NetApp’s Israeli VPs leading the company’s cloud service forward
Roy Alon and Assaf Levy have been at NetApp since it acquired their startup 13 years ago and have built the U.S. company’s successful cloud offering from Tel Aviv
Following Onaro's acquisition in 2008, Alon and Levy were asked by NetApp's CEO to stay in Israel and continue developing new technologies for the company. That led to the development of NetApp's cloud activity from Tel Aviv five years ago, which currently involves 300 local employees and sales reaching $216 million in the past year.
Both Roy and Assaf became Vice President's in NetApp and as part of their role are also responsible for identifying cloud companies for NetApp to acquire. In the past three years alone they have led the acquisition of six startups that developed technology that complements NetApp's offering. Two of those startups were Israeli, Spot.io, bought in June of this year for $450 million, and Cognigo purchased for approximately $70 million in May 2019.
How did you find yourselves still at NetApp 13 years after the exit?
Roy: "We didn't think we would be at NetApp 13 years later. After the acquisition, the CEO came to us and said that instead of continuing for another year or two and leaving as is often the case after exits, you can continue to develop new technologies and products for the company to be sold across the world. We turned into a sort of startup bubble inside NetApp and for the past five years we have been leading the cloud sector from Tel Aviv with activity that we built from the ground up and is growing all the time."
“The cloud activity is like a startup that grew from within the company. The cloud services generated $216 million in the past year and tripled the company's revenue from the previous year. If you take into account the rate of growth, NetApp's cloud department is like a unicorn within the company."
Assaf: "We started our activity four years ago from zero and grew rapidly, by 200% a year. We are expecting this to continue and increase in order to help NetApp in a significant way."
What are you actually selling?
Roy: "There is a global process in which data centers are moving to the clouds of Amazon, Google, and Microsoft, and what we do is add to their basic service special capabilities in storage, management, and data security. We sell a complementary solution to these basic cloud services. It is exciting to have an effect on how businesses are being built on clouds, to help secure the data and ensure it isn't being stolen, and to do it for NetApp from right here in Israel."
Isn't it easier to start from scratch rather than transform a 25-year-old company?
Assaf: "NetApp sold storage solutions for the data centers of the biggest companies in the world for 25 years. The emergence of the cloud created a massive disruption in this market. NetApp took the product that it had running in data centers, which was developed by thousands of engineers over 25 years, and converted it so that it could run on the cloud. The clients continued to have the same experience, but the application moved to the cloud."
How do the capabilities of the Israeli companies that you purchased, Spot.io and Cognigo, complement you?
Roy: "Cognigo identifies the organization’s sensitive information in order to strengthen the security around it. While NetApp focuses on the optimization of data storage, Spot complements us by optimizing processing power. That adds another smart layer to the management of the infrastructure of our cloud users. NetApp is like an autonomous vehicle. You want to run an application on the cloud? NetApp will make sure everything works properly, that you are going straight and at the right speed with the combination of these technologies."
2020 was the year of the cloud because we were stuck at home. Will 2021 be the year of the cyber hacks?
Roy: "In 2020 people understood how important it is for them to be on the cloud. There is more demand for cloud services and more clients are making their business digital due to Covid-19. This will continue throughout 2021 and 2022. Organizations are allocating budgets for this for the next couple of years. The insights may have come this year but the big effect will be felt next year."
Assaf: "There is no doubt that the problem is becoming more severe and we are trying to find solutions. That is one of the reasons we purchased Cognigo, because it helps understand the location of the information which you don't want anyone to have access to, like financial information or private information on clients, and it helps protect it with AI technology."
You acquire companies. Is there any preference for Israeli companies? Any preferable sectors?
Roy: "NetApp is always looking for opportunities. The market is growing and there are many interesting startups around. We are always looking."
Assaf: "We are looking for solutions that will add to our portfolio. Data management and security are sectors that are very interesting to us. We will be very happy if these will be Israeli companies, but the capabilities of the company are the determining factor."