Exclusive Interview With Bob Hammer, Chairman, President and CEO, CommVault

 N. Robert Hammer
He has served as chairman, president and CEO of CommVault Systems Inc. since March 1998. He was also a venture partner from 1997 until December 2003 of the Sprout Group, the VC arm of Credit Suisse’s asset management business, which conducts its activities through affiliates of Credit Suisse Securities (USA) LLC. Prior to that, he served as chairman, president and CEO of Norand Corporation, a portable computer systems manufacturer, from 1988 until its acquisition by Western Atlas, Inc. in 1997. He led the leveraged buy-out of Norand from Pioneer Hi-Bred International, Inc. and then served as Norand’s chairman through its IPO in 1993. Prior Norand, he was chairman, president and CEO of publicly-held Telequest Corporation from 1987 until 1988 and of privately-held Material Progress Corporation from 1982 until 1987. Formerly he spent 15 years in various sales, marketing and management positions with Celanese Corporation, rising to the level of VP and GM of the structural composites materials business. He has some background in storage as Celanese that was involved in tape substrate and worked in the ealry days for small start-up Material Progress in bubble memories. He obtained his bachelor’s degree and master’s degree in business administration from Columbia University.

StorageNewsLetter.com: What’s your opinion on the buzz around software-defined storage?

Bob Hammer: I believe software defined storage will be deployed more and more throughout the industry and over time will be the predominant way storage is deployed in large corporation. 

You don’t seem to use this word though.
CommVault is more of a data focus company.

But you are in software and storage…
True, but we would typically interface with a software layer.  

Which one will be the computer media for storing backup in the future?
I believe disk will still play a predominant role. What you’re gonna see is primarily flash or low-cost disk. The way data is managed, backup if you want to say, will change dramatically over time. 

Do you intend to enter into small SMBs, SOHO or consumer market with lower-end lower-cost Simpana software?
No. Our cloud provider and MSP partners will service that market. Commault will not do that directly. 

Not even with a special product?
No.

Will you enter into hypervisor?
No.

Into backup for Macintosh?
Yes. We already do that.

Have you ever acquired a company?
In my career yes, but for CommVault the growth has been a 100% organic from the beginning. 

Do you have an acquisition strategy?
Our plan is to grow the company from where we are today, about $600 million, to $2 billion all organically.

CommVault was founded in 1988 with $75 million in financial funding, right?
The company was a buyout from AT&T Lucent at a much lower capitalization than that. It was restarted when I took over. We build a different company on a different technology platform. 

There was $161 million IPO in 2006. Among the early investors was Microsoft. Does the storage giant continue to be part-owner of your company?
No. Microsoft was the lead investor in the new CommVault but their shares were sold at the IPO.

Will you have your own data center for cloud storage for your customers?
No.

For 1FQ15, software sales derived from indirect distribution channels decreased 6% over the prior-year period and represented 76% of software revenue. Why this decline?
One of the major corporations in the world did a direct deal with us. 

Which one?
I cannot say but it’s one of the top 10 companies in end-user in the USA. It was an eight-figure deal. 

HDS and NetApp are two of your OEMs? What do they represent in percentage of revenue?
We don’t communicate these numbers. In the US we report a partner if it contributes to more than 10% of our revenue. This is less than that. 

Do you have other OEMs?
Yes, Huawei and Fujitsu. The contract with Fujitsu is in Germany but we have a global relationship with them. 

Software revenue in 1FQ15 decreases 9% sequentially. Why is that?
If you look at CommVault’s history from the time we went public until the end of March 2014, we grew at a compounded rate of 21%. Through that period we had a slowdown in our license revenue growth, primarily because of a situation in the United States. It’s a US issue which is being resolved. 

Distributor Arrow was 33% of your global revenue in 1FQ15. Who are the main other ones?
We don’t disclose this, Arrow is our largest distributor globally though.

In a recent Gartner’s report, the analyst firm wrote that you have to be cautious about CommVault for three reasons. What are your answers to each of these assessments?

1. Pricing has been CommVault’s greatest struggle, with renewals and prospects frequently expressing concerns and sometimes augmenting CommVault with lower-cost VMware point products and/or choosing another vendor overall.
Because we have a large platform we have a price by terabyte. The market for certain use cases would like to see pricing on a way they would buy. For example, a customer buying a complete mobile solution that we have would prefer to buy on a price per user per month, not a price per terabyte.
Gartner rightly recognized that we had outgrown that platform pricing. So we started to break certain use cases out from the platform and priced them the way customers want to buy.
Mobile was one, exchange archiving was another, also certain use cases in virtualization where customers like to buy by the socket not by terabyte. So we changed the pricing.

2. As CommVault further penetrates very large organizations and its array-based snapshot capability is utilized, more time and perhaps services need to be factored in to the deployment.
We have the most capability in that regard. We are integrated with more hardware array than anybody else in the industry. Typically that does require more services than just traditional backup. 

3. Some prospects and customers cite the lack of a CommVault integrated appliance as an impediment to implementation; however, in 2014, CommVault did collaborate with STORserver to create a pre-bundled solution, and the vendor claims that it will continue to expand its appliance offerings through additional partnerships in 2014.
Many of our customers would like us to provide a converged appliance for certain use cases and we think that is appropriate. The first CommVault appliances will come to market in the next several weeks. 

For hybrid backup?
Yes, gateways, archiving, backup. These appliances are engineered by CommVault but supplied by 3rd parties.
The first one to come to market is Arrow. It will supply the hardware through some well-known partners we have not announced. There are also partners in Europe, Fujitsu will come up with a CommVault appliance. And there will be others.

It will be the first time you enter into hardware.
Not exactly, our partners will sell the hardware, the appliance will have CommVault label though.

Is it going to be large capacity?
They’ll be different capacities and servers offered. But not at a petabyte scale for the moment.  

What’s the roadmap for Simpana?
Today we are in two broad areas, one is cloud management and the other is data and information management.
In regard to cloud management we built a very comprehensive management layer to orchestrate, provision, report and manage data in the cloud. We are one of the early companies to work with the big cloud providers. We have what is recognized by many as ‘the most comprehensive cloud management platform’ which is used by many of the larger cloud providers: Rackspace, British Telecom, people like that. Our management capability is quite broad.
In regards to data protection and management we do some of the standards things like how to protect and restore data. We manage mobile devices, we can provision and decommission the device. We do file sync and share. We provide secure direct access to customer data. We’re heavily involved in a unique way of managing an archive. We make a copy that can be used for search, archive, compliance and legal, so we’re involved in the content side of things. We have infrastructure management and log analytics built into the platform.
We are quite a broad data and information management company today. 

Your strength is to have an all-integrated software…
Yes we have one stack, that means a common UI, data movers, job managers, event managers. When a customer is dealing with tens of petabyte in hundreds of location, we have a single platform to manage the data globally, set global compliance policies, have audit trails tied to their data management strategies.
We’re the only company who built a platform that is data focused. We know what application the data is coming from, what version of the application, who owns that data, who has access to that data, if it”s encrypted, who has the keys, and we can manage that on premise, in the cloud, on mobile…

And once more, what’s the company roadmap?
The other thing that’s unique about CommVault is that data is stored in an open repository so users can get direct access to their data without going through an application. It also mean you can write analytics on top of that content store. As we move forward you’ll see us move into more verticalization.
We’ll continue to build out our operations analytics, automation capabilities. There’s also a whole series of thing in terms of how data is managed in massive scale that has got to change. It needs to change because of the increased proliferation of cloud-based applications.

PERSONAL QUESTIONS

Are you on the board of other companies?
No, I use to be but not anymore.

Are you personally involved in the class action suits recently filed against CommVault by Bernstein Litowitz Berger & Grossmann as well as Brower Piven, and Kahn Swick & Foti?
No. I’m not going to comment on the suit, it is completely without merit and we’ll let the court decide.

How old are you
I am 72. 

When do you intend to retire?
Maybe…I don’t know…90. 

Your hobbies?
I play golf, I fish, I sky, I hike, ride bike, motorcycles.

What is your annual salary?
To be honest with you I have no approximate of what it is. I don’t pay too much attention to my annual salary. What I pay attention to is how do we create shareholder value for the company since I’m a large shareholder.

And annual total compensation?
You’ll have to take a look at the proxy.

8.7 million in 2013…
That is not something I pay attention to. 

CommVault’ revenue and net these past years
(in $million, fiscal year ended in March)