Why Cisco, VMware, Arista Are Not In The Multi-cloud Networking ‘Conversation’: Aviatrix CEO Steve Mullaney
Aviatrix CEO Steve Mullaney says the cloud-based multi-cloud networking provider, which has tripled its valuation to $2 billion in the last seven months, does not see Cisco, VMware or Arista in its multi-cloud “customer interactions.”
Looking For Partners To Go ‘All In’ On Multi-cloud Networking
Aviatrix CEO Steve Mullaney says that he is looking for partners that are ready to throw off their on-premise shackles and go all in with the multi-cloud networking high-flyer.
“I want them to be all in,” said Mullaney of his company’s partner acquisition strategy. “Don’t just put me on your line card so you can look hip and cool.”
Mullaney has given strict marching orders to Aviatrix Americas Channel Chief Chad Blackwell to focus squarely on partners that are not beholden to old world on-premise networking models.
“The charge to him is to go find those 10 percent of partners that get it,” said Mullaney. “I gave him an oar and said you are going to have beat nine out of ten people trying to come on our boat because they are not going to make it. But you have got to go find that one. They are out there.”
The drive to bring on next generation multicloud focused networking partners comes with Aviatrix closing a new $200 million round of financing just two months ago. That investment tripled Aviatrix’s valuation in just the last seven months to $2 billion.
Mullaney, the former CEO of software-defined networking superstar Nicira, which was acquired by VMware for $1.26 billion in 2012, says he decided to come out of retirement to lead Aviatrix because he saw just how fast the cloud based networking model was taking hold.”I saw that this was going to be a transformation 10 times bigger than the shift from mainframe to client server,” he said.
“Ten times bigger, 100 times faster,” exclaimed Mullaney. “Winners and losers are going to be defined in a matter of a couple of years. It took Cisco 15 years to become dominant. This is going to take us two years to become dominant. We already have a $2 billion market cap valuation. We are just getting started.”
What do you see ahead for the channel with the new wave of cloud based software providers like Aviatrix driving a new cloud stack?
Unfortunately 90 percent of the partners that are in legacy on premise hardware are not going to survive. The partners may not want to hear that, but that is the truth. They are not going to survive.
When the boat goes down what happens is it sucks everything down with it. The problem is that is what is happening in this massive transformation to cloud that we have been talking about for 12 years. It is actually now happening.
The problem is the Titanic is going down. That is on-premise (solutions). If you are close to it you better kick as hard as you can and get away from that. If you are on the (on premise) boat and you don’t kick and swim you are going to get pulled down.
Aviatrix is on the life raft. We are not on the boat. One thousand people have now made it off the boat and they are swimming toward our life raft and we have 10 seats.
I am going to have to beat a lot of them off my boat with an oar because I can’t save them all. I am looking for a few. I am looking for the 10 percent of partners that understand what’s going on, that understand cloud and aren’t hanging on to the old world of on prem, saying ‘Ninety percent of my business is Cisco so I am going to try to manage this transition.’ They are going down with the Titanic and I will beat them off my raft.
What we are looking for are the people that say – ‘I am all in on cloud. I see this transformation and not I am going to try to get 10 percent of my business (with cloud) and manage the transition where 90 percent of my business will go down and then over the next five years the 10 percent will go up.’ That ‘s not going to happen. They are going to go down with the Titanic. The ones that are going to succeed are going to be born in the cloud.
You have a track record making transitions like this with Nicira and then VMware. Are you surprised more partners aren’t moving faster to cloud-based networking?
When you do something you keep doing it. Humans don’t like to change.
If you go to a conference and on the first day you take a seat that is your seat for the rest of the conference. Everybody knows it. That is what we like to do as humans. Humans find things they like to do and they just keep doing it. It is only 10 percent of the humans that actually change.
They intellectually understand that they are going to have to do it but they don’t want to do it.
What is the litmus test for partners that you want to bring on board?
I want them to be all in. Don’t just put me on your line card so you can look hip and cool. But then they know where their bread is buttered and it is all with Palo Alto Networks or Cisco or Arista.
What is the opportunity for partners that go all in with Aviatrix?
The opportunity is there is a huge skills gap and skill shortage for cloud. On prem people don’t know how to spell cloud. They spell it C-L-O-W-D.
If you are cloud native and born in the cloud and know what is going on, there is a huge opportunity for you to help these enterprises as they move into the cloud. But that doesn’t mean you take and resell a product. What it means is it is going to be systems integration. It is going to be consulting services. It is going to be architectural services. It is not margin (on a product).
All these partners are thinking what’s my margin? You know who really gets it? People like Accenture.
If you come to us and say what is my margin? You are out. If you come to us and say – ‘You should be charging three times as much. ‘They get it. That’s how we know who to work with.
Who is a partner that gets it?
SVA in Germany ( the largest privately owned systems integrator in Germany).
To me a real partner is someone I could right now take out my phone and text the CEO of the company and they’ll text me back. If I call them they answer. That is what I am looking for.
My advice to partners is quit your jobs and form another company that is going to be cloud native.
You had retired, why did you come back to run Aviatrix?
I did retire. I had a good career. I was 50. I was never going to work again and I was on all these boards. And what happened was two and a half years ago the enterprises said ‘Now we really mean it. We are going to go to cloud. I am talking about the global 2000.’ And I went holy cow! This transformation that we have been talking about for the last 15 years is actually starting to happen. It was all talk before that for 10 years. I saw that they meant it because they started talking about security and compliance and auditing and all these thing that big enterprises care about. I said, “This is happening!’
I saw that this was going to be a transformation 10 times bigger than the shift from mainframe to client server. All the partners in the market my whole career were PC and client server focused. This is going to be ten times bigger and it is going to happen 100 times faster because it is all software defined. Click. Click.Click.Click. Boom. Deployed.
Ten times bigger. One hundred times faster. Winners and losers are going to be defined in a matter of a couple of years. It took Cisco 15 years to become dominant. This is going to take us two years to become dominant.We already have a $2 billion market cap valuation. We are just getting started.
The growth rates are astronomical. We are going to be over $100 million (in revenue) next year and then $250 million after that. As a partner you have got to grab on to that! This is the biggest opportunity that anyone in the partner community has had in their entire life time. It is 10 times bigger than the last opportunity with Cisco.
If you could have gotten in with Cisco when it was only 300 people, that was a pretty good move. It is the same thing now (with Aviatrix). We are going to be the networking and networking security company for the next 30-40 years. If you get in early you are going to make a lot of money.
What is the difference between the Aviatrix cloud based multicloud offering versus VMware or Cisco?
Everyone on prem thinks of multicloud as they need to get to AWS, Azure or Google. Have you ever been to an all inclusive resort? The service brokers and cloud providers are like all inclusive resorts. They will tell you they do everything and they’ll give you anything you’ll ever need for networking and security. The on prem vendors like VMware, Cisco and everybody else believe that too. So what they say is all you have to do is get there, buy a plane ticket and get to the all inclusive resort and everything will be fine.
At the resort they have sailboats, all you can eat, all you can drink, everything. Then you get there and what you realize it is very basic level services, meaning the food is a Vegas $3.99 buffett. There’s no alcohol in the drinks at the pool. They have one sailboat with a 4:30 am Monday morning slot. Then you go to dinner and say you would like some wine.... It is red wine and it comes in a box. Only after you’ve gone to the all inclusive resort do you understand the horror of it.
So VMware, Arista, Cisco and all of them think the world is going multicloud but what it means to them is they have to go from on prem and connect to AWS and Azure. They have no idea when they get there it is an all inclusive resort.
All of our value is not in the plane ticket to the all inclusive resort. It is when you get there and you would like a nice bottle of wine or to go to a tennis camp on another island we make that happen for you.
Have you had to go in and clean up a mess that was created from a Cisco or VMware multicloud engagement?
No. Did Cisco have to come in and clean up the PC client server mess that Digital Equipment Corp made? Did we ever have to clean up that mess? No. How about the IBM mess? No. That was mainframes. We just quarantined it and put it over there. We didn’t get rid of it. And that is what is going to happen to on prem.
People are still going to have data centers. We are going to quarantine it. We are going to keep it over there. We are not going to add to it. We are going to treat it like an expense. We are going to try to lower it if we can or maybe we keep it where it is. But we are going to keep it over there.
I swear to God in all of our customer interactions the words Cisco, VMware or Arista never come up. They are not in the conversation.
Why aren’t they in the conversation?
Cloud is so different as an operational model. It is all about agility. It is all about simplicity, automation, agility. The operational model in the on premise data center is all about creating complexity and saying ‘I am the only one who is smart enough to fix it.’ When you move into the cloud it is the opposite. It is all about doing things today- right now! So the operational model just doesn’t fit with on premise.
Who do you compete against for these cloud networking and multicloud deals?
Nobody. We compete against enterprises that think they can do it on their own by just working with AWS.
What’s the ROI for an Aviatrix solution in which the customer moved from on premise to cloud?
It is all about agility. It is not so much a cost thing. You can’t do what we do on premise.
If you have a problem in your network and it takes your network down for two weeks. With us it takes five minutes to fix. What is that worth to you? It is almost infinite. It’s not like it used to cost me a dollar and now it’s 50 cents. It is not an Apples to Apples cost reduction. It is almost infinite. What is that worth to you? It’s probably millions of dollars and billions of dollars in market cap.
How big an issue are public cloud outages when you look at Aviatrix versus the old networking model?
If you look at how often public clouds go down versus private clouds it is not that often. It is kind of like plane crashes. When it happens you really know about it.
Public clouds don’t go down that often. It’s like a plane crash or a shark attack. It is not that often.
You have hired Chad Blackwell (former channel chief of Cohesity) as a channel chief. What is his mission?
The charge to him is to go find those 10 percent of partners that get it. I gave him an oar and said you are going to have beat nine out of ten people trying to come on our boat because they are not going to make it. But you have got to go find that one. They are out there. Only 10 percent are going to make it.
How fast do you see the remaining 90 percent going out of business?
It always takes a lot longer than you think. It will be years. They will nurture their business as long as they can.
What is the model for the Aviatrix partner of choice?
They are going to be systems integrators. It is all about intelligence and the architecture services. It is not so much I have a product to sell because what happens is you can go on to the marketplace at AWS and download it? So why do I need a partner? It is more consultancy services that customers can not download from the marketplace.
What is the difference you see between the old channel model and the new cloud stack era channel model going forward?
The old model is about reselling product and getting margin for that. That is what the old world was. That was great for 30 years but not in the cloud. Customers can download (the software) on the AWS Marketplace. So you don’t control access to the product as a reseller. I don’t need you for that. So why am I going to pay you 20 percent to download it off the AWS Marketplace.
What customers don’t have is the intellectual capital and the intelligence. Customers are going to pay partners for their intelligence and for the consulting services that they don’t have access to. The customers do not understand cloud. They do not know how to migrate. If you don’t understand that as a partner then the customer has no use for you. They don’t need you for the product.
So partners better learn cloud. That is why I say the partners that focus on cloud are the ones that are going to survive. They are the only ones that have any value to the enterprise. They don’t need partners to resell them a product. They need them to architect the cloud.
Why did you sell Nicira at the time when you were just getting started?
We had to because it was a transition. It wasn’t a transformation. We were not going to be able to be a standalone company. We had to get bought by either VMware or Cisco. We had to. Aviatrix does not have to. Aviatrix is a transformation.
Cisco was never going to be beat. Ever. IBM was never going to be beat. Ever. Digital Equipment Corp. was never going to be beat. Ever. You remember how strong those companies were? What happened? What happened is the market made them irrelevant. The market decided on IP networking. Now you are DEC? What do you do. You are IBM what do you do? You are never going to out-mainframe IBM. But PC client server came on. Remember PCs were looked at as toys. Servers were a PC with two power supplies. Then it became enterprise networking.
The same thing is happening now with cloud. It has made what people are doing on prem basically irrelevant. Not that on prem is going to go away- like mainframe didn’t go away. But it just doesn’t really matter that much anymore. So keep that over there. Quarantine it. We won’t get rid of it but we won’t do a lot more of it.
So on premise guys are going to be saying – what about me? And everybody is going to be saying – ‘Are you still there?’
How fast is this happening?
Really fast. It’s slower and then faster. Humans think linearly. It never works that way. It takes longer and then when it happens it goes faster. So we’re now at that point where it is starting to happen faster.
You always overestimate in short-term and underestimate in the long -term.