Interview with Karl Chen, LeftHand Networks

Our interview today is with Karl Chen, VP of Marketing and Business Development at Boulder-based LeftHand Networks. LeftHand has developing IP storage area network hardware for the storage industry. We spoke to Karl to get some insight into the firm and its products.

Techrockies: What are LeftHand's products?

KC: We are pioneer and leader in iSCSI SANs. The company was started in 1999, and was founded in Boulder. We brought IP SANs to the market in fall of 2001, and today we have more than 1000 customers and 3000 units deployed in customer production environments. We just came off a very successful 2005, where our revenues doubled, a 100% year over year increase. We participate in the fastest growing segment of the iSCSI SAN market, which all IDC says in 2006 will approach a $1B market. What is unique about our solution compared to others, is that we have leveraged our distributed clustering technology, our SAN IQ software. We deliver that software to customers as part of an open iSCSI SAN initiative. We use industry standard platforms, and scale out the architecture, allowing customers to scale capacity on demand. We run on a number of different platforms, and have 20 OEMs worldwide, including Intel, HP, and Verari Systems.

Techrockies: What's your core technology?

KC: Our core intellectual property is our distributed SAN IQ software, which sits on industry standard hardware and allows for lots of flexibility on deployment. Running SAN IQ, our customers are able to virtualize their SAN environments. Typical SAN deployments require users to buy everything from one vendor, including both hardware and software, locking users into that vendor. We're taking advantage of a trend in the storage market, which was seen in PC servers a decade ago, where there has been a dis-aggregation of vertical applications. Today, in the server market, you buy hardware from someone like HP or IBM, and you use operating system software like Linux or Windows, and you buy a separate application from another vendor. We see a very similar direction in storage. We are first to come out with our iSCSI SAN software initiative, where we can integrate our software on industry standard platforms. We have very unique network RAID software to virtualize and pool our intelligent storage modules.

Techrockies: Those modules are PC platforms?

KC: Typically those modules are an Intel processor and a standard PC class motherboard. Those systems include standard array controllers from LSI, 3Ware, and others and standard disk drives. We're protocol agnostic, chip agnostic, and disk agnostic.

Techrockies: What kind of users are buying your product, and what markets do you target?

KC: They really stretch across the board in all industries. iSCSI took off initially in the mid-market, so we found that early adopters were in the educational segment, state and local government, and healthcare. We're now seeing adoption across the board.

Techrockies: There's been a lot of talk about the iSCSI market being somewhat slow to take off, has this changed recently?

KC: Absolutely. We have seen a tremendous increase adoption in the last 9 to 12 months. The real driver to that was iSCSI initiators. Adoption was slow before all of the major operating system vendors released their iSCSI initiators. Since Microsoft and other have released 2.0 initiators the market has really begun to catch on.

Techrockies: One issue lots of startup in the storage space have is the dominance of the larger OEMs. Do you find that customers are willing to buy storage from a startup like yourself?

KC: We started with our own branded products, and have had tremendous customer adoption. Our 500 initial customers bought LeftHand branded solutions. They bought those product because they plugged in and worked. The unique advantage was that they could scale incrementally, something they couldn't get with a legacy SAN architecture. With EMC arrays and others, our users had to guess a capacity point and buy the right frame. If they went beyond that capacity, they had to buy a second frame, causing them to be locked into what are called SAN islands—not what customers intended to do with network storage.

Techrockies: Do you see a lot of competition from NAS and vendors like NetApp?

KC: We do see them in some areas, and we can address the file market. We have a Windows Storage Server product we OEM, which you can put on a NAS head or NAS gateway. This is the LeftHand SAN Filer product. This passes file based storage onto our back end SAN. The problem with the majority of NAS solutions is that the storage is within the NAS box, and you're not able to scale the storage. It's a similar problem as Fibre Channel SAN, where you still have to guess the capacity correctly or you have that NAS/SAN island situation. Putting your NAS head/SAN filer in front of our block-based SANs means you can scale out your storage. It's a far more elegant and cost effective solution to implement.

Techrockies: How is LeftHand backed?

KC: We've raised 3 rounds of funding. We completed our C round in September of 2005. We have a terrific portolio of VCs including Sequel and Boulder Ventures, two local firms. Our investors also include Sprout Group, the venture arm of Credit Suisse First Boston. In our most recent round, we also had JP Morgan and Valhalla in Maryland participate. We've now raised a total of $75M , all the funding needed for us to go cash positive and to fuel future growth. Other local investors we have are are Vista, Appian, and Portage, quite a bit of local contributions.

Techrockies: How big is LeftHand, in terms of people?

KC: We have 150 employees in the company, 130 based here in Boulder or in the field. The other 20 to 25 are at an offshore development site in Bombay, through one our partners, Patni Computer Systems.

Techrockies: Those are in the software development area?

KC: They are doing software, QA and test, however virtually all of our SAN IQ software is done in Boulder.

Techrockies: Thanks!