August 19, 2013 Issue
The Most Powerful Name In Corporate News and Information
Developing and bringing to market Server Load Balancing Technology/Application Delivery Controllers, KEMP Technologies is helping Mid to Large Sized Businesses Optimize their Web Applications and Web Servers at a Cost-Effective Price
About KEMP Technologies
Founded in 2000, the company
has over 16,000 worldwide clients and offices in America, Europe, Asia and
South America, KEMP Technologies has been a leader in driving the
price/performance value proposition for load balancers and application
delivery controllers to levels that line of business customers can afford.
KEMP products’ versatile and powerful architecture provide the highest
value, while enabling customers to optimize businesses critical applications
that customers, employees and partners rely on.
Ray has worked in the I.T sector for over 22 years. During that time he has held a number of executive & operational management positions at global companies like Cabletron Systems and Enterasys Networks. In 2002 he co-founded Arrosys Ltd, a European based Sales & Marketing consultancy. He left there in 2010 to join KEMP.
Ray was educated in his native Ireland at the Limerick Institute of Technology. He later completed a post-grad in Quality Management at the University of Limerick.
He resides on Long Island, NY with his wife Janet.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – August 19, 2013
CEOCFO: Mr. Downes, what attracted you to KEMP Technologies?
Mr. Downes: At the time, I was running my own company in continental Europe and I was looking for a career opportunity to move back to my native Ireland. I started looking for I.T sector opportunities there, and KEMP approached me at the time when they were looking to establish their Europe, Middle East and Africa headquarters. I joined KEMP in 2010, and we established a EMEA presence, and it rapidly grew due to favorable market conditions for our solution. Ironically a couple years later, I ended up moving to the states further away from Ireland but the opportunity to work in the States for a US multinational company has been a long time personal goal.
CEOCFO: You have been the CEO since 2012. How has the company changed under your leadership?
Mr. Downes: I took over KEMP at a time when the founders had brought in some significant outside investment funding. For the first time since foundation the company brought in private equity investments and we essentially became a “born again” startup but with over a decade of history to fall back on. The VC’s and my core management team, which includes one of the co-founders jointly agreed an aggressive 5 year high growth plan which I’m proud to say we are tracking to very well. We had 35 employees when I took over and we now have 125, so there has been substantial growth and change over the last 18 months.
CEOCFO: Would you explain what you do at KEMP?
Mr. Downes: We develop server load balancing technology which is also called application delivery controllers. Essentially, what the product does is it helps customers to optimize their web applications, web servers, and any business application infrastructure that they might have such as ERP or CRM databases, e-mail applications such as: Microsoft Exchange, or communication servers such as Microsoft Lync. We provide health checking and redundancy options so business applications are always available should there be a server overload or hardware failure. That’s essentially what we do. This technology has been around a long time and there are a number of players in the space. It is a very interesting market at the moment because there are more and more applications, more data transfer, more server resources deployed. Everybody wants to build in high availability and redundancy to their infrastructure. We help to provide that at a cost-effective price and ease of use is key differentiator because the application administrator is not always an expert on load balancing. We have an exciting hybrid cloud solution about to be released.
CEOCFO: Do you provide hardware, software, or both?
Mr. Downes: First and foremost we are a software company. A lot of our products are delivered on hardware, but our IP is the software operating system. We lead the industry with our split of hardware to software only products and we anticipate most of our revenues will come from software only from 2015 and beyond.
CEOCFO: Is there a target customer or target industries for you?
Mr. Downes: We span many different industries and verticals. Our sweet spot is medium enterprise and the majority of our 2013 business is coming form that type of customer. Historically KEMP’s, was known as a small business provider. I believe we were the first people to bring out a product at the sub $2,000 dollar range. We still have a product at that price point but its only 14% of our product sales. We have a lot of state and local government and education customers which is a very active vertical market for us. We are winning a lot more US federal government business and have a dedicated team now working that sector. In general we continue to acquire more and more well-known customers and if they are not using us in their core datacenter that are deploying our solutions across their line of business using those budgets because of our affordability.
CEOCFO: Was there a particular push into government over the last year and why would this be the time to do so?
Mr. Downes: Our value proposition has always been producing products at a very good price without compromising on performance, quality, or support. With federal budgets being cut a lot recently, the federal government is really looking to maximize the return on their investment. It seemed to be a natural extension for us; for instance, there is a security standard called FIPS and we brought a FIPS market to product early last year. This product is opening up a lot of opportunities in DoD. It has helped us open up doors and have discussions. Our value proposition is that they can get very good product from KEMP at maybe 40% of the price of some of the branded competitors also targeting this space.
CEOCFO: How are you able to provide a solution at such a cost effective range?
Mr. Downes: Firstly, in our particular technology area a lot of the vendor margin is very much tied to the combined solution of hardware and software. As I said earlier we are primarily a software company that happens to also deliver its IP on hardware if the customer prefers it. We are not averse to decouple the hardware from the software. If somebody has their own x86 hardware such as a Cisco UCS, we will allow them to buy our software and run that natively on their own Cisco hardware. The competitors of KEMP won’t do that as it is probably core to their revenue and margin model. We have an OEM partnership with Dell where our s/w is deployed on Dell standard hardware but with the added benefit of access to their world class services and support organization in 123 countries. We optimize our product to run on specific hardware and we get validated by the hardware vendor to do that- the branded name such as Cisco or Dell.
CEOCFO: When you speak with a prospective customer, do they understand immediately or is there an “aha” moment where they understand that KEMP is different and superior?
Mr. Downes: In the early days of KEMP prior to my joining, the founders were very much experts in this technology having worked for what are now competitors. They saw that the competitor’s product was actually quite complex to understand and deploy. They felt it was a great opportunity to bring out a product where ease of use was part of the DNA of the product and clients would receive great value for their money. That is the one constant we have kept the whole way through to today. Rather than having to go on a paid training expedition to the west coast for five or ten days for ADC deployment training, we can have you trained in three or four hours remotely online in terms of how to deploy our product. I think that is certainly one of the “aha” moments. The other one is that we know that our typical customers do not need all of the features that are out there, yet they end up inherently buying a product that has all of these features that they are not interested in. We have been very selective in the features that we put in so that they meet the requirements of what our customers are actually looking to deliver.
CEOCFO: How do you reach potential customers?
Mr. Downes: We are a 100% channel focused company and by that it means that we are trying to reach small and mid-enterprises so you need channel partners to help you get out there and extend your reach. The channel is an extension of our sales and supply chain and all of our activities are very much geared to working with and educating our partners to help us acquire customers. We have a substantial web marketing engine to generate leads which we push to the channel. They love that aspect of their partnership with KEMP. We do a lot of focused trade events with our strategic alliance partners such as Cisco, Microsoft, and Dell. We have a new relationship with Oracle, which we are starting to get some traction in as many of their software solutions perform better when load balanced. We will market to that installed base with our partners.
CEOCFO: KEMP has clients worldwide but are there areas where you would like to have a greater presence?
Mr. Downes: Yes, we asked ourselves that question about twelve months ago and I put a significant investment into Asia Pacific. Back in 2010 when I joined the company, only 8% of the company’s revenue was coming from international. It is now 46%, and a significant portion of that has come from Europe but Asia was the next area where we felt our solutions would resonate. Asia-Pacific customers are always looking for value for the money, so we established a KEMP branch headquartered in Singapore and we have resourced the region with an experienced team of ten people. Australia, India & South East Asia were the initial focus markets in that region however we have just fast tracked China because of interest there. Asia Pacific is up 249% year on year and we hope that the region will contribute about 10-12% of our global revenue within the next few years. Even though Japan is part of Asia Pacific, it is a very different market. We are just in the process of establishing a KEMP Japan entity and we hope to have that up and running by Q4 this year. Outside of the US domestic market, Japan is the next single biggest country market for application delivery controllers.
CEOCFO: In technology, ideas change every day. How do you keep up with all of the potential changes that may affect what you are doing? How do you know what to pay attention to and what will likely go by the wayside?
Mr. Downes: We have put a lot of resources into our product management function and we do a lot of industry research. We do a lot of looking at what other vendors are doing and we look at a lot of what the analysts are saying. We have very good relationships with the likes of Gartner, IDC, Dell Oro so we are briefing and inquiring all the time. We then look at where we can be relevant in our market for our customers. We do not see ourselves as bleeding edge but we are fast followers and that is the continued route to our success- looking at where the industry is going and getting in there at a stage where the market is in a growth cycle. We are actually looking three years out at the moment in terms of our product development cycles. That is something that you can afford to do when you are on the type of growth path that we are. We have had 510% revenue growth over the last three years and we are now looking at the next three years out to 2016 with confidence
CEOCFO: Many companies tell me that they have difficulty finding competent people for their technology. Do you experience that as well and how do you find the right fit for KEMP with both the technical and people skills?
Mr. Downes: People and teamwork are absolutely critical. In the early days when I came on board we had a small team and every single one of the people we brought in had to work out for us because we did not have any margin for error. We took incredible care in the recruitment process and in reference checking. We went out to a network of known good people that we had either worked with before or people that were recommended to us. Our core group came through that approach. As we are expanding, however, we cannot do that so we have taken on more scientific methodologies. There is a system of personality checking out there called predictive indexing (PI) and that was introduced to us by an Irish management consultant that we work with quite a lot. He works with my management team on strategy. We have taken on predictive indexing to help us make sure that we get the right cultural and skilled people coming into the company. We use predictive indexing with all employees to help us understand individual management needs and in putting cross functional teams. In terms of the recruitment process, they are a few things that we did. In Europe and specifically in Ireland where are headquarters are, we have very good headhunter relationships who know our culture and where we are going as a company. In the US, we actually brought in dedicated recruiter under our own roof. That has worked to help us clear the backlog of critical positions that are required this year.
CEOCFO: Why should people in the business and investment community pay attention to KEMP Technologies?
Our track record over the last couple of years stand up for
itself. We have had a lot of revenue growth and recognition. We think we are
doing a lot of the right things, and our investors are very happy with their
return on investment 18 months down the line. We have options to
bring in round B funding this year, ahead of plan to build on the momentum.
I know we have assembled a world-class management team and leadership team
and we are in an industry that is a very interesting place to be at the
moment. There is a lot of new technology areas such as software defined
networking and network function virtualization that gives us a deep
relevance over the next number of years where IT is undergoing a paradigm
shift. We think that we can leverage that change to continue our growth
“Our value proposition has always been producing products at a very good price without compromising on performance, quality, or support.”- Ray Downes
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