Exclusive Interview With Paul Bloch, President and Co-Founder of DDN Storage

Paul Bloch, 55, co-founded DataDirect Networks, Inc.http://www.ddn.com/ (DDN Storage) and brings over twenty five years of experience in starting, growing and managing technology businesses, including serving as the president of DDN, Personal Writer, Inc., and MegaDrive Systems, Inc. Previously, he was a director for Hi-Tech Consulting Group, a European management consulting firm based in USA. He was also for two years co-founder and board member of Whamcloud. He graduated with an Engineering Degree from National Superior School of Telecommunications (ENST) in France and a Masters in Electrical Engineering from the California Institute of Technology (Caltech). He is a U.S. citizen carrying a US passport. Hobbies: skiing, boating, fishing, motorboats and old cars.

StorageNewsletter.com: Why does the company has two names, DataDirect Networks and DDN Storage?
Paul Bloch: We’re moving into the DDN Storage name, but it has not been fully, officially, done. But pretty much all of the visible logos and aspects are DDN Storage branded now.

Is DDN really the world’s largest privately-held storage company?
It actually is yes, until Dell will acquire EMC that is to say. At that point they will become the largest privately-held storage company for the time that they remain private, which might not be too long.

Founded in 1988 under the name MegaDrive Systems, DDN only raised $12 million in 2001 in series A round with ClearLight Partners LLC, and ended its relationship with its VCs in 2002. I’ve heard several rumors about a possible DDN IPO. Are you actually looking into that, because you already did so in 2008?
We are privately-held, we are profitable and we’re very much focus on R&D and investing in future solution and customer satisfaction. The fact that we are private enables us to develop technologies that would be more difficult to work on if we were public. Moreover, at this point it does not really slow down the development of the firm as we have our own abilities to finance a project.

But the results are:
1/ you didn’t get enough money from VCs or from the stock exchange to accelerate your growth,
2/ you couldn’t acquire any company to complement your offering, and
3/ big customers hate not to know precisely the financial health of their vendors.
Those are all good points. For large customers typically, we have enough large references and we’ve been in business for long enough that this in not an issue once we talked to them. But from the outside you’re exactly right. This being said, now, with our installed base and references, it’s not much of a problem. Most of our customers are large enterprises. For acquisition, it is definitely a limiting factor, however we haven’t really found a lot of very attractive acquisition target either. But if we were, we would be able to attract and raise some fund on this. We have unused credit lines, abilities to finance our projects and growth.

What are DDN revenue, profitability and growth rate?
Revenue will get close to 300 million this year. The growth, depending on the year, has been in the 10 to 20% range, but mostly in the 10-15%, and we have a good profitability which enables us to keep investing in the technology, in the people and in the resources. The last small loss year was in 2013. 2014 and 2015 have been profitable and 2016 will be as well.

Which is you most growing vertical market outside of HPC ?
The largest growth market are really the web and cloud, then the financial services and the life sciences / genomics. Oil and gas was doing extremely well until the cost of the oil barrel dropped, but it’s coming back now and we’re seeing a small resurgence. So we’re hopeful on the investment in that front. We’re also doing reasonably well in manufacturing and video surveillance. So we have quite a hefty practice in commercial market which is growing faster than the historical HPC.  

What is your percentage of sales through channel and direct?
We have a lot of direct contacts with customers but the sales goes through our channel with a bit of direct for strategic accounts. We do nonetheless rely on partnerships with Cray, Dell, Atos, HP, SGI to basically funnel through complete solutions. So we sell more through channel, but direct is growing as well.

Your OEMs?
We have no OEMs at this point. All of them sell DDN-branded technologies.

Who are your main competitors?
Our main competition is some of the offerings from EMC, some of the offerings from NetApp, IBM potentially, and then on the lower-end it could have been Seagate, but they really failed on implementation.

Now are you also competing with companies like XtremIO and Pure Storage in all-flash subsystems?
Yes and no. We’re more in the large scale and performance environments, as opposed to Pure or XtremIO. Pure is very focused on resolving Oracle database issue with small capacity for small and medium companies. We’re in a larger scale implementation where our pool of both capacity and I/O requirements is going be significantly larger than the requirements given to these guys.

Number of employees in your company?
In the six hundreds.

How many French ones?
About 35-40 French employees.

Number of active customers
In the range of 1,500 to 2,000.

How can your compete with the recent scale-out SDN with commodity hardware like Scality or DataCore solutions for example?
Scality we don’t see them as much. We actually have a larger scale lower latency platform object store with WOS. So this competes directly with Scality, but DataCore I don’t know enough to tell you if it works or if it doesn’t. What we have seen is that they play more in the low to mid-enterprise market. You don’t see DataCore in HPC environment, they cannot draw the performance requirements.

You don’t offer de-dupe or compression.
The type of content that we use very often cannot take advantage of de-dupe or compression as much as enterprise contents. We’re starting on compression though. You’ll see one of our compression offering later this year.

Encryption?
We do have encryption.

Gartner wrote last year: “DDN lacks tight integration with VMware and Hyper-V.”
Not tight yes. If you look at our sales and revenues, it is not based solely on delivering solutions for VMware and Hyper-V. However we do have a significant amount of customers that uses them as part of the implementation with us. 80% of our sales are not on VMware and Hyper-V, so as such we might no be as expert, but a lot of our customers are using our technology with these two solutions, and we have some of the certifications.

What’s the future for HPC: IB or Ethernet?
I would answer both because we’re able to deliver both, and Intel Omni-Path is coming up as well on a single platform. So we’re just going to follow the various price/performance trends.

Are you planning to enter into backup or archiving?
We already are in a live archive market and we announced some data migration products that enable you to really manage workflow and data from persistent to object store to cloud or to tape. So we do have those software suites now that we’re delivering both a data migration and data archiver. We’re able to provide a solution to move from Isilon, NetApp or other competitive platform to our object store. It allows you to not buy more tier-1 and you can basically lower your overall cost and ease your management.  

Who are your HDD and SSD providers?
For HDD it’s simple, there is not that many anymore so it’s HGST and Seagate. On the SSD side it’s Toshiba, SanDisk and Intel.

Percentage of SSDs sold vs. HDDs?
Today it’s 1 to 10 and it’s going to grow to two, two and a half by the end of the year.

What is your average system price range ?
Our system starts in the $75,000 to a $100,000 range, and it can reach into the multiple million dollars implementation, tens of millions sometimes. But the average is probably in the $200,000/250,000 range on a per system basis.

Why did you open a new R&D center in Meudon, near Paris?
Both Alex (Alex Bouzari is the other co -founder of DDN, Ed.) and I were born and raised in France so it does have a play, we have a good knowledge and understanding of the continent. Paris is a great location and the French, and more largely European engineers, are quite good in theoretical math and coding and so forth. And because we’re doing advanced R&D in Europe, it’s a good match. Hiring developers, support personnel and field sales engineers with staffing targets will exceed 50 employees in 2016.

What is your roadmap?
We’re looking more and more at resolving end-to-end data life-cycle workflow at scale. So at that point you basically have notions of acceleration of application, using SSDs and different software layer for that portion.

Are you thinking about going in the lower end?
We have a mid-range system that can start in the 50 to 100TB range and can evolve. We plan to stay in that mid to high range sector, we’re not going to go in sub $5,000 range.