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Veeam CEO Peter McKay details company's plans, challenges

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Peter McKay, co-CEO of Veeam Software, reflects on his year and a half with the company, the evolution of the data protection market and the vendor's future.

The year 2017 was a busy one for Veeam CEO Peter McKay, and 2018 started off in a similar fashion.

Veeam reported $827 million in annual bookings revenue for 2017, which marks 36% year-over-year growth. The backup and recovery software company also claims more than 282,000 customers. Showcasing its increasing focus on enterprises, the company hit 62% year-over-year growth in enterprise deals and 500% annual growth for deals exceeding $1 million.

Veeam's push for more enterprise business was also clear in its product updates. The latest version of its flagship data protection product, Veeam Availability Suite, improved management of virtual, physical and cloud data. In addition, through an OEM deal with Cristie Software, the Veeam Availability Platform added physical protection.

Veeam CEO Peter McKayPeter McKay

At its annual VeeamON user conference in May 2017, the company announced major management changes. McKay, previously the COO and president, became Veeam CEO, sharing duties with company co-founder Andrei Baronov. McKay retained the title of president, while previous CEO William Largent moved into a new role as chairman of the company’s Finance & Compensation Committees.

In January of this year, Veeam revealed it made its first acquisition in 10 years, buying N2W Software (N2WS), a company that protects Amazon Web Services (AWS) data, for $42.5 million. Also in January, Veeam launched its Recovery to Microsoft Azure, which provides recovery of on-premises workloads in the public cloud.

By the end of the year, McKay wants Veeam to be a billion-dollar company. By 2022, the Veeam CEO is hoping for a $2.2 billion company. But how does it get there?

In this podcast, McKay talks about Veeam's plans for the year ahead, which may include other acquisitions. He also looks back on his first year and a half with the company, which follows a number of other executive roles, including senior vice president and general manager for the Americas at VMware. And he details the challenges that Veeam faced and will face as it evolves in the data protection market.

Update: McKay's tenure as Veeam CEO ended in October 2018.

Editor's note: The following transcript has been edited for clarity and condensed.

Transcript - Veeam CEO Peter McKay details company's plans, challenges

How would you sum up 2017 for Veeam and the data protection market in general?

Peter McKay: It's been an exciting year overall. Our market has expanded much more aggressively in 2017 and going into 2018, on the backs of the importance of staying up, running, available 24 by 7 by 365. That's now become mission-critical for companies, so we were well-positioned to take advantage of it. We've got 53,000 channel partners around the globe that are in front of customers every day, talking about the importance of mission-critical applications.

For us, it was a great year. We hit [$827 million in annual bookings revenue], so that was 36% growth, year over year. In our fourth quarter, we did $299 million in revenue, which was 48% growth, year over year.

Underneath all the numbers, I think I'm probably even prouder of our transition from a smaller company kind of feel to what we hope is a multibillion-dollar business. We made some management changes and some really tough decisions to put ourselves in a good position for 2018. But it took a lot of effort to do that, so I think it says a lot for the Veeam team that we were able to make all these changes and still have the 36% year-over-year growth. That really goes to the resiliency, the culture and the adaptability of the Veeam team to become that next $1 billion software company.

In the middle of last year, Veeam changed up its management structure, and you became the co-CEO, in addition to president. How has it been splitting the Veeam CEO duties with Andrei Baronov, and what have been the challenges there?

McKay: I think it's more of an odd structure externally than it is internally. Andrei and I work closely together, looking at the customer feedback, trends and market challenges. And we really assess the priorities. Andrei has been unbelievable in his assessment of the market, and the trends that have been going on over the last 10 years, and has done an unbelievable job of building the technology and the breadth of the products. One of the areas that is growing the fastest is our enterprise business. We've really evolved our technology to be the platform for the enterprise as well as smaller companies.

It works well internally. Obviously, it's not a conventional approach to a CEO position, but we're not a company with egos. We've determined that he understands the technology far better than I do, and my expertise is the operations, the go-to-market side, and it works out really well.

You've been with the company for about a year and a half now. How has it been different from your previous jobs, and how has it matched up with your expectations?

McKay: It doesn't match up with any one particular opportunity. My experience at Veeam has been really the culmination of a lot of experiences over the past 25, 27 years. So, it's been a really good fit for where the company is at, the company culture, the challenges that we have faced in the market and the opportunities, with the skill sets that I've acquired over my career.

Ratmir [Timashev, one of the founders, former Veeam CEO and current board member], has been incredibly supportive in the journey here. And we work very well together, so there are absolutely no complaints. This has been a far better experience than I had expected 19 months ago, when I first joined. And the opportunity is far bigger than I ever expected. It was clearly a good move for me, and I think, so far, it's been a good move for the company as well.

What do you think is the toughest part of the job?

McKay: We've had a lot of growth over the years. And that requires a tremendous amount of focus on keeping in front of the talent curve and continuing to develop your teams internally, but also looking to continually recruit the top talent you can find in the industry.

When I came, we had to continue to do both. We had to invest more aggressively in developing our talent internally to scale to over $1 billion. But we also had some people just doing maybe too many things. At a small company, you can have someone do three, four or five different things, but, as the company gets bigger, you really have to focus on people doing very specific tasks and also going outside the company and recruiting people who have specific skill sets and have done well in excess of the scale that we're at today as a company. That mixture of internal development, restructuring organizationally and recruitment of talent has been a major focus for me over the past 18 months.

Now we're in a much better place, but there was a lot of effort. I think 20% of my time has been just interviewing and recruiting, and we've been able to bring some incredible talent into this business. We were a little behind, and now we're in front of the curve, from a growth perspective.

Looking ahead now, what are the biggest challenges in the data protection market for Veeam to tackle in the coming year?

McKay: One of the bigger challenges is this massive accumulation of data, and it's not in one spot. Data is being accumulated in many different spots, with [the internet of things] and machine learning, for example. You've got pockets of data all throughout the organization, at the endpoints, in the cloud, on premises, in cloud applications. This concept of a data center is going away, and so the need for us to provide visibility, management and orchestration, on a single pane of glass, from a data perspective, is critical.

The challenge is we see customers and potential customers at various stages of their evolution in terms of that journey of how they're handling availability. Some people will still look at it as, 'You know, I'm just going back it up.' But it can also include moving through the lifecycle of data, from the recovery to automation, automation, automation. For us, it's really about getting a better understanding of our customer evolution and then applying the right model for them, based off of where they are and where they want to be.

We need to get better at what we do. It's more of a consultative, more of a strategic approach than the Veeam of the past. We're in more of these strategic conversations with companies about best practices for data management, what to do in the cloud, what not to do in the cloud, what to do with your software-as-a-service applications and what not to do. More and more of our conversations are at that strategic level, which is a great spot to be, but it requires us to change the approach we had for many years past and be truly that strategic partner for our customers.

You've said that Veeam needs to be the best in the world in cloud backup and recovery. You just announced the acquisition of N2WS, which provides backup and recovery for AWS, so that will help. How else do you get to that 'best-in-the-world' designation for cloud backup and recovery?

McKay: This is where we see an opportunity. It's very similar to the early days of virtualization. Veeam was purpose-built for a virtual environment, specifically vSphere, and then we evolved to Hyper-V and then Nutanix Acropolis.

We feel as though we're the best in the world at the virtual environment, and now we've added physical and cloud. As to the past couple years, a hybrid story is really what customers have moved toward. We believe that a similar native approach, like we were native to virtual, is native to a cloud. So N2WS, which we invested in, we decided to acquire because of the growth we saw. And the opportunity we see is very similar to where we were in the virtual world.

Virtual is not going away. It continues to grow. Physical is not going away. That continues to be a component. But the cloud is an increasingly growing aspect of the world we live in. N2WS was a technology that we could leverage across multiple clouds that are very native to the cloud environment. That really differentiates our approach from a basically bring your own license to AWS or Azure that a lot of the competitors have been doing.

This is a really critical shift in this market, where you have a native product that's built on the marketplace of AWS, which we believe is the ideal solution for companies that want to do more on AWS.

Finally, is there anything else you wanted to say about the year ahead or 2017?

McKay: You've seen a lot of change within Veeam in 2017. We've also put a lot of things in place that maybe you haven't seen. And I really see 2018 as a year of significant growth. There's stability, in that we have a team in place that's working really well together. There's the need for us to evolve the organization. We've got the right team. We've got the right platform. Our alliance partners have never been stronger, including Hewlett Packard Enterprise, Cisco, Pure Storage and Nutanix.

We've been able to invest aggressively in our sales, our marketing and our product development. We're adding 230 new engineers, research and development resources and customer support organizations in our team. And we've acquired. And I think you'll see us acquiring additional companies in 2018, to continue to broaden the portfolio.

We think we have the best people, culture, platform, alliance ecosystem and market position. And, lastly, our financial position to invest very aggressively in the market puts us in a really good spot for exceeding $1 billion in 2018 and well on our way to $2.2 billion by 2022. It's an exciting time.

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