NSI Software CEO Steps Down

On the outside, it seemed like things were going quite well for Don Beeler, the chairman and CEO of NSI Software, a leading provider of the continuous data-protection software package known as Double-Take. The closely held company announced revenue last year was up 33 percent, and with 13 consecutive quarters of sales growth, revenue grew 40 percent for the fourth quarter of 2004.

NSI Software, recognized by analysts as having a key position in the market for data-protection software, had just received another $7 million in Series C funding from private equity firm ABS Capital Partners to expand product development and its channels, bringing the total capital raised to $60 million.

Yet Beeler, who co-founded the company 14 years ago, won't be around to see the company's next phase of growth, presuming all goes as planned. Beeler has quietly stepped down as chairman and CEO, though he says he will stay on for a few years as an adviser. NSI's board named Dean Goodermote as his replacement. Goodermote is a seasoned executive who has taken public several companies that he has run, and has merged IT companies with other players.

Despite reports of strong revenue growth, NSI wouldn't say whether it is profitable. Beeler is traveling abroad and has declined several requests for an interview, but in an e-mail forwarded by a company spokeswoman, Beeler said he resigned for personal reasons, "and because it is the right time for NSI," he stated. "I have accomplished what I set out to accomplish with NSI and know that I am leaving the company in the strongest position possible."

Beeler also said he believes Goodermote, who has been an adviser to NSI's board for some time, is the right person to take NSI to its next phase of growth. "Dean has significant experience in leading companies through MandAmp;A processes, launching new product lines, making product acquisitions and accelerating growth strategies, in one case increasing revenue at triple-digit rates over a three-year period."

Nevertheless, Beeler's departure appears somewhat abrupt. Just days before leaving, Beeler talked to VARBusiness about his desire to grow NSI and even posed for a photo shoot. "I feel so comfortable," Beeler said in our interview last month. NSI was featured in an article about emerging alternative vendors as a company that has a viable data-protection alternative to products by Veritas Software, among others. The company asked to pull the photo, but the publication had already gone to press.

Double-Take is regarded as the leading software that performs continuous data protection and replication. Unlike backup software, continuous-replication software mirrors systems while they are online. Beeler had said he was intent on not shifting into the broader backup market.

In an interview with VARBusiness, Goodermote said that the company has no intention of shifting strategy, but indicated he would like to see a more aggressive growth plan during the next year. "I think as time goes on over the next six months to a year, and we start to look out further, hopefully we will have a broader perspective about the options available to us," he said. "I've been through IPOs, I've been through MandAmp;As and acquiring businesses."

As CEO of Process Software, a developer of internetworking software, he grew revenue by 250 percent and expanded the company's product line by acquiring a product line from Cisco. After that company was sold, Goodermote co-founded IPworks, a company that was later sold to Ericsson.

Goodermote also was CEO of Clinsoft, an ISV that develops clinical research software, that was losing money when he joined. Through repositioning the product line, the company returned to profitability and merged with Phase Forward. Goodermote also took PSDI, now known as MRO Software, through an IPO and secondary offering.

Saying that an IPO for NSI Software is not "out of the purview," he did say it was not on the table currently. Goodermote insisted that he was not brought in to fix a company in trouble, but to help it grow faster. "I couldn't say we'd be into something specifically different, but I would hope we could seek complementary markets we could move into," Goodermote says.

Some areas he finds appealing are expanding into the area of compliance and developing appliances. "I have been through situations where I've fundamentally changed the course of the company," Goodermote said.

One NSI partner saw the change as a positive sign of growth, and was encouraged by the selection of Goodermote.

"It seems like he's definitely got some seasoning behind him and he's fairly capable," says Shyam Manwani, a principal with S&L International. "You can see them grow to the point where they get acquired by someone larger trying to get into that space, or you could see them growing to be a stronger entity in that space overall."