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FalconStor Software CEO talks rebuilding, rebranding

FalconStor's CEO talks about saving the company by focusing on cloud, rebranding its FreeStor data protection and management platform, and keeping his finger off the panic button.

FalconStor Software CEO Todd Brooks is no stranger to saving enterprise software companies.

Before joining FalconStor in August 2017, Brooks worked with a private equity firm called ESW Capital LLC, based out of Austin, Texas. "Our specialty became rebuilding mature enterprise software companies," said Brooks, who served as COO of ESW companies Aurea Software and Trilogy.

His plan for saving FalconStor Software includes rebranding its flagship FreeStor software and adding technologies through small acquisitions. He also said he wants to avoid hitting the panic button, as he has seen struggling "mature" companies do.

In an effort to curb years of revenue losses, FalconStor Software went through major reorganization and restructuring. The vendor currently has just under 100 employees. When Brooks replaced previous CEO Todd Oseth, who lasted six weeks, he saw an opportunity to rebuild after the company had taken cost-cutting measures.

"When you work around mature enterprise software companies a lot, there's a pattern for those that you are able to really re-energize and make relevant again," Brooks said. "FalconStor met that pattern very well."

CEO hopes FreeStor changes can help turn tide

Todd Brooks, CEO, FalconStorTodd Brooks

The software vendor has been slightly profitable on a non-GAAP basis for the past five quarters, but still suffers from declining revenue. Its third-quarter earnings report issued in mid-November showed $4.1 million in revenue and $332,000 in losses, but a non-GAAP profit of $100,000 after accounting adjustments. The revenue was down from $6.1 million a year ago.

Brooks' goal is to bring FalconStor Software back to where it was in 2010, and his plan revolves around developing the data protection and management software currently known as FreeStor.

The FreeStor brand is going away, as Brooks said he is preparing to rename the software as the FalconStor Data Mastery Platform in January 2019. That name change will come with added features to the software, mostly focused around cloud capabilities. The FreeStor of today can back up and replicate to cloud, but FalconStor Software intends to add backup and replication for multi-cloud environments and between public clouds.

"The initial focus as we expand the Data Mastery Platform is all about cloud leverage," Brooks said.

We need to focus. We need to figure out what it is we're really good at, and we need to get everyone in the company aligned around that strategy.
Todd BrooksCEO, FalconStor Software

Brooks is also looking into acquiring other companies to build out Data Mastery Platform's capabilities.

"We'll begin to acquire complementary technology -- acquire companies that have vertically focused applications or software solutions that are storage-centric," Brooks said.

Because FalconStor Software is low on funds, with only $2.8 million in cash and little revenue coming in, Brooks said he plans to start with small, low-cost acquisitions and divestitures, and he may pursue a small amount of financing.

FalconStor Software has about 1,000 active customers. Brooks said he intends to keep the company's focus on large enterprises. Enterprises are generally slower to adopt the cloud, but Brooks said he expects them to go there eventually.

Brooks said his plan to grow FalconStor is tested by experience.

"What happens with mature software companies is they panic, they become undisciplined, and they begin to try all sorts of new things in an effort to regain their footing ... They completely forget about their install base," Brooks said. "We need to focus. We need to figure out what it is we're really good at, and we need to get everyone in the company aligned around that strategy. It is not rocket science, but it is very steeped in discipline."

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