Q&A With Dean Goodermote, CEO of Double-Take

Dean Goodermote in corporate mode, left,
and rocking out, right, with his company band,
Cluster-Funk

Dean Goodermote, 56, joined Double-Take Software in March 2005 as president, CEO and chairman. He is simultaneously CEO of Grid-Analytics, a concept-stage company he founded in 2004, focused on aggregated research. From September 2001 to March 2005, he was a venture partner of ABS Capital Partners. From September 2000 to August 2001, he occupied the positions of chairman and CEO of Clinsoft, developer of software for clinical research. From 1997 to August 2001, Goodermote was chairman and president of Domain Solutions, a software developer for enterprise applications and the parent of Clinsoft. From May 2000 until December 2001, he founded and was CEO and then the chairman of IPWorks, in Internet address management  software. From August 1996 to May 2000, he was CEO and president of Process Software, a developer of internet working software. From August 1986 to February 1997, Goodermote served in various positions, including eventually president and chairman of Project Software and Development, now known as MRO Software, a provider of software-based asset and service management solutions.

StorageNewsletter: Do you consider Double-Take Software to be a storage company?
Goodermote: I wouldn’t say it is today, I’d say it’s more an infrastructure company, and more about uptime. But we’re going there.
It seems odd that within the industry, very few people mention Double-Take when they talk about storage software. Why is that?
They’re not saying this? I’m sorry. I think it’s because we’re more in that infrastructure play…
Yes, but your business is backup?
It’s getting to backup. But prior to recently, it’s really been more putting a real time copy somewhere for recovery.
But recovery, it’s related to backup…
It’s close.
Even speaking personally, you were not at all involved in storage before becoming CEO of the company.
No, I’ve never been in storage. No, I’ve been in different things, but not storage.
Was the $55 million IPO in 2006 successful, given the $70 million invested in the company, formerly NSI Software?
It was very successful. The company took $55 million. The value of the IPO was well over $200 million. So the shareholders go another $150 million, so I think it was very successful.
Your secret is byte-level replication of files, applications and the OS, correct?
It’s continuous.
Apparently, you were one of the first companies in D2D backup?
We were early with it. There was another stream from a company called Octopus which eventually worked its way up to become Legato, it got bought and bought and bought. But we were one of the very early to do differential continuous byte-level replication.
Which means you collect all the application files in small blocks?
Yes.
But it’s the same size? Each block…
No, it can be variable. It depends upon the application, if the application file changes.
So you choose the size of the block depending on the application?
Yes. And then when we send it over to the network, we’ll use compression and governing, so those would be the other techniques we use to shorten it.
You concentrate on Windows…
Mostly. We have a Linux…
And why not Unix, which is mainly used in storage?
Because our market has been targeting what I call business critical systems, you know, the email system, single server systems. That’s been our focus. I’d say we have a small Linux business, and that could grow, but probably not Unix, at least in the short term.
Why did you launch a software, sanFly, that turns any Windows server into an iSCSI device, given that Microsoft offer it for free?
We actually provide it for free too.
Is there really a difference?
Between what we do and what Microsoft does? I’m not sure, you know one thing we do is that you don’t need a special HBA for us. You can do pixie-booting with it. What we want to do is be able to use this boot directly, so that we can recover images for Double-Take right on the desktop. So we’re using it for our own purposes.
Double-Take acquired TimeSpring to get CDP and emBoot to obtain network booting technology. Who will you buy to get de-dupe, which you desperately need, given that you have $79 million in cash on hand?
We plan to make a counter-offer to NetApp…
Seriously…
We’re working on our own internal product. You know, you could argue that de-duplication is a form of data reduction, so byte-level differential replication is also a form of that. So probably on the continuous, when you’re really looking for continuous replication, you may not use de-dupe on the source, because you then have to reconstruct. So really if you’re looking for rapid recovery, I know everyone talks de-dupe, but even if we do complete our project, we still may not use that technique to do rapid recovery. But for the backup space…
When do you think you’ll have that?
This year.
Because today it’s very difficult to sell recovery products if you don’t say de-dupe.
It’s become synonymous with backup.
Currently you have replication.
Oh year.
Do you have snapshots?
We integrate with Microsoft for the snapshots.
And do you offer tape backup?
Not us directly.
Will you venture into email management?
We look at archiving, frequently. We haven’t done anything there yet.
Because you have an agreement with…
Yes, we have some agreements with Mimosa and with GSX Groupware Solutions.
So are you going into compliance and archiving?
I don’t know. We’ve looked at that, but have never gone there. We tend to partner with other companies to get there.
Do you consider online backup and cloud storage to be your competition today or in the future?
Yes, but not for storage so much, we’re really about rapid recovery. So there really aren’t good competitive solutions in rapid recovery at the moment. So not yet, but I think it could be some day, so we’re working on that now. You can actually go to our website and find a way to use Double-Take on Amazon.
What’s your roadmap?
In addition to the cloud stuff, we have a range of products that we’re trying to put into four areas: Availability, which would be disaster recovery, rapid recovery. Backup, that’s not what we did, but it’s starting to be one and the same. Migration products, so we’ve always been used for migration, but Double-Take is expensive and complex, so we have a new version of that, and what we call Flex, which would be the fabric, to be able to leverage the SANs to move systems around.
You are independent from any hardware, but I would imagine that your customers need basic configurations for your software. Which one do they go for?
Yes. The minimum could theoretically be any basic server. That’s all. It’s so small. If you’re going to be replicating something, Exchange or something like that, you’ve already got sufficient capacity.
What’s the median price of sales of your software licenses to customers?
Actually the median is about four to five thousand dollars. The average is about eight to ten thousand. The median is actually lower, which means that we have a lot of small companies buying. We might get a large company – we do really well in the small mid-market, but we also do well with projects within a large company, say with one department, to protect certain servers. But then they may tell their friends in other cities and other functions, and then it expands from there. So we get a lot of deal over and over again.
Who are your main competitors?
The companies that have competitive products are EMC, Symantec, CA and then there are some private companies.
What about CommVault?
Not often. Once in a while they do have some replication, typically they’re not in the rapid recovery business, but once in a while…
Your main OEMs?
We have one, HP.
Not Dell?
No, they’re a reseller.
So your main distributors?
Dell is our largest reseller. The main distributors are Magirus, Tech Data or Bell Micro in the U.S. After that it’s mostly Sunbelt. 71% is from resellers, but then 20% is from distributors, but those distributors are going through resellers too, so it’s really 90%.
Your main resellers?
It’s mainly Dell. And then Sunbelt.
How does it work with SunBelt?
We acquired Sunbelt Europe, so that’s now us. Sunbelt in the U.S. is a separate company, so they make their own software, but they still resell for us as well.
How many active customers do you have?
We’ve got over 19,000 customers, total. This is just a rough estimate, I would guess that 11 or 12,000 are still connected to us, paying maintenance.
I am always surprised to see the high level of revenues storage software companies derive from services. For you, in 1Q09, it was incredibly high, 57.5%, compared to 42.5% for software licenses.
That’s not all good news. Licenses were too low in the first quarter. Because sales were down, that was a horrible quarter. But we do have good maintenance, we’re very focused on that. So we try to put new technologies within our existing product, rather than selling add-on licenses, and keep the maintenance rates up. But I agree that’s extraordinarily high because it was a bad quarter. Normally it should be 45%
With the crisis, do you see this trend continuing? Will people keep paying so much?
Remember, we have a lot of small accounts. So if there’s 12 or 13,000 customers paying maintenance, a lot of these bills are in the hundred dollar range. The crisis has had an effect, we’ve had to push back a little bit on maintenance, but not so much.
With which storage system company did you have legal proceeding?
We’ve had two… we have none right now. We had two recently, a patent suit with EMC which was resolved in the beginning of 2006…
You were obliged to pay royalties?
No, it was settled.
And the other?
The other one was NeverFail, that’s probably who you’re thinking of, it’s a smaller private company. And they agreed to stop, they were using in metadata our name within search engines, and they agreed to stop doing that.
Did they pay something?
No. There was no payment. We sued them to stop.
So you didn’t pay anything to anyone?
EMC we didn’t pay royalties. We agreed to a payment that was less than the legal fees, and four years of buying equipment we were going to buy anyway, but no royalties. NeverFail we didn’t pay anything, and EMC is done now.
How many employees have you laid off since September 2008?
Because of the crisis? We terminated a few for performance.
So no plans to lay off?
We’d like not to have to lay anyone off.
But you reduced salaries.
Instead of lay offs.
For all employees, all over the world?
No. Just the little people. We cut their salaries and I took a pay increase because I need to stay focused. No, we cut everybody in North America, we didn’t do it here in France because labor laws make it too difficult. We did that, because we felt we needed the developers and the support people to keep working, not to be laid off. And we hope to give those pay cuts back.
You reorganized the legal structure of your EMEA operations in a way that should reduce your exposure to fluctuating exchange rates between the UK pound and the Euro going forward. What did you do precisely?
I can’t even give you the details. That’s really not material. The reason we had to do that was because we had both the UK and then doing business in Euros, so if there were large fluctuations in the pound, relative to the Euro, we got the double hit back on the dollar. So all we did was combine those two to avoid that.
So where are your European headquarters?
Here in Paris. That didn’t change. It was a small detail.
Are you ultimately happy with your acquisitions of TimeSpring and emBoot for respectively $8.3 million and $9.6 million in 2008?
No I’m not happy with TimeSpring. I don’t think we’ve produced enough independent revenue with it, which really wasn’t originally the intention, but we started to sell it, and we didn’t integrate it quickly enough, so we’re doing that now. We think we got lured into trying to sell it, then we had low sales, we had double the sales, but it wasn’t big. We should have integrated it right away. CDP is not a market on its own, so I’ve not been happy with that. emBoot’s been okay.
But first quarter sales for emBoot products were only about $140,000…
Yes, but that’s because we plan to integrate it. That’s opportunistic desktop sales.
Is there something I should ask? Or something you would like to answer?
Yes, why don’t you ask what makes Double-Take special?
It’s a good question. What makes Double-Take special?
I’m glad you asked that question!
Because you’re positioned oddly in the market, no?
I think that’s true. We’re a bit infrastructure, but we put a lot in storage. We move things around between virtual and physical systems, but people think we’re still in storage. And yes, we do virtualization. Everyone’s a virtualization company, everyone’s a de-dupe company. But here’s what’s special. We do a pretty good job with our clients. So most people in IT, not necessarily the CIOs, but the people who run their systems know who we are, and they may very well use us, and if they don’t, they know who we are and respect us. So we have a very good reputation with end users. And then if you look at the technology, you take all these things together, we do continuous replication, which others do to, but not all, most storage companies do block-level periodic movement…
It’s changing…
It’s changing, but it’s important, because really when you use us to move something from here to there, you don’t have to shut it down, you don’t have to schedule it. We’re very efficient at moving things over wide areas. In the U.S. there are lots of examples of things going between New York and San Francisco, going between these offices. Then, we can recover those whole systems, so it’s not just always there, it’s that you can recover it very quickly. And then finally, about two years ago, we released technology that does the same level replication for changes, not just in the data, but for the applications and the operating systems. And I think that really makes us unique, because we’re really moving whole systems continuously, that’s why people buy us.
You’re a musician, you play bass in a rock band called Cluster Funk. What style?
Straight ahead rock and roll. Like dance music…
Elvis Presley?
Rolling Stones, Chili Peppers.
Buddy Holly?
About ten years after that. I also play in another band, called House Red. That’s unrelated to the company. We play a mixture of jazz and rock and roll songs that you don’t usually hear.
Do you rehearse often?
Not often enough.
How many CDs have you sold?
We don’t have any CDs. But you can see us on YouTube…
Other hobbies?
I’m on some non-profit boards, and I spend time with that. I’m the chair of the Center for Refugees at Johns Hopkins University, and very active with that. I’m on the New England Aquarium board, in Boston. So I do things like that. I’m a big skier and snow-boarder, and I’m a judge for freestyle skiing, mobile and aerials. I do that still, but I also judge that, and I’m on a competition committee for the USSA. I teach every year in Leipzig, Germany, in an MBA program.
You have a lot of activities. How many days of vacation did you have last year?
Where I didn’t actually work, hardly any. Because you’re really always connected. But I did something in April, something called the Haute Route, where you go from Chamonix, France to Zermatt, Switzerland, entirely on skis.
Nice!
It’s really not so nice, it’s a lot of work.
What’s your salary plus compensation for 2008?
I don’t know. It’s published. I get a salary and bonus target that’s around $500,000, but I didn’t make that last year. It’s complicated…
That’s not a big figure for a CEO.
No, right now, I probably won’t make that this year. A lot less. So I made 400 and something. But I have stock options, that’s why it gets confusing. When they publish that, when we went public, it looked like I made $3 million. I didn’t make anything. I got stock, and I paid taxes. I made zero.
It depends if you keep them or sell them?
You can’t just sell them, you have to sell them at a profit. If I got stock options at $17, they’re not worth anything today, so those things are very misleading I think. For me and everybody. More for Joe Tucci and the big guys.