In competing against other networking distributors that are far larger, how do you differentiate yourselves?
We definitely have competitors in our business, and the differentiation is that they are very large companies. They tend to ask what a customer's order number is and look it up on the system, and it's very impersonal. When you call us, we know you and we know your name. We want to be very much engaged with our partners.
Another thing to differentiate ourselves is that when small to medium-sized VARs go to our competitors, they get lost. Small business is small business to us. When we work with companies that are bigger than Securematics, they like the personalized attention, and they know they can call my cell phone or at home. For VARs that don't want to be touched by our competition, we decide to incubate them. So for a small VAR that starts out doing $100,000 a year, I tell my team not to ignore these VARs. It's amazing how all of a sudden one out of 10 of these VARs will do $15 million a year, and it always happens. When that VAR does $15 million a year, the big distributors start to call them to say they will give them discounts, and a lot of those VARs reject those offers. They rather buy at a higher price from Securematics because it's a combination of personal touch, and they know the buck stops with me. I'm always accessible, reachable and involved.
How do you incubate small VARs?
There are a number of things we do. We vet out the technology -- make sure we understand internally what the value-add is, the differentiation, know more about the technology and its manufacturers. If it's manufactured in other parts of the world, it won't be accepted in the U.S. market, so we vet that out. We form a business relationship, see what kind of resources we can put in our sights so we can have that vendor work with our entire team. We're fortunate we have two locations in Santa Clara, [Calif.], and San Diego. Vendors can have presence in our on-site locations and introduce them to our VARs to solve business problems.
What are some examples of the kinds of business problems your VARs are currently solving?
Our VARs have large gaming companies that are trying to build out their infrastructures to handle users, as well as providing the proper level of network security to make sure they are operating in a secure environment.
We have customers running large campuses, so [we're] looking to provide the bandwidth, connection for connectivity for students to be able to effectively utilize the Internet and maintain proper levels of security and add levels of wireless opportunity.
Health care is the same thing, running that, but all these laws and compliances that they have to meet. So it deals with becoming HIPAA-compliant and developing an infrastructure that supports the hospital staff and other computing needs they have.
What are some other things that Securematics provides its reseller customers?
We do have VAR events and benefits beyond rebates like MDF money, but instead of trying to blanket a program, we look at businesses individually. We also have a demo program, and that's a big benefit because typically VARs have to buy equipment and, depending on the opportunity, we will ship that out to them at no cost. We also bring in our VAR counsel, our executives, to make it customizable. We talk to each and every VAR to see specifically what they need, and [we] provide that for them. We found it to be more successful and cost-effective doing it that way.
Are you going to stay with your core vendor group for 2014, or are you hoping to add new vendors?
We're definitely hoping to add new vendors. Again, we're what you call a real niche distributor; we're very different from Ingram and Tech Data because of our size and focus on network security. We don't focus on servers or commodity products, and those higher-niche products.
So it's any vendor that can support that networking and security ecosystem -- those that are small players right now but looking to add the missing piece of the solution that our customers are looking for, and other vendors that are not competitive to the Juniper ecosystem.
From your perspective, what is the future of distribution?
There will always be a traditional big box, hardware, software services. When we get more into SDN and cloud, it's going to be about how the distributors provide value in that space. I think what's going to happen is more of an integration of those technologies, and that's where the value will be. Everybody talks about software defined networks and the cloud, which isn't a physical cloud. There's infrastructure behind [it], so it's how you're going to distribute the work load. So guiding our partners in that evolution will be important, and as an architect of solutions, that's what we're going to provide as the most value.
PUBLISHED MARCH 6, 2014