 Hello everybody, welcome to VeeamON 2022, the live version. Yes, we're finally back live. Last time we did VeeamON was 2019 live. Of course we did two subsequent years, virtual. My name is Dave Vellante. And we've got two days of wall-to-wall coverage of VeeamON as usual. Veeam has brought together a number of customers but it's really doing something different this year like many companies that you see. They have a big hybrid event. It's close to 40,000 people online and that's sort of driving the actual program where the content is actually different for the virtual viewers versus the onsite. On-site is the VIP event going on, they got the keynotes. Veeam is a company whose ascendancy occurred during the VMware rise. They brought in a new way of doing data protection. They didn't use agents, they protected at the hypervisor level. That changed the way that people did things. They're now doing it again in cloud, in SaaS, in containers, and ransomware. And so we're going to dig into that. My co-host is Dave Nicholson this week and we've got a special guest, Zias Caravallo who is the principal at ZK Research. He's an extraordinary analyst. Zias, great to see you. David, thanks for coming out. Absolutely. Good to see you. VeeamON. Great to be here. Yeah, we've done VeeamON. Back live. So, dramatically, the focus ransomware, it's now a whole new TAM, the adjacency to security, data protection, Zias, it's a whole new ballgame, isn't it? Well, it is. And in fact, during the keynote, they mentioned that they're now tied at number one for back of a recovery, which is, I think it's safe to say Veeam does that really well. I think from a- And that's tied with Dell, yes? Right. I don't think they mentioned that in the keynote. Yeah. But they've been rising, Dell EMC's been falling, and so I think it's- Somebody said 10 points that Dell lost in sharing the IDC data. It's not a big surprise. I mean, they haven't really invested a whole lot, I think. Anyway, sorry to interrupt. Anyways, but I think from a Veeam perspective, the question is, now that they've kind of hit that number one spot or close to it, what do they do next? This company they mentioned, I was talking to the CTO yesterday, he mentioned they're holding an exabyte of customer data. That is a lot of data, right? And so they do backup and recovery really well. They do it arguably better than anybody. And so how do they take that data and then move into other adjacent markets to go create not just a backup and recovery company, but a true data management platform company that has relevancy in cyber and analytics or artificial intelligence and data warehousing, right? All those other areas I think are really open territory for this company right now. You know, Dave, you were a CTO at EMC when you saw a lot of the acquisitions that the company made. They really never had a singular focus on data protection. They had a big data protection business, but that's the differentiator with Veeam. That's all it does. And you see that shine through. From a CTO's perspective, how do you see this market changing, evolving, and what's your sense as to how Veeam is doing here? I think a lot of it's being driven by unfortunately evil genius out in the market space. I know we're going to be hearing a lot about ransomware, a lot about some concepts that we didn't really talk about outside of maybe the defense industry, air gapping, logical air gapping. Zius, you mentioned this question of what do you do when you have so many petabytes of data under management? Exabytes now. Exabytes, I'm sorry. Yeah, see there, I'm already falling behind. One thing you could do is you could encrypt it all and then ask for Bitcoin in exchange for access to that data. Yes, that is, that's a lot of it. See, we're getting so much of the evil genius stuff headed our way. You start thinking in those ways. But yeah, to your point, dedicated backup products don't address the scale and scope and variety of threats, not just from operational mishaps, but now from so many bad actors coming in from the outside. It's a whole new world. Zius, as analysts, we get inundated with ransomware solutions. Everybody's talking about it across the spectrum. The thing that interested me about what's happening here at Veeamon is they're sort of trotting out this study that they do, Veeam does some serious research. You know, thousands of customers that got hit by ransomware that they dug into. And then a larger study of all companies, many of whom didn't realize or said they hadn't been hit by ransomware. But they're really trying to inject thought leadership into the equation. You saw some of that in the analyst session this morning. It's now public, so we can talk about it. What were your thoughts on that data? Yeah, that was really fascinating data, because it shows the ransomware industry, the response to it is largely reactive, right? We wait to get breached. We wait to get held at ransom, I suppose. And then a lot of companies pay it out. In fact, I thought there's one hospital in Florida. They're buying lots and lots of Bitcoin simply to pay out ransomware attacks. They didn't even really argue with them. They just pay it out. And I think Veeam's trying to change that mentality a little bit. If you have the right strategy in place to be more preventative, you can do that. You can protect your data and then restore it right when you want to. So you don't have to be in that big bucket of companies that frankly pay and actually don't get their data back. Like a third, I guess, roughly. It's shocking amount of companies that get hit by that. And for a lot of companies, that's the end of their business. You know, a lot of the recovery process is manual. It's, again, a technologist, you understand that that's not the ideal way to go. In fact, it's probably a way to fail. Well, recovery is always the problem. When I was in corporate IT, I used to joke that we were the best at backup, terrible at recovery. And that's not atypical. My friend Fred Moore, who was the vice president of strategy at a company called Storage Tech, Storage Technology Corporation. He had a great saying. He said backup is one thing, recovery is everything. He started, he said that 30 years ago. But orchestration and automating that orchestration is really vital. We saw in the study a lot of organizations are using scripts. And scripts are fragile. They break, right? No, absolutely, absolutely. Unfortunately, the idea of the red run book on the shelf is still with us. Scripting does not equal automation necessarily in every case. There's still gonna be a lot of manual steps in the process. But what I hope we get to talk about during the next couple of days is some of the factors that go into this, we've got day zero exploits that have already been uncovered that are stockpiled and tucked away and it's inevitable that they're gonna hit. So whether it's a manual recovery process or some level of automation, if you don't have something that is air-gapped and cut off from the rest of the world in a physical or logical way, you can't guarantee that it's meant to recover. The problem with manual process and scripting is even if you can set it up today, the environment changes so fast, right? And with shadow IT and business students buying their own services and users storing things and wherever, you can't keep up with scripts and manual. Automation must be the way. And I don't care what part of IT you work in, whether it's this area, networking, communications, whatever, automation must be the way. I think prior to the pandemic, I saw a lot of resistance from IT pros in the area of automation. Since the pandemic, I've seen a lot of warming up to it because I think IT pros now just realize they can't do their job without it. So you don't think that edge devices lend themselves to manual recovery processes? No, in fact, I think that's one of the things they didn't talk about. What's that? It is edge. Edge is gonna be huge. Every retailer I've talked to, oil and gas companies have been using it for a long time. Manufacturing organizations are looking at edge as a way to put more data in more places to improve experiences because you're moving the data closer, but we're creating a world where the fragmentation of data, you think it's bad now, just wait a couple of years until the edge is a little more, you know, to life here. And I think you ain't seen nothing yet. This is, this world of data everywhere is truly becoming that. And the thing with edge is there's no one definition of edge, you got IoT edge, cellular edge, campus edge, you look at hotels, they have their own edge. I talked to Major League Baseball, they have, every stadium's got its own edge server in it. So we're moving into a world where we're putting more data in more places, it's more fragmented than ever, and we need better ways of managing, securing that data, but then also being able to recover for when things happen. I was happy that Danny Allen, he used the term that we coined called super cloud, he used that in the analyst meeting today. And that's a metaphor for this new layer of cloud that's developing, to your point, whether it's on-prem and a hybrid, across clouds, not just running on the cloud, but actually abstracting away the complexity of the underlying primitives and APIs. And then eventually, to your point, going out to the edge, I don't know if anyone who has an aggressive edge strategy veamed to its credit, you know, has gone well beyond just virtualization, they've gone to bare metal, they're into cloud, they were the first, they were first at SAS, they acquired Kasten, who was a partner of theirs, and they tried to acquire them earlier, but there was some government things, and that whole thing, that got cleaned up, and now they own Kasten, and I think the edge is next. I mean, it's gotta be, there's gonna be so much data at the edge, I guess the question is, where is it today? How much of that is actually persisted? How much goes back to the cloud? I don't think people really have a good answer for that yet. No, in fact, a lot of edge services will be very ephemeral in nature, so it's not like with cloud, where we'll take data and we'll store it there forever. With the edge, we're gonna take data, we'll store it there for the point in time we need it, but I think one of the interesting things about Veeam is because they're decoupled from the airline hardware, they can run on virtual machines and containers, porting Veeam to whatever platform you have next actually isn't all that difficult, right? And so then if you need to be able to go back to a certain point in time, they can do that instantly, it's a fascinating way to do back up. Good point about it, I mean, you remember the signs up and down near the EMC facility, right outside of Saltbro, no hardware agenda, that was Jeremy Burton when he was running Veritas, of course they've got a little hardware agenda. But Veeam doesn't, they're friendly with all the hardware players of pure play software, couple other stats on them, so they're a billion dollar company, they've now started to talk about their ARR growth, they grew 27% last year in annual recurring revenue, 25% in the most recent quarter, and so in the vast majority of their business is subscription, I think they said 73% is now subscription based, so they really transitioned that business. The other thing about Veeam is they've come up with a licensing model that's very friendly, and they sort of removed that friction early on in the process. I remember talking to Ratmir about this, he said we are gonna incent our partners and make it transparent to them, whether it's that when we shift from the crack of perpetual license to a subscription model, we're gonna make that transparent to partners, we'll take care of that, and essentially they funded that transition, so that's worked very well, so they do stand out, I think, from some of the larger companies that have these big portfolios, although the big portfolio companies, they get board level contacts and they can elbow their ways in. Your thoughts on that sort of selling dynamic? So navigating that transition to a subscription model is always fraught with danger. Everybody wants you to be there, but they want you to be there now. They don't like the transition that happens over 18, 24 months to get there. As a private company, there's so much shielded from what they would have been if they were, yeah, for sure. Exactly, but that bodes well from a Veeam perspective. The other interesting thing is that they sit where customers sit today. In the real world, a hybrid world, not everything is in the cloud or a single cloud. Still a lot of on-prem things to take care of, and that's the idea. And there will be for a long time. Exactly, back to this idea, yeah, there's a very long tail on that. So it's well enough to have a niche product that addresses a certain segment of the market, but to be able to go in and say, all data everywhere, it doesn't matter where it lives, we have you covered. That's a powerful message. And we were talking earlier, I think they stand a really good shot at taking market share on an ongoing basis. Yeah, the interesting thing about this market, Dave, is they're, although they're tied number one it's 12%. This reminds me of the security industry five, six years ago, where it's so fragmented, there's so many vendors, no one really stood out. Then what happened in security? So a little company called Palo Alto Networks came around, they created a platform story, they moved into adjacent markets, like SD-WAN, they did a lot of smart acquisitions, and they took off. I think Veeam is at that similar point where they've now, that 12% number, they've got some capital now, they could go do some acquisitions that they want to do. There's lots of adjacent markets as they talk about. This company could be the Palo Alto of the data management market, based on good execution, but there's certainly the opportunities there with all the data that they're holding. It's a really interesting point, I want to stay there in a second. So there's, obviously there's backup, there's recovery, there's data protection, there's ransomware protection, there's SaaS data protection, and now all of a sudden, you're seeing even companies like Rubrik is kind of repositioning as a security play, which I'm not sure that's the right move for a company that's really been focused on backup to really dive into that fragmented market, but it's clearly an adjacency. And we heard Anand, the new CEO today in the analyst segment, we asked him, what's your kind of legacy you're gonna look like? And he said, I want to defragment this market. He's looking at, he wants 25 to 45% of the market, which I think is really ambitious. I love that goal. Now, to your point, he's sure, but that doubles from today or more, and he gets there to your point, possibly through acquisitions, they've made some really interesting tuck-ins with Castin, they certainly bought an AWS Cloud Play years ago, but my, so Veeam was purchased by Private Equity Inside Capital in January of 2020, just before COVID for $5 billion. And at the time, then COVID hit right after, you were like, uh-oh, and then of course the market took off, so great acquisition by insight, but I think an IPO is in their future, and that's ZS when they can start picking up some of these adjacent markets through M&A. And I think one of the challenges of them is now that the Holden's exibited data, they need to be able to tell customers things that the customer doesn't know, right? And that's where a lot of the work they're doing in artificial intelligence machine learning comes into play, right? And nobody does that better than AWS, right? AWS is always looking at your data and telling you things you don't know, which makes you buy more. And so I think from a Veeam perspective, they need to now take all this huge asset they have and find a way to monetize it, and that's by revealing these key insights to customers that the customers don't even know they have. And they've got that monitoring layer. He called it, Dandy didn't like to use the term, but he called it an AI, it's really machine learning that monitors and then I think makes recommendations. I want to dig into that a little bit with it. Well, you can see the platform story starting to build here, right? It's a really good point because they really have been historically a point product company. This notion of super cloud is really a platform play. Right, and if you look in the software industry, look across any segment of the software industry, those companies that were niche, that became big became platforms. Salesforce, SAP, Oracle, right? And they find a way to allow others to build on their platform. Companies they think are like a Citrix, they never did that. And they kind of tapered out at a certain level of growth and had to, you know, change, they're still changing their business model of fact. But I think that's, the beams at that inflection point, right? They either build the platform story, enable others to do more on their platform or they stagnate. HP software is another good example. They never were able to get that platform. And we're not able to. Just a bunch of bespoke and on used to work there. Well, why is it so important, Dave, to have a platform over a product? Well, Cynical Dave says, you have a platform because it attracts investment and it makes you look cooler than maybe you really are. But really for longevity, you have to be a platform. So what's the difference? How do you know when you have platform versus APIs? Is it breadth, is it ecosystem? Some of it is semantics. Look, when I'm worried about my critical assets, my data, I think of a platform, a portfolio of point solutions for backing up edge data, stuff that's in the cloud, stuff that exists in SaaS. I see that holistically and I think, guys, you're doing enough. This is good. Don't dilute your efforts. Just keep focusing on making sure that you can back up my data wherever it lives and we'll both win together. So whenever I hear platform, I get a little bit, a little bit sketchy. Well, platform beats products, doesn't it? To me, it's the last word you said ecosystem. You think of the big platform players. Everybody in the customer experience space builds for Salesforce first. If you're a small security vendor, you build for Palo Alto first. If you're in the database, you build for Oracle first. And when you're that de facto platform, you create an ecosystem around you that you no longer have to fund and build yourself. It just becomes self-fulfilling and that drives a level of stickiness that can't be replicated through product. Well, look at the ecosystem that these guys are forming. I mean, it's clear. So are they becoming, in your view, a platform? I think they are becoming a platform and I think that's one of the reasons they brought on and in. I think he's got some good experience doing that. You can argue that ring kind of became that, right? Ring central, yeah. Yeah, and so I think some of his experiences and then moving into adjacencies, I think, is really the reason they brought him in to lead this company to the next level. Excellent, guys, thanks so much for setting up Veeamon 2022. Two days of coverage on theCUBE. We're here at the Aria. It's a great venue. I love the Aria. Yeah, it's nice. It's a nice, intimate spot. A lot of customers here. Of course, there's gonna be a big Veeam party. They're famous for their parties, but we'll be here to cover it. And keep it right there. We'll be back with the next segment. You're watching theCUBE Veeamon 2022 from Las Vegas.