Veeam Co-Founder Ratmir Timashev On Strategic Growth, And Co-CEO Peter McKay's Departure

Veeam co-founder Ratmir Timashev says his company has a 100 percent channel sales strategy and several powerful alliances with top hardware vendors.


Changing Of The Guard

Veeam co-founder Ratmir Timashev (pictured) expects the data availability software company to outpace the market for years to come. A 100 percent channel sales strategy, several powerful alliances with top hardware vendors including Hewlett Packard Enterprise, Cisco Systems and NetApp, and a market hungry for cloud solutions are all working in the company's favor, he said.

The Baar, Switzerland, company's co-CEO, Peter McKay, said Tuesday that he was leaving the company, kicking off a broader executive restructuring. Timashev said McKay made the decision to leave the company after accelerating its enterprise channel sales strategy, as well as its strategic alliance strategy.

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In the wake of McKay's departure, Veeam made Timashev, who has in the past served as CEO, executive vice president of worldwide sales and marketing. Co-founder Andrei Baronov, formerly co-CEO, is now the company's sole chief executive.

Timashev said Veeam has grown its data protection and replication business in the mid-20 percent range in recent years, and he expects to maintain that pace over the next couple of years. Cloud service providers are the company's fastest-growing partner segment, he said, and an increasing number of traditional resellers lured by customer demand and huge margins are getting in on that action.

What follows is an edited excerpt of CRN's conversation with Timashev.

What does this leadership change mean for Veeam? Partners aren't expecting much to change primarily because you and Andrei are still there in leadership roles.

That's correct. We're the two co-founders, and Bill [Largent, vice president of operations] has also been here a long time. He's been with us since 2009. A lot of the executive team has been with us a few years. Even before Peter became on board, there were some changes, but not strategic. With Peter on board, we focused more on large enterprise, but we didn't abandon middle enterprise or SMB. We also focused on strategic alliances in the last couple of years and signed exclusive resale agreements with HPE, and also with Arista, Cisco and NetApp, and recently with Lenovo. But the work was done five years before that, meaning we started doing the integration with HPE and then NetApp six years ago, five years ago, four years ago. When Peter came on board, he pushed for closer relationships with alliance partners and he accelerated resale agreements, not just generic partnerships.

Given those agreements and the pace of Veeam's growth in the market, what's your alliance partnership strategy going forward, and what did Peter (pictured) contribute to that strategy?

The strategy is to be hardware-agnostic and never have our own appliance, unlike our competitors. Most of them have an appliance, like Veritas and Commvault, as well as the small ones like Rubrik. They have their own appliance. Our strategy has been no hardware because the day we have hardware we will alienate our strategic alliances. That strategy was put in place before Peter came on board. Veeam is 100 percent channel. Veeam is strong with alliances. No hardware. We serve all markets: SMB, mid-enterprise and large enterprise. When Peter came on board he accelerated those, specifically he built a separate sales force for large enterprise. He accelerated the relationships with strategic alliance partners.

What impact did Peter have on Veeam's channel operation?

His goal was to take the channel relationship to the enterprise, to accelerate relationships with enterprise channel partners such as WWT, ePlus, Presidio. We already had these relationships in place, but he helped accelerate those.

What are your growth expectations for Veeam over the next couple of years?

We just got the latest IDC tracker for data protection and replication for the first half of 2018. That report shows that we have grown 24.7 percent in the first half when the industry grew 2.8 percent. We are No. 4 in market share. IBM, Veritas and Dell are ahead of us and Commvault is behind us. IBM and Veritas shrank. Dell grew, Commvault grew. Overall, the industry grew 2.8 percent. We grew the fastest, 24.7 percent. In the last two years we have shown that kind of growth. We plan in the next two or three years to remain in that mid-20s range.

What are your goals for Veeam's channel operation? Do you have plans for any significant partner recruitment?

We are always recruiting new partners, especially ones with our alliances like Lenovo. We recently signed new relationships with Nutanix. When we do that, our channel expands. All of them are VMware, and our channel is largely VMware's channel. A lot of them sell Nutanix and Pure Storage. Once we sign a new strategic partnership relationship with a hardware vendor, our channel expands. Our general focus for 2019 is to do more sales and marketing activities with the top 100 partners globally.

What shape will that take? How do you plan to execute on that?

We have MDF, and this year we spread MDF too thin with our top 1,000 partners. Instead of spreading too thin among 1,000 partners, for 2019 we decided to focus on the top 100 or 150. Those will be dedicated joint marketing activities. It doesn't mean we won't work with other channel partners. We have a unique model where we have extensive inside channel management. We have channel managers that work with larger partners like CDW, WWT, ePlus and Presidio, but we also have inside channel managers that work with smaller ones and whose goal is to cover lots of partners with support on how to issue code, how to issue license keys. The smaller partners need a little hand-holding, so we invested in those partners, as well.

What does Veeam need from its channel partners to maintain its pace of growth?

We say we have four segments: large enterprise, mid-enterprise, SMB and service providers. In each of these segments the channel plays a critical role, but different. In large enterprise, we work with large enterprise partners, as well as our strategic alliance partners like HPE to put together a complete solution for customers. For the mid-enterprise it's very similar. For SMB we're looking for volume transaction partners. We like to work with CDW, which provides a large volume of transactions, as well as with small partners that have a dozen, or a couple dozen customers and they need our solutions. Then there are service providers. We have about 15,000 service providers that use our solution on a service provider basis. They provide backup, remote backup, Backup-as-a-Service, Disaster-Recovery as-a-Service in the cloud or on the customer's premises. That business for us has probably grown the fastest.

That would be cloud service providers like iland and OffSite? Are you noticing many traditional resellers making a transition to become service providers?

That's right. And many resellers are now becoming service providers, or transitioning to resell the solution from iland, for example. Our goal is to connect our traditional resellers first with our service providers and second to help them if they want to transition to a service provider model, as well. For example, a product like Office365 backup, lots of our resellers sell it, but they're asking to also provide the service based on our product.

What kind of margins can resellers see when they decide to make that transition?

In general we provide one of the highest discounts to our channel. Our average discount globally I believe is 37 percent. Service providers can make much more money because they provide the service. The service requires SLAs so the service provider takes the liabilities, takes the hardware, takes the services, all of that. For every $1, they might make $5 or $10. The margin could be 1,000 percent. Depending on the service, the SLA, and how much human capital they put behind it, the hardware, the bandwidth, for every $1 they pay to us, they can make $5 or $10, but then they have to subtract out their costs.

What are you seeing in the global economy and the tech market that's working in Veeam's favor?

Our biggest markets are Europe and North America, and those markets are doing extremely well. We're also growing nicely in Asia and Latin America. We don't see any negative trends in the global economy. People are investing in digital transformation to be more competitive in the global economy. That's simply it. To be competitive now, all the value services come from the digital side. A car used to be 99 percent hardware and 1 percent brain. Now, it's 10 percent or 20 percent brain so 10 percent or 20 percent of the value of the car is digital. Every company has to be innovative whether it's a bank, insurance, manufacturing. They need more IT services to be competitive just to survive.