Vast Data CEO Renen Hallak Talks Future, Finance And A $100M Funding Round
Vast Data's Series C funding comes as the company still has plenty of cash after the last funding round, giving the storage industry's newest unicorn a $1.2-billion valuation and plenty of runway to build its technology and channels.
Storage Industry's Newest Unicorn
Vast Data early last year introduced its Universal Storage system, which the New York-based storage technology developer said combines high performance and low-cost technologies to develop exabyte-scale storage with the cost of traditional storage systems. Vast Data does this with a combination of three technologies: high-performance NVMe-over-Fabric that allows CPUs to directly access the internal SSDs, low-cost consumer-grade QLC (quad-level cell) flash technology, and 3D Xpoint non-volatile memory technology. It is targeted at high-performance workloads in such areas as artificial intelligence, machine learning, data analytics, and deep learning.
Vast Data on Thursday unveiled its Series C round of funding worth $100 million. CEO Renen Hallak told CRN that the company still has the $40 million the company raised in its last funding round, giving it over $140 million in the bank and a large cushion with which the company can invest in expanding its technology and exponentially grow its revenue with the help of its channel-focused business model.
Hallak said Vast Data, which achieved unicorn status with its new $1.2-billion valuation, has one of the fastest revenue growth records in the storage industry. For more about the company, its growth, and its upcoming Universal Storage 3.0, turn the page.
Introduce us to Vast Data.
Vast is building next-generation infrastructure for next generation applications, mainly analytics-based applications and A.I. and machine learning and deep learning. This new set of applications requires new infrastructure in order to succeed. And we're starting from the storage piece by allowing very fast access to very large data sets to these applications. They don't need to compromise the way that you did before on tiered architectures or on hard drive-based solutions. And we will expand from that to go up and give those applications richer APIs and provide more internal analytics of metadata data and data understanding as we progress through the years. So we've started working on that second product line beyond storage. And we expect to be all over this new wave of infrastructure that the new applications require.
Are you talking hyper-converged infrastructure?
We believe that hyper-converged was a great technology for the last decade. We think the next-generation of infrastructure will be slightly different than hyper-converged in the sense that it will be disaggregated, and that not everything will be in the same box, but you will rather compose the amount of compute that you want versus the amount of storage that you want, etc. And so our architecture is a geared towards that. And, as I said, it allows very fast access to very large data sets, which means that you now don't need to compromise, you don't need to choose which pieces you want access to and which pieces you're willing to sacrifice access to. And that opens the door to a lot of these new applications to do new things. And it opens the door to our customers. It changes the way they do business based on this lack of a storage bottleneck.
Are you talking about Vast Data someday producing compute nodes that work together with your storage nodes as part of a disaggregated composed infrastructure, or about working with other vendors to develop these infrastructures?
We are not a hardware company. We try to leverage the latest and greatest hardware pieces in order to build the best infrastructure software possible. In the same way that we did three and four years ago when we had those forward looking bets on Xpoint and QLC and NVMe over fabric, we are now looking at what new hardware pieces will need a software system around them, and we are building towards that.
So Vast Data is a software-focused developer, no hardware of your own?
That's correct. Of the hundred or so developers and engineers that we have right now, one or two are hardware people and the other 98 or 99 are software people.
So the hardware people aren't supporting Vast Data's hardware, they're actually just working with other people's hardware?
What's new at Vast Data?
We closed our first year of sales, 2019, with unprecedented results, especially when compared to other companies in our space that came before us and that we admire. The revenue numbers that we were able to achieve in this first year far surpass those of comparable companies. And following on to that, we thought it was a good milestone to raise money. We got some inbound interest from a few funds. And we just closed our Series C funding, which is $100 million, based on a $1.2-billion valuation.
Any strategic investors in the round?
The lead investor is Next47, which is a fund of Siemens. So there's a strategic tie. All of our existing investors also participated in this round. And we're also adding Mellanox, soon to be Nvidia, as another strategic investor that joined this round.
You said that your revenue was up very high compared to last year. Vast Data has been in the market for how long?
We GA'd (general availability) the product that the very end of 2018. When I said the revenue was high, I wasn't comparing 2019 to 2018. I was saying revenue was high when compared to other similar companies. In fact, if you take companies like Nutanix and Pure Storage and Isilon and Data Domain, companies that have done very, very well in their first year versus our first year, we did somewhere in the ballpark of all four of those combined.
Who would you consider Vast Data's primary competitors to be?
We compete against storage systems. As part of our Universal Storage strategy, we're competing against more and more of those legacy storage systems. The main ones that we're competing against these early days are scale-out file systems, object stores, and a little bit of parallel file systems as well.
Any specific companies?
The ones you would imagine. The big storage vendors. Not so much against startups.
So, $100 million in new funding. What's your plan for the money?
So on top of the $100 million dollars, we actually have a Series B funding, which was $40 million, still in the bank. So we have a very significant war chest to take us forward. We plan to do three things with it: A, capture as much of this opportunity that we're seeing in the market as we can as fast as we can, and continue growing our revenue exponentially as we move forward.
B, invest a lot in engineering and innovation to keep the quality of the products that we release very, very high as they are now, as well as to continue releasing new features and functionality in a very fast pace. Just to give an example, we released four major releases since we announced the product a year ago and we are just about to release Vast 3.0, or Universal Storage 3.0, which includes Windows [SMB protocol] support and native replication to the cloud, to [AWS] S3, and encryption support, and a lot of big features that R&D has been working . So we intend to maintain that pace and increase it.
The last thing is give our customers the ability to make big investments in us, and to have them rest assured that we're here to stay, that we have a runway that will take us well into the future. And that we'll be here to support them for the long term.
How about cloud support?
Our replication to cloud or to S3 will support all of the major cloud providers. And also, if a customer prefers to replicate off to another object store that's on-prem, that's also supported. As well as of course another VAST system because we do support the S3 protocol natively.
What is the total investment to date in Vast Data including these last two rounds?
Is the money in the bank enough to get you through to cash-flow positive or profitability, or do you expect to look for another round of funding?
We expect this money to get us to profitability, Definitely. We expect that we won't need a big chunk of it to get to profitability also.
Maybe this is a good time to talk about our go-to-market efficiency. Even though the revenue numbers are so high, the spend is relatively low. If you do the math, it took us less than $40 million to get to this point, which is a lot less than what you would see in comparable companies. And the reason for that is that high ASP (average selling price). We can be so efficient because we don't need 1,000 deals to get to a certain number. We need a lot less because each deal is very significant.
Is Vast Data cash-flow positive yet?
Does Vast Data have a large indirect channel sales model?
We're 100 percent channel. Every sale that we've had or we're doing is through the channel. In some cases, [partners] bring the leads to us. In other cases, we bring the lead to them. But we're working very, very closely with our channel partners.
What do you look for in a channel partner who may be considering signing on with Vast Data?
What I look for in a channel partner is that they're willing to go on the journey with us and take this long view with us. And that they're willing to really partner and not just look for opportunities that we feed them. I look for a channel partner that understands the technology and understands the differentiation in the technology, and is curious about what customers are doing with it and can spread that word for their customer base, which of course has their trust and loyalty, in a very effective way. As I said, we truly look at these organizations as our partners, and we work together with them on a daily basis. We couldn't have reached the revenue numbers that we did in 2019 if we didn't have that force multiplier that comes from our channel partners.
How is Vast Data doing during the COVID-19 coronavirus pandemic?
Most of our employees are working from home, myself included. Everyone in New York and in Israel is working from home. Everyone except for the ones actually building the systems. And they are all very well taken care of. Other than that, we're trying to move as fast as we can despite the pandemic. And our customers aren't stopping, and we're not stopping and so we're making good use of this time.
Are you seeing storage sales, storage manufacturing, being as impacted by the COVID-19 coronavirus pandemic as other parts of the IT industry?
Not so much. We're not seeing a big impact. In some cases, it takes a little longer to close deals as people get adjusted to this new work from home situation. But we've actually, in a lot of cases, been seeing the opposite, that customers, especially in specific verticals--we have a lot of life science customers, we have a lot in the financial sector--we see that they buy more than they were expecting to because they need more capacity and because they'd like to be ready for the future.