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It's the end of an era at Veeam Software.
Ratmir Timashev and Andrei Baronov are stepping away from the backup, recovery and data management company they founded in 2006. Private equity firm Insight Partners said last week it would acquire Veeam in a transaction that valued Veeam at $5 billion. Timashev said it was his decision to step down from the board of directors and from his position of executive vice president of sales and marketing. He will remain in those roles until the sale closes, likely by the end of the first quarter. Baronov has left his CEO position and will relinquish his spot on the board.
Timashev held the CEO job from 2006 to 2016, and has been the most public face of Veeam. Timashev said he feels he's leaving Veeam in good hands. For example, William Largent, who has served in various positions since the beginning of the company, returned to the role of CEO.
"At some point, the founders have to step down," Timashev said in an interview.
He expressed confidence in Insight Partners as the new owner. The firm had invested $500 million in Veeam a year ago and first invested in the company in 2013.
Timashev seemed excited for the future of Veeam, which started in backup for virtual infrastructure and has since expanded to cover cloud and physical environments. It has grown in that time into a billion-dollar annual revenue company and claims 365,000 users and 70,000 partners.
Timashev said Veeam has conquered the VMware backup market and will next tackle the hybrid cloud in its "act two." He specifically called out four targets in Veeam's focus: AWS, Microsoft Azure, Office 365 and Google. The transition includes a move to subscription pricing.
Timashev, 53, this week discussed why the founders decided to sell the company, what the sale could mean for customers, and what he plans to do next.
What was behind the decision to sell the company now?
Ratmir Timashev: We felt that it's good timing for us to accelerate our growth globally, but also specifically in the U.S. Insight has been our strategic partner since 2013. But I've known Insight since 2001.
We believe right now the whole industry, as well as Veeam, is in a transition to what we call "act two." For us, "act one" was dominating the highly virtualized, modern, on-premises data center, from the data management and backup point of view. And we've done a great job in the last 10 years.
The whole industry and also Veeam is going through a large transition to a hybrid cloud and pay-as-you-go subscription model. It's a difficult transition, but we believe that we will be successful.
So, we thought that Insight, with the industry experience -- and experience with different business models and software companies -- would be a great partner to take us to this next level.
Will you still be involved in Veeam?
Timashev: I will be involved in the transition and then my role will be more on a consultant basis.
How long do you see the transition lasting?
Timashev: We don't know -- [at least] until the deal is closed, which is expected by the end of Q1. The transition might [end] sometime after that. But I will not be employed by Veeam when the transaction closes.
What would you like to see during the transition period? What are some of your goals while you're still employed with Veeam?
Timashev: We want to make sure that employees understand that not a lot of changes will occur. This acquisition is not about reducing the cost or shrinking the expenses. It's about growth.
Sometimes when a private equity firm buys a company, in an industry or segment that is not growing, their goal is to reduce the costs. That's not the case with Veeam because we are in a high growth area with a leading position. And we're extremely well-positioned to capitalize on this expanding market for us.
We believe that we have a very strong executive management team.
Considering your relationship with Insight, could you have stayed on after the deal closed, as an executive?
Timashev: I could have, but that's not our plan.
Why, since you've been there from the beginning, why is now the time that you want to step away?
Timashev: In general, I want to spend more time with my family and kids. I worked very hard in the last 20, 30 years building two companies. [To start Veeam, Timashev and Baronov invested money they made from selling their first company, Aelita Software, to Quest in 2004.]
Andrei is in a similar position -- we are the same age. And we have kids and want to spend more time with family.
Since you've been with the company since the beginning, will it be hard to step away?
Timashev: It's always hard, it's like a baby. Friends of mine are asking how difficult it is. I asked them, 'Is it difficult to sell your child for $5 billion?'
Is there anything that's unfinished that you wish had been completed by now? Do you have any concerns that you hope get resolved in the near future?
Ratmir TimashevCo-founder, Veeam Software
Timashev: Not really -- right now, we are going through a major transition, which represents some challenges, as well as opportunities. Whoever wins this new market is going to dominate. Veeam won the VMware market. It took us two or three years to win that market and then we basically rode the wave.
When a new market opens up, you only have two, three, four years to win that market. And there will always be three winners -- number one, number two, number three, and then there will be a whole bunch of others.
We're very well-positioned.
So you don't have your third company in the works yet?
Timashev: We always have some ideas -- always definitely to find another billion-dollar market opportunity. And I always say it takes three things to create a successful technology company -- to be at the right time, at the right place, and create a brilliant product. And me and Andrei have done it twice now.
So, I'm sure that at some point after taking some time off, we might come up with a new idea.
What do you think the sale means for your customers? Have they expressed any concerns going forward following this news?
Timashev: No, they look very positively [on the sale], especially the U.S. customers. As part of this transaction, we are going to become 100% U.S.-shareholder owned. And with the executive management that is primarily U.S.-based, that news is very positive, especially for our U.S. customers. We have lots of large enterprise customers in the U.S., as well as federal customers, and they are taking this very positively.
What will it take to make your product the best for the hybrid cloud era?
Timashev: We have to follow our playbook. We have done it twice. Back in the '90s, we won the hearts and minds of Windows administrators [with Aelita]. And then 10 years later in 2008, 2009, we won the hearts and minds of VMware administrators. Now 10 years later, we just have to win the hearts and minds of AWS, Azure, Office 365 and Google users.
What does it take? First, the product has to be brilliant, simple, and we have to listen to our core customers. Our core customer used to be [running] VMware. Now it's going to be a different buyer -- AWS, Azure, Office 365, Google buyer. They have their own budget. Sometimes they belong to IT. Sometimes they belong to DevOps.
We have to offer them the simple, flexible and reliable product. That's what Veeam is known for: simple, flexible and reliable.
Can you give more detail on what your consultant work for Veeam might entail?
Timashev: Just sitting down with [Insight Partners managing director] Mike Triplett, with Bill Largent on a regular basis, and advising them how to attack this new market, how to play the Veeam playbook to win the new markets of AWS, Azure, Office 365 and Google. Those are four big markets.
Will there be any big changes in terms of Veeam offices? What will happen to the headquarters in Switzerland and the people who work there?
Timashev: No, no big changes. We will be looking at U.S. headquarters. We already have two very large offices in Columbus, Ohio, and in Atlanta, Georgia. We have probably around 400 people in each office. So probably one of those will become the U.S. headquarters.
Our office in Switzerland will continue to operate the way it is now. We are unique in the sense that we have always had our management team very distributed. We don't really have a single office where everybody needs each other.
What do you see generally, for the future of the backup and recovery market and data protection?
Timashev: The market, if you look laterally, it's backup and recovery, [but it's also] data management. We believe that there are other components to data management in addition to backup and recovery -- [for example] replication, cloud mobility, governance and compliance, analytics.