Exclusive Interview With Jeff Erramouspe, CEO, Spanning Cloud Apps

He is:

• CEO at Spanning Cloud Apps, LLC

He was:

• Chief revenue officer at Spanning Cloud Apps
• President at Manticore Technology
• VP of market development at Digby
• Founder and CEO at Deepfile (renamed StoredIQ and acquired in 2013 by IBM)
• VP of marketing at MoneyStar/Cofiniti
• VP of marketing at Vignette (acquired in 2009 by Open Text)
• Director, server software marketing at Compaq (acq. in 2002 by HPE)
• Various positions at NCR Corp.

StorageNewsletter.com: First it’s important to refresh us about the background of the company as you had three eras: independence, under the Dell perimeter and now own by Insight Venture Partners (IVP)?
Jeff Erramouspe: We were founded in 2010, acquired by EMC in 2014, which resulted in becoming part of Dell EMC in 2016, and returned to independence as part of the Insight Venture Partners portfolio in April 2017.

Obviously, one of our biggest milestones was getting acquired by EMC when we were still a very small company. We’d only raised $9 million in venture capital and the acquisition provided a nice return to our investors (including EMC Ventures, ironically). Getting acquired by the market leader in data protection for large IT organizations was clear validation of our market, our product that served that market, and our team. EMC had a big business in backing up MS Exchange servers on premise, and, as those workloads moved to Office 365 in the cloud, saw a threat to that revenue stream. Spanning was a way to protect that revenue stream with our backup solution for Office 365 data.

The first big change we experienced after getting acquired by EMC was to our sales process and marketing activity. The rest of the company, especially engineering, was pretty much insulated from a lot of change. But on the marketing and sales side, things changed a lot. The hypothesis for the acquisition was that we could move Spanning products very quickly through the EMC Data Protection sales force, which was about 2,300 reps around the world. The thought was that we wouldn’t have to spend money on lead generation as those reps would walk us into all of their accounts. Of course, it wasn’t that simple. We pivoted our sales team (which was about 12 people at the time) to support the EMC reps. Of course, there is no way 12 reps can fully support 2,300 – it’s just not possible to cover them all. Even when we did engage, we ran into friction because we were subscription rather than a hardware sale and our sales prices were far below a typical EMC data protection deal. Everyone wanted to help, it wasn’t an issue of “want to” – rather our core characteristics and incentives didn’t line up in order to seamlessly flow our products through this incredibly powerful sales force. It was a bit of a rude awakening.

Over time, we started to figure it out and started doing some really large deals. Spanning continued to grow – we still had outstanding customer and revenue retention metrics – and were adding new customers at an accelerated pace, but we didn’t grow as fast as we could have had we been on our own. It was sort of the proverbial “round peg/square hole“.

Once the Dell EMC merger finalized it became even more clear we were going to struggle. All those EMC sales reps that we’d finally gotten the attention of were now dealing with another whole new set of products and relationships they needed to learn. They were trying to figure out how to navigate this new reality and we fell further down their priority lists. Spanning continued to grow, but it became obvious that we would need to spin-out to reach our full potential.

So, that was next. Once we spun out in April of 2017, we had to learn to stand on our own two feet again. We’ve been spending time re-building our finance and operations functions, and putting in place all the systems and processes to support them. We’ve re-established our own transactional sales process where we drive everything from awareness to demand generation to lead generation to sales development to closing the deal. We’ve taken back all of our customer support responsibilities. It’s good to be on our own again.

What is the current profile of Spanning? Did you keep many people from your previous team?
One of the achievements I’m most proud about is that, through all of our turmoil and change, we’ve kept a really strong nucleus of the Spanning team together. When we were acquired by EMC in October 2014 we were 54 employees. Of those employees, 30 were still with Spanning when we divested from Dell EMC and got acquired by Insight Venture Partners in April 2017, two and a half years later. During that time, we went through a ridiculous amount of change. First, adjusting to being a part of a big company, then having to adjust to life as a part of Dell, including having our growth limited during the integration of those two giants, then getting agreement to be spun out again and going through that process. The fact that we kept such a key core group together is testament to the culture we’ve built at Spanning as well as the criticality of that group. Less talented and committed teams would have disintegrated under the pressure of what we went through.

I think adhering to our core values – Helpful, Innovative, Fun, Accountable, Driven, Open – what we call HIFADO – really helped us through all of this. We currently have 72 employees, and we are are hiring.

IVP has capital interest in several backup companies – on-prem and cloud-based – how is Spanning positioned in the IVP portfolio?
I really don’t think of things that way and I don’t think that IVP does either. There isn’t a formal ‘positioning’ of the companies that IVP owns. They simply invest in and acquire business they believe have a good opportunity to make them money. They are pretty much numbers driven and unemotional about how they do that. The good news for us is that their knowledge and experience in the data protection market is something we can learn from and we’ve been taking full advantage of that. And there are some logical partnerships for us that we’re exploring.

Any input on IVP long-term strategy?
You would have to ask them that question. My goal is to make Spanning a valuable asset for them. I believe that we have a good opportunity to do that.

What is new in the product? New applications environments?
(Jeff Erramouspe invited Mat Hamlin, VP of product, to answer here)
We continue to invest across the product line and deliver features and services that provide value to our customer and the market.

In 2017, we added backup and point-in-time restore support for Google Team Drives and Microsoft SharePoint Online, both of which are critical to organizations since those services typically store shared corporate data. In our Salesforce solution, we have focused on delivering innovation for developer enablement, providing the ability to restore data across orgs, for example, from production into a developer sandbox sandbox. We also added functionality that allows users to compare and diff the metadata (configuration) between orgs, and we are currently working on direct restores for metadata. Collectively, these deliver Sandbox Seeding, empowering rapid development.

We have more product updates on the horizon for 2018 that we’re unable to talk about at the moment but excited to share once they’re ready to go.

How do you price product?
(Answer from Matt Hamlin)
We price our products on a per user per year basis. This includes unlimited backup and storage for those backups. All of our subscriptions are for a minimum of one year. We price this way because it makes it much easier for our customers to plan budgets. It’s easy to know how many people you’re going to hire – it’s much more difficult to predict how much data they will create. We make sure that we backup everything that the do create.

Do you still use Amazon S3? Even in Europe?
Spanning runs on AWS. AWS knows as much about cloud computing as anybody in the world, and is well-known for their innovative approach to development. The resources and scale available from AWS cannot be underestimated. They have thousands of highly qualified engineers to ensure their services run as reliably as possible, and the best security experts in the world working to protect their assets. When something goes wrong, and it will, they have all the resources needed to get it back to working as quickly as possible. I believe it is a true differentiator.

How many customers do you have? What it the volume of data you protect? How many records protected? For how many restores per week?
(Answer from Matt Hamlin)
We have 8,100 customers and 1.5 million installed seats. Beam Suntory, the world’s third largest premium spirits company, is a great example of a Spanning customer. They represent a trend that we continue to see in the market which we are referring to as the ‘SaaS Enterprise’. They have adopted an IT strategy that prefers SaaS services, as long as the service meets their corporate business needs and passes their security and performance standards. When we engaged with them to discuss backup and recovery of their Office 365 and Salesforce environments, they clearly understood the need for backup, both from a business continuity and compliance standpoint, and were evaluating a few solutions. They chose Spanning over a traditional, on-premises solution that would have been managed by their managed service provider, because we could deliver scalable and secure data protection for their SaaS data, in a simpler, more cost-effective manner.

How do you see competition?
(Answer from Matt Hamlin)
When talking about the competitive landscape, I think it’s important to clarify where we’re competing. Spanning is focused on global mid-market and enterprise organizations, which is different than other vendors protecting SaaS data, like Datto Backupify, who is focused on the SMB market, especially after their merger with Autotask.

When competing in the mid-market and enterprise, we focus on our strengths of ease of use, accurate restores, trust through transparency, and strong security. Our goal is to make backup and recovery of SaaS data effortless for our customers, and we are seeing more and more adoption of our cloud-to-cloud model vs. a traditional backup model that just adds support for SaaS applications.

A great example is Beam Suntory, who selected us over a traditional vendor because with the other solution, they were faced with outsourcing management and maintenance of the software in addition to running it in their data center, on their servers, writing to their storage. Spanning was easy for them to get up and running quickly and provides their admins and end users the ability to quickly find and restore data after any data loss event.

What are the key differentiators against Backupify, OwnBackup, SpinBackup or Odaseva? Did you replace some of them?
Differentiators vary a bit across competitors, but our key differentiators of true point-in-time restores, end user enablement, and market leading security has led us to successfully compete against all of these vendors.

We’ve replaced incumbent vendors numerous times in the G Suite market, where customers experienced failed or inaccurate restores, unplanned downtime and a lack of features, such as support for Google Team Drives.

What about GDPR?
(Jeff Erramouspe invited Brian Rutledge, principal security engineer, to answer here)
In 2016 the EU passed comprehensive legislation on data privacy (Regulation (EU) 2016/679). Spanning began working in earnest to evaluate our data-privacy posture, policies, and procedures. After an exhaustive data-privacy evaluation process and in-depth conversations with multiple internal stakeholders, as well as customers, to understand what would be required to comply, we determined that Spanning is compliant with the GDPR. Spanning will continue to monitor evolving legislation and individual country legal requirements to fine tune our products and data privacy processes to ensure we continue to meet compliance.

Any plan to extend the product with a long-term retention capability such archiving?
We’re certainly considering adding such a capability. We already have the data, so it’s a matter of changing how we store it so that we can do so most efficiently.

How did you finish 2017?
Very strong. We were fortunate in that the market is finally coming to the realization that they absolutely need to protect their SaaS application data. The rapid adoption of Office 365 by enterprises led to a lot of our growth because they understand, both for data loss and compliance reasons, why they need to backup their Office 365 data. Of course, just having the market ready doesn’t mean you’ll gain share or grow. While the market has come around, we’ve been producing great products that exceed our customer’s expectations. We’ve also built a really solid marketing and sales process that ensures that when people are looking to buy, they can find us and we can quickly engage with them and meet their needs. And finally, our happy customer base provides us with great references that often result in new business. We think we’re right at the start of a really rapidly-growing market – the proverbial hockey stick.

What do you plan to add in the product in 2018? What will be the next steps for the company?
In the near-term, we want make sure we get on a consistent quarter-over-quarter/year-over-year growth path. We’re well on our way and I believe that we’ve got the talent and focus to accelerate our growth. This will fuel everything else we want to do.

In the longer term, we want to develop a broader platform for SaaS backup and become our customer’s go to partner to protect the data in all of their critical SaaS applications. We think there is a tremendous opportunity there.

Geographically, we’ll be expanding more in the EU and in AsiaPa. It’s funny, we’ve literally been selling internationally since we launched our first product – we had customers purchasing with credit cards in virtually every country in which Google sold G-Suite, which was pretty much everywhere. And we did that with no international employees. However, now that we’re selling into larger companies it becomes more important to have a presence and while we have sales people and data centers in both Europe and Australia, it’s time for us to increase our investments there.