SolidFire’s Mark Conley: NetApp Acquisition Will Change Storage Industry

Watch out for consolidation in the storage industry, SolidFire’s Mark Conley warns.

The director of channel sales said lukewarm increases in IT expenditures and a more difficult fundraising climate may encourage smaller companies to consider M&A.   

His own company recently was bought by the systems manufacturer NetApp. The acquisition closed in February. Conley said the deal will have a major impact on the storage industry.

He spoke to Channel Partners about the acquisition, the storage industry and the channel.

**Editor’s Note: This transcript has been edited for length and clarity.**

Channel Partners: Can you talk about the impact the acquisition by NetApp has had on SolidFire?

Mark Conley:  It has been really great. We have difficulty – like any small startup company – having the amount of legitimacy that we believe we should have and the amount of attention we want to get. Having the NetApp name behind us gives us instant credibility, gives us instant access to a lot of accounts that wouldn’t even talk to us before. For the channel side, we were striving for legitimacy with the biggest resellers, and we found that once we got the NetApp brand behind us — resellers really like NetApp, and they want them to win and they see SolidFire as a key bit of ammunition for their arsenal. It’s been good for us from a notoriety and recognition standpoint; it’s been great from a breadth and scale standpoint as well. We had around 400 people in the organization before the acquisition; now we have 12,000 people that we can leverage. We had 230 resellers before the acquisition; now we have thousands and thousands of resellers.{ad}

CP: What is your approach to the channel, and how has that approach changed?

MC: Before the acquisition, we were building a channel program that was above our weight class. We had built a very full-featured, robust program that had different authorization tiers that resellers could reach by increasing their competency levels with SolidFire. It was a big-boy channel program that also had account rebates and other incentive rebates in the back end for partners … We also had MDF and co-op programs that allowed them to do great marketing programs. So even before the acquisition by NetApp, we had a good program, and we had a program that even the biggest partners said was something they were attracted to. When we started talking with NetApp after the acquisition was announced, about their channel program – how it worked and how ours worked – we were wonderfully surprised that the two programs were very similar. They had the same kinds of philosophy [and] authorization tiers. They had a really rich channel program for partners to participate in. We found much more in common than we did in difference between the two. That being said, there [are] still some differences. Some of the companies that were attracted to SolidFire (and this is a natural thing) — those are the kind that are attracted to a small company. They by definition are more pioneering organizations. Most of those will …

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… make the turn with us to NetApp because they want to get bigger and grow their companies too, but some companies are more satisfied with a smaller vendor, I suppose. We really haven’t run into that much, but that’s one of the things to worry about as far as differences go.

CP: Has selectivity of the channel program changed?

MC: Not that we needed to try to partner up with anybody that would be interested in us, but we couldn’t afford to be as selective as we’d like to be. With NetApp there are thousands and thousands of partners, and just like with any sales organization, most of your business is done by your top partners. We certainly want to get their attention, and we would love to do more business with WWT (World Wide Technology), and we’d love to do business with Sirius in the U.S. We’d love to do more business with Onyx and ePlus (and those people were all partners, except for Sirius, before the merger), but there [are] an awful lot of other organizations … they’re perfect candidates to sell SolidFire, but we never talked to them. We never had a conversation with them. A good example is Storage Assessments in Iowa. Great storage company, lots of technical knowledge, lots of knowledge of building hybrid clouds, but someone we’ve never even spoken to. Those are the kind of people that are going to increase our breadth. The program integration [is] kind of the easy stuff. You match one level of authorization at SolidFire with one level of authorization at NetApp. You communicate feverishly to the partners to make sure that they understand and there’s no confusion or hurt feelings. But the really great benefit for everybody is finding those gems of organizations that … both want to grow and both have a great value proposition.

CP: What trends do you see happening in storage?

MC: This has been forming in my mind for quite some time now, and it has become more and more obvious. It seems like there’s a new example of it. The market overall has slowed a bit. Almost every company can look at their financial statements … and see that it’s happening. The [increases in] IT expenditures are not as strong as they have been in recent years, so as a result, everyone is competing for that same small piece of the pie and getting a little aggressive about it. It was a higher increasing spending environment three-four-five years ago and a much more liberal venture-capital market where companies like SolidFire and some of [its] competitors were born. I don’t think that the D.C. market and the equity that those folks are demanding is nearly as advantageous to the companies today as it was then. As a result, startup companies that have not made the jump and merged with a larger company like NetApp or gone public — those companies are scrambling a bit for money to …

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… keep themselves and customers to make sure they can get more money. We see a lot more aggressive actions by the smart companies in the marketplace. My personal belief is that it’s going to be very difficult for those folks to continue … because you can’t lower your prices and pay more for a dollar to keep your business afloat. Very soon one of those things is going to run out. I personally see a bit of consolidation sometime in the next 18 months.

CP: What advice would you give to someone who’s trying to succeed in business?

MC: This is a little corny, perhaps, but the most important thing that you can have at your disposal is a good understanding of who you are, what you do well, what you don’t do well, what you like and what you don’t like. I see people getting themselves into the wrong situation and not being happy. I see companies trying to go after markets that they’re really not qualified in nor have the appetite or the stamina to be able to take on. The better you know your strengths and weaknesses, the more successful you’re going to be. You’ve got to take care of your family. You’ve got to take care of having a balanced lifestyle in addition to that. Find something that you really have fun with and do that, but make sure it’s not something that doesn’t leverage your strengths. [I] try to put myself in uncomfortable situations. When I came from the consulting company to work for CommVault … it was a very different motion for me, but it was something that fit my personality. But it caused me to learn a lot of new things in the process. When I left CommVault to go to SolidFire, I hadn’t been with a startup for about 15 years. I had kind of forgotten what it was like to be at a startup, and I had to re-learn those things. I like to put myself in slightly uncomfortable situations so I can learn and I can grow. If you stop doing that, you kind of die a little bit inside every day.

CP: What does the next year have in store?

MC: There’s no way that anyone can predict the future accurately, but we certainly see a lot of change coming in the next 12 months with the  current largest independent storage company in the world (EMC) merging with a systems manufacturer (Dell); that’s a big deal. We’re not taking it lightly. We’re not sitting back on our heels. That leaves us as the largest independent storage company in the world. That’s something that a) is a big deal and b), is happening because of a great, big merger. No one can predict how that’s going to end up and if that’s going to be a great thing, a bad thing or just something between. But it’s certainly going to create change, and change usually creates opportunity, and we’re poised to take advantage of this opportunity.