Vyatta Startup Takes on World

Vyatta, a feisty Linux networking startup with attitude, believes the current economic downturn and a confluence of technological shifts will enable it to overcome normally impossible odds of success.

“We are the Red Hat of networking,” said Vyatta CEO Kelly Herrell.

Vyatta is benefitting from the current economic downturn just as Red Hat did following the dot-com bust a few years ago, he said And today, as in the previous recession, budget-strapped IT directors need to stretch their dollars; therefore, they are more willing to consider open source alternatives like Vyatta, he explained.

Additionally, however, Vyatta is growing rapidly due to a technological “perfect storm,” including adoption of a standard ISO open network operating system, a stable Linux kernel and standard, x86 hardware, Herrell said. In addition, network integration no longer a problem because most companies now are running on the Internet and using the same IP protocols instead of large private networks, he said.

“Our little founding group understood that most of the networking market is about software,” that no longer needs to be married to hardware, Herrell said. “They put the pieces together and they were right.”

The venture-backed, Belmont, Calif.-based company sells portable, Linux-based networking, routing and security software which can be purchased as an appliance or run on the customer’s own x86 hardware, or on the Xen or VMware hypervisors as virtual machines or on the cloud. All for a fraction of rival products from Cisco, especially compared to Cisco’s larger systems.

In a very active development span last year, Vyatta boosted its maximum throughput to 10 gigs and introduced three networking appliances, first the 514 router, firewall and VPN, followed by the more robust and feature-rich 2501 and 2502 models. The 2501 has a 1.8-gig single-core processor and 1 gig of memory while the 2502 has a 2.4 gig, dual core processor and two gigs of memory with dual core forwarding, virus protection, intrusion detection, high availability and failover protection.

While the initial 514 appliance was only big enough for a small office, the larger appliances extend Vyatta’s reach into small, midmarket and larger enterprises including hosting providers. Vyatta offers several levels of support subscriptions for its appliances and its stand-alone software. In addition, a community edition of the software can be downloaded as a single image for free but is not recommended for production.

Although Vyatta hasn’t introduced a new appliance since last December, Herrell said.

Vyatta is currently reviewing recent Intel advances that are expected to boost price/performance and scalability and will be incorporating these upgrades in its future products to ensure that Vyatta remains at the leading edge.

In fact, Vyatta’s ability to ride Moore’s Law of continuing chip advancements is what will enable it to compete with Cisco, unlike its large proprietary rivals such as Nortel Networks, which filed for bankruptcy several months ago, he said.

Vyatta can “absolutely” overcome Cisco’s 70% market share lead, Herrell said. “We already are,” but not like Nortel or Juniper Networks but by riding a wave of technology disruption, decoupling network software from the hardware, he said.

“We are surfing trends more powerful than any single vendor, trends for standards and openness, that no proprietary vendor can contain,” he said.

Herrell declined to offer even a rough estimate of revenues or predict when Vyatta would become profitable. To date, the private company has received about $20 million in venture capital.

However, in a March 2008 interview with TechTarget.com about the time of Vyatta’s first appliance and 10-gig test, Herrell said the company had 100 paying customers and had given away more than 100,000 free software downloads. Ten months later, Vyatta said in a January press release that its revenues grew 600% in 2008, to which Herrell would add only that revenues are growing 50% to 100% every quarter. Total downloads now have tripled to 300,000, he said.

Through all the challenges of growing a startup against a huge, entrenched competitor, Vyatta’s playful sense of humor is a rare and refreshing contrast to the vast landscape of corporate blandness. In its standard “boilerplate” description at the end of every press release, for example, Vyatta claims that its customers are “smarter, better looking and drive much nicer cars” than those of its larger competitors. Its website challenges visitors to take the Vyatta vs. Cisco Challenge: Five Simple Questions. Five Shocking Answers. And its press releases include a tongue-in-cheek apology for causing Nortel to file for Chapter 11, a Vyatta bailout relief plan for IT departments and a subscription discount pegged to Cisco’s latest profit margin.

“We inject a little levity and satire into a very serious industry,” Herrell admitted. “We are very different and the humor fits us well. But along with the humor, we strive to keep making the more serious point that there are far more flexible, economical, usable ways to deploy networks. It’s a 1-2 punch from the get-go.”

Asked what benchmark would represent success, Herrell said the key hurdles are getting Vyatta’s largest enterprise and service provider customers to go public and winning partnerships with global IT vendors.

“I believe we are [successful] but I haven’t heard the news yet,” he said. “We’re talking months, not years. Then revenues will follow as a result of widespread industry adoption.”