Exclusive Interview With Peter McKay, Co-CEO, Veeam

Peter McKay, 55, is co-CEO (with Andrei Baranov), president and board of directors of Veeam Software, Inc. since two years and three months. He was president, COO and company’s member of board of directors from July 2016 to April 2017. He is also on the board of UK start-up Snyk in the security field. Hobbies: road-bike. He took a trip last May in Provence and he did the Ventoux (a moutain in the south of France culminating at 1,2 miles, Ed.). He always wanted to do the Tour de France, but he said he got too old. He also swims and run. He likes many sports. He also plays golf but is not a good player. “But If I’m not with my family, I’m probably on a bike. And I listen to book while biking, that’s kind of crazy.”

StorageNewsletter.com: You had no background in the storage sector before arriving at Veeam, correct?
Peter McKay: Not exactly. I used to be the CEO of a company called Desktone,Inc. that got acquired in 2013 by VMware. It was in desktop virtualization. I stayed at VMware for 4 years, I ran American business for the firm before coming to Veeam. So, not a storage expert per say.

Veeam publishes booking but not revenue. How much is your revenue?
They’re slightly behind bookings. Let’s see, if we’re going to do close to $1 billion in bookings in 2018, the revenue will probably be somewhere in the $800/$850 million. Last year we did $827 million in bookings, that makes around $700 million in revenue.

When will Veeam become a $1 billion company?
If you speak in terms of bookings, that’s our goal this year. For revenue, it will probably happen next year.

Did you ever had financial founding rounds? How to you do to finance the company?
No, we never did founding rounds. The two founders of Veeam [Andrei Baronov, Ratmir Timashev both born in Russia, Ed.] sold a company and build Veeam with the proceeds of that sale. Veeam has been self-funded and cash flow positive ever-since, no debts or ventures.

So why aren’t you doing an IPO?
The better question is “Why do an IPO?” If the company is profitable and we have a lot of cash, then why bother? Companies who go public usually want to use the money to go buy other companies or liquidate their investors or something. We only have two major shareholders, the two founders.

If you’re note planning on doing an IPO, is a sale conceivable?
Our goal is to continue to run a fast-growing and profitable software company. So every year we take a look at the company and ask ourselves “Do we keep going the way we’re going or should we take a different route? Should we go public?” That’s not off the table. We’re not looking for someone to buy us either, but if someone came and said “Hey look this is a great business” we wouldn’t say no. All the options are on the table at any time.

There was a rumor that HP would acquire Veeam a few months ago though.
Yeah, that was just a rumor. They’re always rumors, but as far as I know since I’ve been here, there hasn’t been that kind of plan. Trust me, if there was, Ratmir would have told you (laugh).

You bought N2W Software this year, an IaaS data protection providing cloud-native backup solution for AWS workloads. It costs $42.5 million. And also nworks last June, in enterprise management connectors bridging the gap between VMware virtual infrastructure and enterprise systems management tools from Hewlett-Packard and Microsoft. Were you not able to develop these solutions by yourself.
First, let me say we invested in N2W before, like we do with many other companies, storage and non-storage. Some we buy, some we keep separate. We acquired N2W because we couldn’t develop that kind of service as fast by ourselves. We can develop anything, but when you look at how fast these markets are moving, sometimes it makes more sense just to buy.

Are there more acquisitions to come?
Absolutely. It could be in cloud application, backup … any area that allows us to better manage the data for our customers on premise or in the cloud. It is what we call “intelligent data management.” N2W is a great example of that.

Why is your HQ in Switzerland and not in USA? Is that for fiscal reasons? Because you are personally based in the Boston area.
I do live in Boston, but my office is in Baar, Switzerland. Switzerland is where all our assets are held. I’m sure fiscal reason was the original drive for setting it up there, it offered the right structure at the time.

Where are your R&D teams located?
Prague, Czechoslovakia, is the big development center. Some of it is in Saint Petersburg, Russia, as well. But Prague is increasingly becoming our main development hub. Other than that, we have our customer support in Bucharest, Romania. We also do inside sales and Europe marketing there. It is more support than engineering.

Does your success mainly comes from the price or the quality of your software?
The quality of the software. The TCO of the software is certainly less that the competition but it’s thanks to the technology. We’ve tried to make our software easy to use, deploy and manage so you don’t need as many people, you can automate more.

At first you were only doing backup for VMware, but now you do Microsoft Office 365, Linux, Nutanix AHV, IBM AIX and Oracle Solaris. Are you still looking to expand this list?
Yes. We’ve integrated with Dell, EMC, we continue to do IBM platforms, HP, Cisco, NetApp. We just did Lenovo and you’ll get some new one. Companies are now trying to build private clouds with OpenStack so we’re doing some work there too. There is also going to be more SaaS application like Office 365. More and more customers are asking us to backup SalesForce, NetSuite, Workday … so that’s becoming a bigger part of our roadmap.

What is you more successful software in term of revenue?
Backup and recovery. We have multiples version of it but that’s the main thing.

In term of licenses sold?
Same. Any new product we develop, we give it away for free to start. You get a free subscription for a year or so and when you want to renew you pay to get the full version.

Who are your main competitors?
I think it’s still Veritas, Commvault, Dell and IBM. The legacy players.

What is your opinion on Veritas?
Veritas has been the biggest donor of market share to others. It’s a challenging position when you’re not growing or making money. I think their worth is around $1.4 billion. When Symantec bought then spun them out it was even more of a disaster.

Commvault is not doing so well either.
No, it’s way too complex and too expensive. Especially maintenance. A lot of these companies, when they change their pricing to be more cloud-like, the new software is cheaper than the maintenance of the old installed base. It’s difficult to price for the new world without cannibalizing the old world. It becomes a challenging situation for the legacy player because their price point and maintenance fees are so high.

How much do license and maintenance bring in terms of revenue?
The split is 65% license, 35% maintenance.

You have a lot of OEMs (Lenovo, Cisco, Quantum, Dell EMC, NetApp, Exagrid, Nutanix, IBM, Oracle, etc.)
They’re more resellers than OEMs. Lenovo, Cisco, NetApp and HP are resellers. Quantum, Exagrid, Pure Storage, Huawei and Nutanix are partners. We’ve got a great partnership with Nutanix actually, one that will be an impactful going into 2019. Dell, EMC and IBM are competitors. Well, actually for IBM it’s more complex than that: IBM Cloud and Global Services are great partners. IBM hardware on the other hand is a competitor.

You have 57,600 partners, right?
Yeah. These are one that signed up to Veeam. How many of those are active is another question. It’s probably 25% of those on a given year.

How many customers?
Approximately 320,000.

What is your roadmap?
We’re doing a lot of new things. We do releases every 3 to 6 months, so every quarter there is something new that is coming out. But our main direction is cloud. Everything is cloud. We want to continue to make it easy to move to the cloud, from the cloud, between clouds … Making sure we built more automation into that. To sum up: orchestrate better and automate more. And that’s not just cloud, it’s cloud application as well.

Why did Timachev quit his position as CEO?
He’s still very active in the business. Andrei is very active in the R&D and Ratmir is focus on strategic acquisition and investment.