Aviatrix’s Steve Mullaney: There’s No Going Back To ‘Cisco Model Of The 90s’

“We’re very picky, actually, about who we work with. If somebody is tied to the old, on-prem world, and selling boxes, we say: ‘Good luck and hold your breath when the boat goes down, because you’re going to get pulled under,’” the company’s CEO Steve Mullaney tells CRN.

Out With The ‘Old’ And ‘Owning’ The Market

Steve Mullaney, a tech veteran, thought he was ready to join a board or two and retire following a successful career leading multiple IT companies. That’s until he saw the potential of the cloud networking market while on the board of upstart Aviatrix Systems Inc.

Mullaney’s impressive resume includes leading SDN and network virtualization startup Nicira as CEO until the company sold to VMware, upon which he led VMware’s networking security business unit. Before that, he led marketing and served as interim CEO for a time at Palo Alto Networks. Mullaney also led marketing for Blue Coat Systems, Force10 Networks, and Cisco. Since last March, he’s been sitting in the president and CEO seat for Santa Clara, Calif.-based Aviatrix.

The cloud networking space is primed to take off as enterprises demand cloud-native networking offerings that support new ways of accessing applications. The networking incumbents won’t be the winners in this space, and the cloud behemoths are happy to lock in customers to their platforms. Enter Aviatrix, which can offer visibility into complex, multi-cloud networks, according to Mullaney. And Aviatrix isn’t prepared to settle for a “crappy, couple billion-dollar acquisition” – the company is prepared to own the market, he added.

To that end, the company is looking to go to market with partners, but not just any solution providers. Aviatrix is seeking organizations that aren’t “tied to the old, on-premise world” and those that are “woke” when it comes to cloud. At the same time, Mullaney knows that there are no half measures when it comes to the channel, and the company wants to make working with Aviatrix worth partners’ while.

Mullaney sat down with CRN to discuss the trends toward multi-cloud and Aviatrix’s growth since the start of the COVID-19 pandemic, how this trends is shaking up the networking market for both the incumbents and the cloud giants, and the areas of opportunity for the channel as Aviatrix builds out its own partner strategy.

Here’s what Mullaney had to say.

What made you come out of “retirement” to join Aviatrix?

Two years ago, I noticed the explosion to the cloud where every enterprise said, “OK, now we need it.” We’ve been talking about cloud for 15 years, but really, until about two years ago, that’s when every enterprise said: “The center of gravity of our architecture is now in the cloud.” Up until that point, it had been very much on-prem[ise]. That was the center. Yeah, there were business units and people were doing some things in the cloud. But honestly, it wasn’t the main focus in the enterprise. Two years ago, they all move like a herd, and it was for a bunch of different reasons. It was existential threat to the survival of their business. It was the mature maturity of AWS, Azure, Google and Oracle -- they got comfortable with the cloud. If I’m a bank, they’re not worried about the other banks, they’re worried about the FinTech startup that’s going to completely transform them. Death is a pretty good motivator for people to change. Obviously, a year ago with COVID, it just accelerated that, but they were already on the move.

I’m a long-term networking person, I was at a company that got bought by Cisco, and I did my time at Cisco as well. I [knew], just like what happened in 1992 with the movement from mainframe to client server, this is a transformation that’s happening. And somebody is going to own the networking layer for cloud networking. I didn’t know who, but I knew just like every transformation, it won’t be the incumbent. It won’t be Cisco, Juniper, or Arista -- that’s the way it is. It’s going to have to be somebody new, by definition.

Why do you think Aviatrix’s odds in beating the incumbents are so good?

I was on the board of Aviatrix. We were already in the market. We already had a few hundred customers and we already were doing a few million in [annual recurring revenue] ARR. We were a cloud-native solution. It wasn’t like we’re taking something from on-prem and trying to bolt it into the cloud. I said, “Why not us? Let’s go for it.” I told the board that I’d be the CEO on one condition: we’re not going to sell off for some crappy couple billion-dollar acquisition -- I’ve already done that. This is going to be tens of billions of dollars and we’re going to own the category. The market size of cloud is 10x and the velocity at which people are deploying cloud now and the velocity at which winners and losers are defined is [much faster]. In 1992, if you think about Cisco, it really took Cisco about 15 years to really become dominant because the velocity at which people could deploy -- because it was boxes, racks, humans and complexity -- it just naturally took 12-15 years to deploy a global network for these enterprises. Now with the cloud, it’s all software. Now, I can just leverage all this wonderful infrastructure that’s out there [from the cloud giants] with software, so the deployment phase goes very, very quick. Winners and losers are going to be defined very quickly.

Networking is always the last layer. People start at the application and kind of start working their way down. Then at the very end, they start thinking: “Oh, what about networking?” Same thing happened at Nicera. We virtualized compute 15 years before we virtualized networking. The same thing is happening with cloud. People are starting to know, the next layer of infrastructure underneath it from an automation perspective. They’re going to go down the stack and they’re going to look at networking. And they’re going to see Aviatrix. We’ve got over 500 customers now, and we just raised another $75 million in Series D with General Catalyst. We’re doubling every year [and we have] over 200 people in the company. We’ll be more than doubling in terms of headcount and in ARR every year, and we’ll IPO, probably somewhere between a year and two years from now.

What does Aviatrix’s cloud networking offerings bring to the table that enterprises aren’t getting today from other providers?

No one’s going to go back to the Cisco, horribly complex operational model of the 90s. In the old days, if you were a business unit or a developer and you went to your IT team, the answer before you could even ask what you wanted was “no.” Or maybe the next question from the IT staff would be: “What year would you like that?” That forced Shadow IT [and] people went to the cloud. That’s all now being brought back in [and] enterprises don’t want to go back to that model. Now, we have to have that DevOps mentality where we have to be able to say yes -- we have to adopt the cloud model of simplicity and automation. However, we’re an enterprise. We need visibility for troubleshooting. We’ve got to operationalize this. This is not fun and games, this is our company, and we’re running our mission critical apps now in the cloud. I need that visibility and then I need security controls. I can’t bring in the Cisco’s of the world because that’s not cloud-native. So, I go to AWS and the other cloud service providers and I get that simplicity. But I don’t get the visibility and control. The cloud providers will say: ”I’m a service; you don’t need to know. And don’t worry about it, you’re never going to have a problem.” But no, that doesn’t work for an enterprise. Now, you have a whole new set of people that say: ”I need to know.”

Aviatrix only has 500 customers and not everybody has heard of us, so they will go to the cloud providers and they will try to use their native tools. They will do scripts and they will try to do automation themselves. Every single enterprise we talk to now says this isn’t working -- it’s not tenable. It’s almost like you’ve got manual processes, so you’ve got complexity. That’s if you have one cloud but then it gets even worse when the business units say they have AI applications that are running in [Google Cloud] and a database that needs to run an Oracle, and Office 365, so they need to be in Azure. They’ve got to expand out to three or four more clouds, and there’s no way they can handle this. That’s when they really reach out. We dramatically simplify all that for them and abstract away a lot of the details of the native constructs for them, and then add in advanced services and effectively create a common architecture for them that they can run across any of the clouds. So, now to expand with different clouds, it’s super easy. We give them that cloud agility and cloud-nativeness. But yet, we also give them the visibility and control they need. We have a product called CoPilot, which is multi-cloud, that gives [enterprises] visibility and control that they cannot get that even on a single cloud. They see this and say: “Finally, somebody gives me that common network architecture with the visibility and the control that I need, but also in the cloud agility and DevOps model that I need.” Our competition really is just trying to cobble stuff together on their own.

What has demand been like for Aviatrix’s offerings over the past year as a result of the pandemic?

[We gained] probably about 200 enterprises. Since COVID happened, for every single [enterprise], it’s been an accelerant into cloud. I’m sure you’ve heard this from everyone, but it’s true. Now, [the pandemic] didn’t wake them up; they already woke up and knew they needed to go to cloud, about two years ago, but a year ago, COVID hits and it was an accelerant -- not a creator. In a way, it was good because they already were going that way, so it just became a little kicker. If you’re going to evacuate the data center in five years, maybe going to do it in three years. It just increased the time. Every single enterprise -- I’ve not talked to one of them that says it didn’t accelerate things.

How do you see cloud networking impacting the big public cloud providers?

I think they‘re all they’re all doing incredibly well. I would say that most of the cloud providers have a partner/competition view of us. If you’re AWS, you did not recognize the word “multi-cloud” until about two or three months ago. Since we abstract away a lot of complexity, [we] make it very easy for an enterprise because we do what the enterprise wants, which is allow [them] very easily, with no friction, to be able to use whatever cloud I want and have a common set of networking services that are consistent across all the clouds. If you’re AWS and you think you’re the king, do you really want that to happen? No. They want to lock all their customers into their cloud. They don’t want them to freely be able to go wherever they want to go. They want silos and borders. So, what ends up happening is, someone like Oracle is a great partner of ours because they know they’re number three or number four. They [tell] the enterprise: ”Move your database into [Oracle Cloud infrastructure] because it runs better there.” If Aviatrix isn’t there, the customer will now have a third cloud because they already have AWS and Azure, so they say: ”Sorry, we can’t take on the burden of another cloud.” If they have Aviatrix, in in the sense, it kind of commoditizes the clouds a little bit.

If you’re third or fourth in cloud, you love us. If you’re number one or number two, and you think you can be number one, you want to lock everyone into your cloud. But even AWS and Azure are coming around. We were just recently named as an ISV Strategic Partner for AWS, because they look at the revenue we’re doing, and they are realizing they can’t keep going [the way they have] because it’s going to start hurting them. They’re actually now starting to embrace us more because they realize it’s what the customer wants. And if you don’t give that to them, they’ll go somewhere else. I think that most of the service providers are now realizing this is a force that’s happening and it’s just time to get on board with it.

Tell us about Aviatrix’s channel strategy?

We’re still very much looking for real partners -- everybody says that, yes. But there will come a time when we will care about distribution and having thousands of partners, but we’re not at that time right now; this is this is still the early days. We’re very picky, actually, about who we work with. If somebody is tied to the old, on-prem world, and selling boxes, we say; “Good luck and hold your breath when the boat goes down, because you’re going to get pulled under really far, like the Titanic.” We’re looking for partners that really are born in the cloud and understand this whole shift, and don’t have that legacy business that they they’re trying to protect. We will work with others that kind of are both, but they’ll typically have a [cloud] section of their company. What I’m seeing now is even big firms like WWT, which are behemoths and made all their money on Cisco, are saying they see the shift too and don’t want to go down with the ship. [Partners] are now all rushing to that ship and we try to be very selective. We’ll obviously work with WWT and other [big partners] like that, and we will work with the other kind of right people. It might not be the entire sales organization, but the people that are kind of ”woke” in terms of cloud.

We have probably 8-10 solid [distributor] partners that work within the U.S. We tend to work very closely with these [partners] where we actually engaged with them and worked on joint deals and marketing events.

Will you be primarily targeting MSPs and partners that pride themselves on their managed services businesses?

Yes, I think that’s the thing that’s going to be the most important part of this -- the MSP part. Every one of our partners want to do MSP because that’s where they’re going to make money.

There are two issues that customers have: there‘s a skills shortage, meaning they don’t really know cloud that well. Maybe they know a little about AWS, but then you start having multiple clouds and they don’t know how to deal with this. Then on top of that, there’s a skills gap. They don’t have the right skills, the right people, or enough people. When we started moving into cloud, the executives at these companies thought they knew cloud; that it was a click and it was easy, so they didn’t need all those people. They could watch their bottom lines and have half the number of people they used to have on-prem[ise]. Now they realize … it’s actually more complicated than on-prem [and] they don’t really understand it as much or have enough people. I think they’re going to reach out [for help], but we don’t want that. That’s not our business. We want to sell software [and] we will do professional services to help our customers, but the ultimate goal is to empower our partners to take on that function. That’s a big thing we’re kicking off right now -- I think we’ll have thousands of MSPs around the world and I think that’s going to be a huge part of our business. And it will all be based on the Aviatrix software.

How much business would you like to see come from the channel?

All of it. My belief is: there’s no half measures with the channel. You don’t take the good deals direct, give [partners] the crappy deals. That doesn’t work. You have to give really good deals. And we have to bring deals to the channel. For example, Chewy is a large customer of ours and we just we just brought in a partner that doesn’t know anyone from Chewy. We brought them in, and they’re going to make about $80,000 on that deal. Why are we doing that? Because that’s what partners do. We could have been selfish and kept the $80,000, but if we bring them in, [the partner thinks] this went well and this company is pretty good, maybe we should bring [Aviatrix] into five more deals. Share to get more.

Every deal we looked at -- either it‘s a partner-initiated deal that they brought us into, or we need to fill in that line and bring them in. That’s the thing about us not having too many partners. We don’t have 1,000 partners; we probably have 20 partners in the U.S. and 20 in Europe. And that’s deliberate. Eventually, it will grow. But right now, I want to make all those partners very successful. And I want to bring them business. If I have 1,000 partners, [they] may get one deal a year that I bring them, if I’ve got 20 partners, maybe they get one a month. We have to treat them just like they’re one of our sales organization and educate them and bring them up to speed because it’s new, and the customers are learning, too. And it’s not just a fulfillment business, people just don’t come in and say: “I’ll take six Aviatrix software.” There’s still a lot of selling that has to be done. So by definition, we need a small number of really good partners that we treat like our own sales organization, we empower them, educate them, teach them how to do the services, and then eventually we’ll scale that, but that’s maybe not for another year or two.