Veeam CEO: We Can Be $1B Software Company

Veeam CEO Ratmir Timashev says the virtualization backup company for VMware (VMW) and Microsoft (MSFT) Hyper-V environments can be the software industry’s next $1 billion company. But how did Veeam start on this journey? And what role will channel partners play in the march toward $1 billion in annual revenues? In a phone interview this morning, Veeam’s CEO offered answers to The VAR Guy.

Here’s a recap of the conversation — many portions of which are paraphrased.

The VAR Guy: What was the creative spark for Veeam’s launch around 2006?

Timashev sold his previous IT management software company to Quest Software (now owned by Dell). Searching for a new opportunity, a friend (Michael Triplett) at Insight Venture Partners suggested launching a business in the systems management area. Timashev and Veeam quickly targeted the fast-growth virtualization market — which needed management and IT storage tools.

Backed by an initial 10 employees, Veeam’s flagship backup and replication product launched in 2008. Despite the global financial crisis at the time, Veeam continued hiring on the sales front to drive growth.

The VAR Guy: When did channel partners enter the picture?

Timashev’s previous company had a direct sales focus.  But when Veeam started, a key hire suggested building the channel early on since virtualization was popular in the channel. “It’s difficult but we realized we had to carve out margin for the channel. It took us maybe two or three years of hard investment in the channel and we’re still making investments.”

Today, the company has roughly 19,000 channel partners. Roughly 3,000 of those partners are service providers that rent or use Veeam’s software to protect customer data.

The VAR Guy: When did you first hit $100 million in revenue?

Timashev says Veeam had $175 million in bookings for 2012, and will have $260 million to $270 million in bookings for 2013. He suggests subtracting 20 percent from those figures to estimate annual gaap (generally accepted accounting principles) revenues.

The VAR Guy: How do you think Veeam can grow to $1 billion in annual revenues?

Timashev: “Because virtualization is the foundation for the data center and cloud computing — private and public clouds. The market for backup is about $5 billion and it will be close to $7 billion in a few years. Imagine in 5 years, 90 percent of the systems will be virtualized. He believes Veeam can grab 15 percent to 20 percent of that overall backup market — generating $1 billion in annual revenues for the company.

Also, he added: “35 percent of virtual machines are not being backed up. We need to maintain and gain market share in VMware backup, and build market share in Hyper-V — where people are using old Windows backup tools.”

The VAR Guy: But will cloud computing create less opportunity for Veeam and backup as data centers consolidate?

Timashev: “Right now we don’t see any negative affects. We’re not concerned. One of our strategies is the cloud — adding off-site cloud backup for on-site customers. We’ve also added wide area optimization so customers can more easily take their backups offsite to the cloud. We’re also integrating with VMware vCloud Director.”

On the cloud services provider front, Veeam recently expanded its partner program.

The VAR Guy: So how many employees do you have today, and how do you ensure quality hires?

Timashev: “We have 1,100 worldwide. Our worldwide headquarters is in Switzerland and we also have our U.S. headquarters in Ohio, but we’re international. We are mostly hiring in sales and marketing. We’re not slowing down. We’re hiring about 30 to 40 people each month. We have a disciplined recruiting process — the most important thing in hiring is the process. We prefer to hire less experienced, hungry, smart people for inside sales. For outside sales, we go for more experienced enterprise and channel people.”

The VAR Guy: What are some of your big priorities for the next year or so?

Timashev: “Moving more into the mid-market and enterprise, and offering more and more cloud backup capabilities for moving your data offsite. Plus, we’ll get more involved in business continuity — letting businesses recover their systems in the cloud using virtual machines.  Another area of growth will be Hyper-V. Today, over 90 percent of our business is VMware. But we have a great relationship with Microsoft and that side of the business is growing fast for us. And the VMware side continues to grow.”

The VAR Guy: Will the channel participate in your mid-market and enterprise push?

Timashev: “We’re 100 percent channel and we’re committed to it. We have direct sales people, but they still work with channel partners.”

The VAR Guy: Does the company need funding to grow? And will you consider an IPO or company sale?

Timashev: “We’re very profitable so we don’t need funding. Insight Venture Partners is a strategic partner that owns some of our shares. We don’t need money but we did need a partner to help us identify market adjacencies to move into. We are not looking to IPO or sell the company in the next three years. We have a proven tracked record of providing innovative products. As long as we create great products for hot markets, we’ll continue to grow.”

Also Worth A Look

Want a complete recap on Veeam’s history and growth? Check out this detailed company timeline.