Opinion

posted on 23 May 2008 15:31

There is a scene in Heat, the Michael Mann movie starring Al Pacino and Robert de Niro, where a character aspires to join the tight-knit group at the centre of the movie and describes them as "a real tight crew."

Dan, Dave, James and Tom are such a tight crew and they run a company where the founders' vision is kept strong and where employees are treated as and feel as if they are in a family company. I'm an onlooker at a NetApp customer event and a first real sense of what makes the company tick, its culture, is coming through.

D, D,  J and T are repectively CEO and chairman, EVP, EVP and Chief Strategy Officer, and Vice Chairman of the Board at NetApp, one of the original disruptive technology companies with its idea of a file-serving appliance based on a commodity x86 server running a Unix O/S with a revolutionary Write Anywhere File Layout (WAFL) file system. It became known as a filer because it took file handling away from general-purpose application servers and put it in a specialised networked box, an appliance, a network appliance.

The four are Dan Warmenhoven, co-founder and ex-cowboy Dave Hitz, Tom Mendoza the corporate cheer leader, and co-founder James Lau. The company was founded in 1992 with Michael Malcolm as the third founder. In 1994 it was in deep trouble. That was the year Mendoza joined and CEO Malcolm was forced out - he now runs Kaleidescape, a home entertainment server company with a product that is still, in essence, a network appliance.

Warmenhoven arrived that year too, as the new CEO, bought in by investing organisation Sequoia Capital. It was a seminal move as Warmenhoven altered NetApp from a channel company to one with a direct sales force. It focussed on filer competitor Auspex and cleaned its clock.

NetApp boomed, absolutely boomed, in the dot com era. Its stock price rose to $150 and the founders became billionaires. Then the dot com era crashed and burned and the stock fell as low as $6. Ouch!

The company re-focussed on selling to enterprises, away from dot com start-ups, and has grown and grown with its turnover now heading towards $4 billion a year.

Adding skins to the onion

NetApp has steadily developed its filer, turning it into a unified storage machine by progressively adding skins to the WAFL onion at the heart of its Data ONTAP operating system. Where rival EMC would add a new product line to add a new storage function: Centera for content-addressable storage; Celerra for file serving, Netapp layers functionality onto Data ONTAP steadily extending it: CIFS, Fibre Channel access, iSCSI, deduplication, clustering, VTL, replication and more.

On the way it has bought companies whose technology can be incorporated into ONTAP, such as Alacritus (VTL¹), Topio (replication) and Spinnaker (clustering). The latter's technology is proving hard to integrate and a separate GX version of ONTAP was produced a year or so ago. It is destined to be absorbed back into mainstream ONTAP within 12 months.

Another acquisition was Decru which provided an encryption box sitting on a network link That has remained a separate business unit. A recent channel-only StoreVault product has been reabsorbed back into mainstream NetApp. The company has also crafted a reselling deal with IBM under which all its products are resold by IBM under its N Series branding.

A sense of what's right

NetApp has a profound and deeply-held sense of what is right. It has a slow-burning fuse which, when lit, is very hard to put out. When it decided that Sun's behaviour over IP license fees was wrong, and Sun's use of WAFL-derived technology in its ZFS file system breeched NetApp patented technology then it decided, reluctantly but determinedly, to act, and sued Sun. This was not done lightly.

Sun counter-sued and the stage is set for a long struggle in the courts.

NetApp is like a family or a church almost, even like the legal firm in the Tom Cruise film The Firm, only, of course, without a shred of the illegality and Mafia connections. NetApp people are down-to-earth and plain speaking. Sunnyvale HQ is not full of people wearing $5,000 suits, with Rolex watches and Ferraris or Porsches in the car park. It could be but they don't spend their money that way.

Sure there are plenty of millionaires at the top of the company but they wear their money lightly, with no ostentation. They do things their way, they believe, quietly but strongly, they believe that they are right. Their products are better than EMC ones. They are not so much openly aggressive as very, very determined, but there is aggression there. Inside NetApp's ordinary cotton glove is an iron fist and it shows in the way NetApp focusses on a few things and then ploughs its furrow again and again and again, not giving up.

To outsiders it can seem as if the company has an invisible ring fence around it separating the ones inside the tent, the lucky 6,800 of them, from the rest of us.

An uber-storage dog

NetApp was founded as a disruptive force and its founders still see it that way; they're struggling even now to overcome proprietary expensive, stove pipe models of storage with the competitive focus honed by years of competing against EMC.

It sees itself still as an underdog, with its start-up values strong and undiminished, yet it has become part of the storage establishment. 3PAR, BlueArc, Compellent, Isilon. Pillar, and other more recent start-ups all name EMC and NetApp as their competition, as the suppliers whose technology they want to disrupt. NetApp is no underdog to them, it's one of the two storage uber-dogs lording it over the storage scene.

The company is not run by detached professional business men in the EMC, way. It's run more as a benevolent, family concern with a strong loyalty to and from its staff. Darth Vader, looking at an average NetApp employee, might say, "The founders' force is strong in him."

So there's Tom Mendoza singing a song about the power of belief to a room full of NetApp Innovation Awards winners, meaning customers; he's unaccompanied - no music, just him and a microphone and he gives it everything he's got. He's leaning over the mike, his voice rises and falls, his arms spread out, the eyes close, and he sings out loud and strong; "If you only believe...."

NetApp people do, they do believe. What other multi-billion dollar annual revenue company vice chairman of the board would do this? Extraordinary people, extraordinary company; a real tight crew.

^{1. The Alacritus VTL runs on a different O/S than Data ONTAP.}

^{[Chris Mellor.]}