Palo Alto Networks CEO: Keep The Focus, Keep The Momentum

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Mark McLaughlin's been in the tech industry long enough to know that when a company has as much momentum as Palo Alto Networks does, priority one is making sure that momentum doesn't slow.

So it's no surprise that McLaughlin, who became Palo Alto's new president and CEO in August, will push the white-hot network security startup to keep its eye on the ball in 2012, and look at ways to keep its growing legion of excited channel partners happy.

McLaughlin joined Palo Alto Networks following 12 years at VeriSign, which had acquired his former company, Signio, in 1999. He became president and CEO of VeriSign in 2009, and it was there that he first encountered Palo Alto Networks -- and its game-changing firewall technology that manages applications and content by user instead of by IP address or port -- as a customer. Palo Alto has been cash-flow-positive for seven quarters now, McLaughlin said, and is hiring between 100 and 125 new employees every quarter as it moves beyond buzzed-about startup status and becomes the network security segment's most formidable challenger brand.

At Palo Alto's recent Double Down Partner Conference in New Orleans, the low-key but quietly intense McLaughlin joined CRN Senior Editor Chad Berndtson for a discussion of how Palo Alto Networks will approach the new year. Excerpts of the conversation follow:

You've joined Palo Alto as a time when it's growing very fast -- the fastest-growing network security player ever, you told partners. Why did you make the move?

I made a list for myself a while back of what an opportunity would have to look like to be interesting. It had nothing to do with Palo Alto -- I'd just made a list. It had to be really disruptive technology in a large product market, and there had to be a great technical team, a great long-term vision and significant customer traction. I took a look at Palo Alto, and I checked those boxes.

What is your message to channel partners? Palo Alto's made no secret that it needs channel partners and the support of the channel to sustain this type of growth.

We are a partner-driven company -- always have been, always will be. We definitely recognize two key values of working with partners. One is leverage, to grow at the rates we're growing, and the second thing is value-added services. The reality is that customers really look at partners for advance on what they should do technology-wise. They're the experts.

Talk about the types of partners Palo Alto is looking to attract.

We're a quality shop, not a quantity shop. We want the best of the best and we're putting a lot of resources into the company and the technology, so we're expecting the same from them.

From the vantage point of VeriSign, you got to see Palo Alto grow from buzzed-about startup to reaching cash flow positive about seven quarters ago. What is the perception of Palo Alto outside the company walls, and especially in the security space?

I've been jetting around the world the last 60 to 75 days talking to everyone I can and [asking] how are we doing. People will always be very frank, but I've heard nothing [negative]. What I am hearing is that the technology is works as advertised, which is fantastic. It's been a very positive couple of months for me.

How and in what areas will you be investing in the new calendar year?

The focus of the company is on network security, so an important point for us to lead in network security is that we have to stay very focused on what we're trying to do. It's a really large market opportunity, so just keeping our eye on the ball will be important, but you'll see us do continued innovation around App-ID, our bread and butter, and around virtualization, around mobility and around malware, for sure.

Talk about how virtualization is changing the network security market opportunity. We've talked before about how the market is growing so fast directly because of those transitions like virtualization.

It'll be interesting to see how that plays out because virtualziation is a technology that lends itself to security off the device, basically virtualizing network security. That's a trend we're trying to stay very much in front of, and we see it as an opportunity.

What other trends would you point to as fueling the opportunity? You've described Palo Alto Networks as having a lot of headroom.

Well, one is malware, for sure. We recently introduced WildFire [a new firewall capability that allows security teams to detect and remediate unknown and targeted malware], for modern malware in the sandbox environment, and we think that's a good TCO-ROI story for our customers. Second, for sure, is distributed devices and mobility. In order to be a network security player you hav to be able to provide the same level of protection for all distributed devices.

Where is a lot of the security protection for mobile devices falling short?

Everywhere, starting with perhaps the most obvious one, which is bring your own device. You have all these devices out there not sanctioned by corporate, and connecting into networks, and corporations are fighting sort of a losing battle of command and control because of the consumerization of technology. The first and most important thing is to know what's on your network.

NEXT: Will Palo Alto Go IPO?

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