, should continue to improve and be somewhat productive, actually largely productive. Let's talk a little bit about Veeam's architecture, and a point of discussion that you often hear in the community. Veeam's a Window's based architecture. Now is that a blessing or is that a curse? Well the pros are that the Veeam team came out of a Windows world, and they know the platform very well. They are amazingly good at adding function, without screwing up performance somewhere else. You saw this a couple years back when they were making a big push on the enterprise and they increased the file sizes, and the number of objects that they could support. Another example is when Veeam added cloud back up, it was a really good product, version one. Unlink many products, when they first tried to port to the cloud, that wasn't the case. Recovery from the cloud is very tricky. Things are out of sync, you got a metadata challenge, and generally Veeam was able to achieve consistent levels of performance with it's cloud product. Now flip side of this, is that if you look at most, if not all, modern architectures today, are based on Linux. And once you start getting into mulit cloud, and cross cloud management, you're going to bump into and be interfacing with lots of Linux based systems. So Veeam is going to have migrate code, and maintaining consistent performance is going to be tougher. But as David Fourier, my colleague points out, there are many many ways to skin a cat, and Veeam's engineering team has really, based on it's track record, has proven that it can solve tough problems, and really deliver a great product consistently. I think the bigger issue and challenge for Veeam again, is execution in the US, and of course the enterprise. Customers in EBC's executive briefing centers, they want to see road maps, and enterprise features, and specials. And so we'll see, if that's something that Veeam has an appetite for. If they do, and I'm one of the incumbents, I'd be worried that Veeam could do a land and expand. Where Veeam isn't as strong in large enterprises, big companies they buy from Veeam. Maybe it's a smaller division, or remote location, but it's not like they don't do business in large accounts, they do. So in a way, they've already landed and they have an opportunity to expand, so that's something to pay attention to. If I'm an enterprise customer, I would be pressing Veeam on it's roadmap, and having them clarify their vision around hybrid and multi cloud management. Will Veeam be more transparent and willing to do specials for the enterprise, and their big partners, who expect them, when they say jump, they expect Veeam to say how high. How will Veeam's culture change, is the other thing I want to focus on. As the two founders step down, are they going to be able to main their engineering ethos, and customer loyalty, and can they figure out the enterprise. I'm a big fan of founder lead companies, when founders leave cultures often change. When founders stay, they're intensely committed, even beyond great CEOs who aren't founders. Look at Michael Dell. He went to the mat to keep his company against the great icon, now look at Dell technologies, after the EMC acquisition, it was completely transformed. Look at Oracle, look at the lengths that Larry Ellison goes to win. Compare that to a great CEO Joe Tucci, when he was at EMC, but you know when he was done, he was done, it was over. It wasn't his baby. So my point is how will this effect Veeam's culture and prospects in the long term. For me the bottom line is the big opportunity's in the US. And that's about execution. And I expect with the move to US HQ, new management, I expect they're going to see consistent market share gains, that's going to continue. The enterprise however, that's going to take longer, it's going to require more patience and more money. And with Veeam transitioning from essentially the two founder's lifestyle business into a company that's really built for an exit, they're going to have more money to invest, greater transparency, I hope, and a path to really build on their past successes. So this Dave Vellante signing out from the latest episode of theCUBE insights, powered by ETR. Thanks for watching everybody and we'll see you next time. (upbeat music)

>> Live from Miami Beach, Florida it's the CUBE covering VeeamON 2019 brought to you by Veeam. >> Welcome back to Miami everybody, you're watching the CUBE the leader in live tech coverage as we go out to the events and we extract the signal from the noise, this is day one of VeeamON 2019 the CUBE's third year covering Veeam first year we were in New Orleans, last year Chicago, very cool and hip location here at the Fontainebleau Hotel, I'm Dave Vellante with my co-host Peter Boroughs. Colin Chatelier is here, he's the manager of storage and compute for Europe at Rabobank, Colin thanks for coming on the CUBE it's good to see you. >> Yeah glad to be here. >> So tell us about Rabobank, what are you guys all about? >> Okay, so Rabobank is obviously a bank we have two main focuses, first of all we're trying to be the biggest high street bank in the Netherlands, biggest retail bank in the Netherlands and we've got 7.3 million customers there, in an adult population of 14 million so that's not bad. And secondly the Netherlands is only of certain size and we're not going to grow it that much so the biggest part of our new business is international. And that's the bank is all focused on providing food and agriculture expertise loans, FX, spot work, anything that can help people or help businesses improve their efficiencies and get more food from spade to plate. >> So what are some of your, the drivers in your business that are affecting your technology strategy? >> Drivers in a business I guess again we've got two different parts of the bank I should probably explain, so two years ago we brought the IT of those two different parts of the bank together. >> [Dave} That's the Retail And The International? >> The retail and the international and if you think about it the international is all wholesale work, the retail is all high street banking so the retail those people really want to see their data, they want to see it on the, on the web, their check and balances, transferring pocket money to their kids and if that doesn't happen, that's a tragedy and embarrassing. So we can't be responsible for that as a result one of our watch words is always on, so we need to make sure that data is always available and we need to make sure that systems are always up for them. Part of that really is, occasionally it won't always be on so you need to be able to recover very quickly and getting a product that's simple to use for recovery and fast to recover was really part of that strategy, that's where Veeam came in. >> So when you had to merge those two IT operations, obviously it was more than the data protection side of things, but talk generally about what the challenges were but then specifically about the data protection piece. >> Okay, so bringing two IT departments together of course gives you a choice, "am I going to use product A or product B?" "Or sometimes product A and product B and not C." That gave us an opportunity to really do something that's not that common in the backup world and introduce a bit of churn, especially in retail environments, we have monthly backups, sorry especially in wholesale we have monthly backups. And those monthly backups go for anything from one year to ten years. So trying to get away from a backup product where there's ten years worth of legacy there, to recover, it's very tricky. But bringing the two banks together gave us that opportunity to say, okay well we'll invest in in a move and we really put a whole series of criteria together to try and figure out which one we were going to use. We moved from vmware and Hyper-V we're moving everything to vmware and from, we have a number of other backup products which I won't name because we're moving away from them. And Veeam was the winner there. Now, why? We needed something that would recover quickly we needed something that would scale to the enterprise, we have 13 thousand VMs being backed up today. We needed something that we could deploy reasonably quickly and without too much effort and actually when we deployed Veeam, we started off in November last year and by the end of January we were finished. Now there were a couple of thousand VMs on Veeam at that point >> Hold on, I'm sorry so it took you two months to effectively move out an old backup infrastructure and move in a new one? >> Sort of correct yes, for dailies. For monthly's we haven't touched that yet so we decide to just bite off one chunk at a time. >> Because you've got ten years of legacies with your monthly's... >> We have at least ten years, yeah >> All right but still >> That's pretty quick >> Yeah, yeah yeah >> Now what about cloud, every conference you go to you see the sign, cloud data management everything is cloud, cloud, cloud it used to be in your business, the financial services business, that cloud was an evil word >> Yeah >> Is it still? What's your clod strategy and how does data protection fit in? >> Well we have a strategy of public cloud first, that's a lot easier to do for new applications than it is for existing applications of course. So it tends to be that the existing applications are waiting for a technical refresh or are waiting for a an application re-write and new applications are going straight into the cloud. How we are protecting that, at the moment most of our data is held on prem where as a lot of our applications which can easily be refreshed and re-published is held on the cloud so we, those guys, the dev ops teams are performing their own backup, their own recovery. >> So are you able to sort of, for the on prem stuff are you trying to sort of make that cloud-like so it'll substantially mimic the cloud are you able to do that? You know, Peter you're always talking about bringing the cloud experience to your data, is that something that you're able to do or is that just sort of good marketing tagline? >> It's something that we are just starting to do again, so a year ago we had a private cloud that was just on the verge of being deployed, but we decided then that strategically we'd mothball that and encourage everybody to go to public cloud, and not confuse them with two different choices. That's proving a little difficult so one of the things that we find is development teams who are currently in the cloud can develop things with software defined infrastructure but when they try and interface with the data or with some of the systems that are on prem, then they come to a dramatic holt and they have to wait for the normal on prem processes to kick through. So what we're looking at doing now is we just started a new process or a new project an on prem, proof of concept, on prem cloud that will interact with the off prem cloud and give the cloud-like experience. So we'll see. >> So you have that challenge of agile meets waterfall and now you're trying to create some kind of equilibrium or really trying to modernize the on prem, what's the strategy there? >> Well I don't think it's agile meets waterfall I think its dev ops meets traditional process. It's and, yeah... (laughter) But how are we going to do it you say? >> Yeah, well I guess what I'm getting to is are you gong to find sort of a common ground or are you really going to try to drive that sort of dev ops mentality into the legacy process? >> We'll, continue to have a traditional or legacy, depending on what you want to call it, environment there, but we'll also have a software to find infrastructure environment on prem, if this proof of concept works, it's being built at the moment or being designed at the moment based on a vmware stack. >> What role will containers and microservices play in terms of facilitating that transformation? >> At the moment we have containers on prem which are coming with applications but we don't have a specific container platform which we're offering as a service on prem That's just where, there's containers off prem of course you know as Euro Cloud. >> Right, right, so for the on prem stuff what does that do for you and where do you see that going? >> For containers? >> Yeah >> At the moment we have a policy of not providing a container service on prem >> Oh, oh, oh, sorry, I heard wrong, sorry. Okay so that's not a direction that you're going currently? >> No but it maybe, because we're feeling our way forward I think. >> As you think about, for example banks or financial services companies have been at the Vanguard of a lot of digital business practices because you're core offering is data and how it gets used so is your overall business starting to rethink this notion of backup and restore from something that's just there to you know, make sure the data's available to becoming an essential strategic capability that can span between the two modes that you're describing but a common approach to making sure the data assets aren't compromised by vendor relationships, by application development style, by locations, is that, are you thinking in those terms of a federated approach to ensure the services on the data that you need? >> Okay well that was a very long question >> Yes >> But it's quite a short answer, yes we're thinking about it, no we haven't done it yet. So, but I think you're absolutely right, one of the problems could be for example we deploy in I don't know as your AWS, Google, and we fall out with one of those cloud providers and we try and move our backup data from provider A to provider B, is it transportable? You know, is, have we got the same policy that's been deployed in each of them so that whole thing needs to be... >> You don't want to recreate that problem that you got with those ten years of monthly backups with the new stuff too? >> Exactly, yeah yeah, we've already made that mistake. >> What are the other challenges, well but you made it for good reason, that was the state of the technology at the time and you had to have hardened processes and that was how you did it you know, ten or fifteen years ago. What are the other problems or challenges that you hear from when we talk to financial services organizations is if their data exists, they're data companies as Peter said but their data exits in hardened silos, again for good reason, you had to protect that data it was mission critical family jewels type of stuff >> Regulatory reasons >> Now as you transform into the so-called digital business everybody wants access to that data and so you've got that tough balancing act so, is that obviously a challenge for you, how are you dealing with that challenge and data protection generally was unique to each of those silos, so how are you thinking about data protection going forward in terms of busting those silos? >> Well, I don't think we've eve had silos in data protection, I think we've, our data protection has been uniform across the two banks of course >> Yeah, right. >> So now we've brought them together again, we have what, different retention characteristics, different ways of using the product. But over the last year and a half, two years we've pretty much brought in the same processes. But I don't think that any application on prem or any that will be on the private cloud or on the prem cloud will have anything different. It will use the same product, the same processes and perhaps have more access by the development teams, dev ops teams to be able to fire off their own backups at the right time. >> You're talking from a data protection perspective >> Perspective, yeah >> And then potentially other things like microservices or containers over time? >> Yeah >> Yeah, okay what's happening at the show here? Things you've learned, anything you've seen that's exciting you? Any announcements? >> Well, it's early days isn't it? It's early days so I think the, the best thing for the show so far was last night when it, going on the boat, meeting some of the other execs and sharing some experiences with them. I think, you know one of the things I always think is the best practice comes from worst experience and I don't want to have all that worst experience myself I wouldn't mind it from everybody else. (laughter) So I think you can learn more in an hour in a social situation then you can perhaps in two hours in the conference room there. >> So what are yo hearing from your peers, what are they doing, some of the challenges they're facing this digital business stuff is it real? How are they dealing with it? >> Okay, my peers, I think what they're feeling is that the traditional backup solution, the traditional backup providers are just not quick enough on their feet, agile in a real sense rather than a >> Quotes >> Quotes and marketing sense yeah, and I think the traditional providers tend to be, less grateful for the business perhaps. You know I heard about the number of new customers that Veeam are getting today but they seem to give a lot of attention to those new customers. Now deploying 13 thousand vms in a relatively short period of time we needed a lot of help from Veeam to overcome the obstacles as we hear them and they were there when we needed them and you know that makes a difference I think especially when you're protecting your data and you need to be ale to restore that data you need a partner not a vendor. >> So it's as much the relationship as the technology is what I'm hearing? >> I don't think we would get into bed with a vendor who wasn't a partner as well. >> Or in manner respects it's almost like Veeam understands how to solve the problem and their technology is a way of doing it easily, and simply, and reliably? >> Exactly yeah. >> I want to follow up on that because some of the large companies that can infer what you're talking about, they might have big established direct sales forces, meat eating guys that are in the field that just go belly to belly. You know Veeam all channel, all indirect how are they successfully partnering with you in ways that the other guys may not be with that type of go to market model? >> So we used a company called Pro*Act a reseller to buy into Veeam, I guess Veeam trained them up well because they had all the information at their finger tips and they represented us in the negotiation with Veeam, so it took away perhaps some of the conflict that you would get in an early situation. And then when we needed the direct help from Veeam, Veeam stepped up to the board and started giving that direct help and not cut out the reseller but the reseller wasn't needed anymore at that point. >> And that was help from a technology stand point or a business terms stand point or both? >> Technology, just over coming the problems, you know a big organization has got a lot of networks a lot of lans, v-lans, and we need to be able to punch holes through those v-lans so it's quite interesting to be able to be told up front where we need to punch. >> Make this work >> Yeah >> Great, all right Colin, well thanks very much for coming to the CUBE, it was great having you, give your final thoughts on Miami, you're coming in from out of town and you got the tour last night on the boat, and what'd you think and impressions of the conference? >> Well Miami first of all, it looks like a nice place to live as we cruised past all of those gigantic homes, I didn't notice anyone in them so, perhaps one's going cheap. The conference it looks good, I am always surprised by how big it is, it's my second event and yeah, they've got a hell of a lot of customers and seem to be loyal customers as well, nobody has a bad thing to say. >> Were you here in Chicago last year? >> I wasn't I was here in New Orleans >> New Orleans, yeah, two years ago, all right great well thanks very much of coming to the CUBE we appreciate it >> Thank you >> All right keep it right there everybody, we'll be back with our next guest you're watching the CUBE live from VeeamON 2019, be right back. (upbeat music)