Startup Vyatta's Line In The Sand: We Are A Channel Company

Information technology startups by their nature are focused on engineering but for networking company Vyatta, the early days were all about attracting channel partners.

Now that the seven-year-old company is reaching enterprise customers and creating a buzz in Silicon Valley for how quickly it's growing, it already has that loyal channel following in place.

"They're a very interesting story," said Ryan Young, co-founder and executive vice president of Torrey Point, a Sunnyvale, Calif.-based consultancy and systems integrator. "Several of their executives are people we've known for a long period of time, so there's that familiarity and trust that they've got some of the better industry experts running the team."

Torrey Point signed on with Vyatta in late 2010, and Young said he sees a great opportunity for Vyatta with service provider customers that are building out virtualization capabilities in their data centers to support cloud computing. Vyatta's hook is scalability: a flexible network infrastructure hinging on open-source software that can replace the need for many single-function devices.

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"The challenge [these customers] usually have is to buy a bunch of equipment, do a traditional install, put the hardware pieces in line in the network and invest a significant amount of cap-ex and op-ex. A lot of these infrastructures are built like that," Young said. "Vyatta pulls that together to make it easily deployable. You have the virtualization characteristics that scale through the infrastructure -- and that's really the direction that the industry is going to move in -- pitching a flatter infrastructure more reliant on software."

It's exactly the type of notice Vyatta has strived for -- and the company's work in the sales trenches is now paying off. In November, Vyatta confirmed a $12 million round of venture capital funding led by HighBar Partners, whose managing partners, Roy Thiele-Sardina and John Kim, have since joined Vyatta's board of directors. Vyatta's total funding since its founding in 2005 is more than $45 million.

The bigger story for Vyatta, however, is the channel which, according to CEO Kelly Harrell, is on pace to account for more than 70 percent of Vyatta's revenue by the end of 2012 and as much as 85 percent the following year. The strategy for Vyatta now is to approach its channel sales both as a high-touch partner -- incite the demand -- and a low-touch partner – letting partners take the lead.

"I believe all good salespeople need to know how to work with the channel partners in the ecosystem," said Sheen Khoury, who joined Vyatta as senior vice president of sales and field operations last year. "And now we've got partners like Torrey Point and Accuvant that are multiregion -- known partners that we've worked with that we know are excited about Vyatta -- and getting them even more excited about the program."

One thing Vyatta has focused on in the past year is what Khoury described as partner-initiated deals, new business development driven almost entirely by the Vyatta partner who can then enjoy 25 percent to 30 percent more margin based on that early legwork.

Overall, said Scott Clark, senior director of worldwide channels, Vyatta is looking to make its channel self-sufficient. As software's role in networking becomes more prevalent, Vyatta will count on partners to do a lot of evangelizing on its behalf, while also rolling out partner certifications to get more partners technically accredited.

"Every single partner we sign up, we track," Clark said. "A lot of them can do the pitch but it's understanding how to articulate our value proposition at different levels."

Vyatta currently has about 70 partners and will continue to look for partners with virtualization, networking and security backgrounds, said Clark.

"We have a line in the sand that says we are a channel company," added Khoury. "We have invested heavily up front in the program so that we can come across as a player."

Torrey Point's Young said Vyatta is making the right bets and also has a viral buzz reminiscent of other networking companies looking to disrupt the networking and data center spaces.

"It's important to find those companies. We were the first partner out of the gate for Arista," Young said. "We want to be able to provide thought leadership around architecture, and that's going to take gambles. Will it be the data center, or will it be the WAN that consolidates, or will it be a kind of unified fabric where it's all virtualized? Twenty-five years ago we had big boxes that did everything. Now, the unifying thing that's coming out is that the application is going to be really critical, and that's where I think we have to look as value-added consultants if we're going to be cutting-edge."