New Talari CEO Q&A: Circuit Flexibility Key to SD-WAN Success

Talari Networks‘ new CEO believes the indirect sales channel is the key to growing in the midst of an ever-consolidating software-defined wide area networking (SD-WAN) market.

The San Jose, California-based company announced yesterday that Patrick Sweeney left his previous position at SonicWall to take the lead at Talari. The company has been developing SD-WAN offerings since its founding in 2007, and Sweeney tells Channel Partners that Talari is one of four vendors that are large enough to compete with an organic growth strategy in the SD-WAN market. Sweeney said in Tuesday’s announcement that he aims to pivot Talari’s sales team to a 100 percent channel focus in order to achieve the growth.

Talari’s Patrick Sweeney

Sweeney spoke to Channel Partners about his decision to join Talari, his predictions for the SD-WAN market and his experience with SonicWall.

We have edited the transcript for length and clarity.

Channel Partners: Why did you choose this company?

Patrick Sweeney: My background is such that I came out of the security space and was able to participate in a high growth segment — security — from about 2003 onward. What I like about the SD-WAN space is, it seems to me that it is the next similar big market where IT will get a net benefit by investing in SD-WAN, and you wind up being able to bring the promise of the internet to reality without having to compromise on communications quality. The market’s very real; it’s growing very quickly. It becomes a productivity investment rather than just being a cost investment. The other thing that’s happening in the market today is that the channel [is] stepping in and being a bigger part of the revenues and the services associated with SD-WAN. The channel today winds up playing a huge role in security in the exact same way I see that the channel — MSPs, MNSPs, traditional VARs, all those that provide the services and the knowledge — in order for the market to scale, you’ll see that those players are going to play a pretty pivotal role and a big part in this marketplace.

And my background coming out of SonicWall was to be very into the markets that are very complex but just ripe for the channel. And SonicWall was a 100 percent channel-based company; that’s how we grew, and that’s how we were successful. I think Talari is in the middle of pivoting to the channel and, for me, our go-to-market motion is going to be all about getting that to be 100 percent channel-driven all the time.

CP: What does that channel investment look like, from a Talari perspective?

PS: The biggest investment is really the sales people changing their go-to-market motion and their training to be channel-focused. We actually made a big, big infrastructural…

…change two weeks ago (which was actually one week after I was on board) where we got the entire sales organization together, and we gave them the directive that we would be 100 percent channel focused. Their compensation, their activities, should be primarily focused around assisting the channel … training the channel and helping them be successful. As you know, you have to do more than that, because it has to be a lifelong commitment, and it has to be a commitment from the company itself to make sure that you’re doing deal registration, that you’re making sure that you’re providing the right services and the right knowledge base for those channel partners, because you can never allow for a channel partner to look bad in the eyes of their customer due to the vendor. You’ve got to become a company that recognizes that responsiveness to the channel is paramount because they have to be responsive to their customer. When you’re talking to a channel partner that has a need, you have to be 100 percent as responsive to whatever the needs of the channel partner is as if they were the end user themselves, because they do represent the end user. The investment for us is in changing the go-to-market model, compensation, training, activities and overall commitment.

CP: What trends do you see in the SD-WAN market, and what are the primary challenges?

PS: The trend in the SD-WAN market is that from an infrastructural standpoint, lots of companies have MPLs today and are looking to add internet as their alternative and lower cost way of expanding their bandwidth connectivity, but they’re so far unwilling to give up their MPLS, usually because they have an absolute dependencey on high quality that they’re nervous about giving up, or because they have a private data center or a public data center or a legacy application running in a hybrid data center, and they want to make sure that they still have that great connectivity and reliability. The challenge in the SD-WAN market is making sure you support any and all types of connectivity without making that end user commit to a fixed telco or a fixed circuit provider. Because if you try to move them to SD-WAN and if you do move them to SD-WAN, the benefit is quality, fail-safe quality through vendors like Talari, where you’re going to get great connectivity. The packets are going to arrive on time. You’re going to have perfect voice-over-IP irrespective of whether it went outbound by MPLS, internet, satellite, whatever it might be. You want to make sure then that the customer doesn’t wind up being fixed on a particular type of circuit, because they should have circuit transportability. And one…

…of the challenges we see is that there are some vendors in the marketplace that will put you on a fixed network. That would be a challenge because it kind of goes against the grain of what we think the benefit of SD-WAN is, which is really freeing up anyone to use any type of circuit that they so desire and have circuit mobility, so then they can choose lowest cost, highest reliability.

CP: What are your thoughts on consolidation in the SD-WAN industry?

PS: I think that the market’s growing fast enough to be able to support several companies that can grow organically or a number of companies that can be acquired. There’s probably not more than four companies that could be solid enough today with a solid enough product that could just choose to remain organic. One of those companies is Talari. We’ve been around for 10 years. We have a very large installed base. We have over 9,000 deployments. So organically, we can become large enough to be independent for a long time, expand product lines and things like that. But there’s no question about it; some number of companies are going to be bought. Companies like Talari could eventually be purchased. Other companies will have to be purchased, and that’s where you really divide the line. Talari’s got nice, defensible patents; it’s got a good portfolio; it’s got a good customer base. So we can go either direction. For the smaller companies or the ones that don’t really have a defensible technical position, they’ll need to be acquired fairly rapidly over the course of the next two to five years. .

CP: What are your takeaways from SonicWall?

PS: My takeaways from SonicWall are, most importantly, that the channel is the key to leveraged growth. It’s the key to a small company being able to grow organically. You have to continuously invest in not just go-to-market but in your your own technology year-over-year-over-year. You’ve got to operate efficiently. Being a part of SonicWall, we were channel-centric. We invested in our technology and never took a break. Continuously invested ourselves, and we always looked for operational efficiencies. And I think a good company like Talari will keep itself focused on those three things.

The fascinating thing about working for SonicWall was, it was a grand example that a small company could be come large enough to stand on its own and at the same time could take advantage of acquisition opportunities. SonicWall when I was with it was a publicly traded company. We took the company private. We then got purchased by Dell. We got integrated into different parts of Dell, and then we spun the company out to a…

…private company again. My lesson learned is that if you really have the products that are high quality and you’ve built a multiyear relationship with your channel, you can grow. You can grow in a big, growing market and be very successful and very profitable. I think it’s very hard to see accelerated growth without leveraging the channel in high complex infrastructure products. You can do it, but it’s not done easily, and it’s harder to leverage.

CP: Is there anything else you want to add?

PS: I think one question that we get asked a bit about is, ‘Is the SD-WAN market one big market?’ And I think the answer is, not really. I think that if you look at how the SD-WAN market can be segemented, which I think would be very helpful for different customers, you can kind of look at it in the following way. Some number of SD-WAN products are bought directly by enterprise. Those tend to be big shops that have a lot of their own IT resources, their own INO, a WAN group and things of that nature. And there’s going to be a fairly significant play for the large companies, whether they buy through a VAR or buy directly.

But the other big piece of the market is going to be the products that are bought by the service providers and provided to the enterprises. It kind of splits almost evenly, in my opinion, as to the two market segments. Enterprise is buying directly or products being bought by service providers.

Service providers come in two flavors in the SD-WAN market. One segment are the telcos that own the circuits or vendors that have aligned with a telco and fixed customers to a single type of circuit. You’ve got companies that have alignments, and you go to the service provider and they’re going to provision you your bandwidth, the equipment — they’re going to do it all. The other part of the service market is the more traditional MSP market, where they’re agnostic as to what circuit they’re going to provision. They’re going to shop around. They’re going to choose what you connect to based on price and quality. And if their end user decides that a particular vendor for the circuit is not quality or too expensive, they have the ability to move that enterprise off. A lot of power will go to the MSPs or the managed network service providers who don’t have a fixed alignment with a telco. And that we think is going to be a strong part of the marketplace that helps companies drive costs down, because you keep the purchasing power in the hands of that enterprise even when it’s done through the MSP.