Mike Worhach, CEO, Sepaton

Mike Worhach, president and CEO of VTL provider Sepaton, says 2008 is going to be a big year for data de-duplication.

"I think we're still in the hype factor stage with de-dupe for enterprise use," he says. "A lot of claims have been made, but in the enterprise space, no one has completed that story yet."

By mid-2008, Worhach hopes to close in on over 30 RFPs he says are in the works with a variety of enterprise customers, mostly in the financial sector, and mostly against rival EMC. Worhach is also bullish on the possibility of Sepaton's profitability and potential for going public next year. We caught up with him by phone today to get his take on these and other topics.

Figure 1: Michael Worhach, President and CEO, Sepaton

Byte and Switch: Give us an update on the business.Worhach: Business is great. Following our April round of financing, we've been growing products and customers. [See Sepaton Scores $22M.] We're in one of the hottest segments of the market, with over 800 customers and more than 30 Pbytes of storage under management with customers like Citibank, Yahoo, National Grid, Samsung, Verizon, to name just a few. We've added Asim [Zaheer] as VP of marketing, and Fidelma Russo as EVP of engineering. [See Sepaton Appoints Russo and Sepaton Appoints Asim Zaheer.] Now we have 150 employees worldwide... Our revenues grew 690 percent between 2005 and 2007.

Byte and Switch: Are you profitable?

Worhach: No, but that's the plan for 2008. That gets into the whole thing about the IPO market. A lot of companies in the past year came out, and we're looking at the metrics, at what ones were successful and ones that were not so successful, and considering the systems, infrastructure, and fiscal responsibility needed to make a move.

Byte and Switch: Who are the bad examples from this year's IPOs?

Worhach: Well, I don't want to really get into naming any of those, but I will say that Data Domain has done an excellent job in the de-duplication space for SMBs. We looked at them as highly successful. And Netezza did an excellent job. It's more than just metrics, you need to have the right people and products. But you also need to continue to execute. You need to have the right infrastructure in place to support the growth. It's all about going forward, all about having a well thought-out strategy.Byte and Switch: Would you consider a merger or acquisition as an exit strategy?

Worhach: We don't have an exit strategy based on M&A. That's not something you can really plan for. Of course, we have investors, and if something came along we'd have to consider it. But if you do things right, it works out.

Byte and Switch: You talk about enterprise de-duplication as distinct from SMB de-duplication. What do enterprises need that SMBs don't?

Worhach: Enterprises move differently than SMBs in procuring. They're more methodical about purchasing. Enterprise evaluation and pilot cycles are quite lengthy. When you talk about de-duplication for SMBs, gigabytes and terabytes, that's one thing, but terabyte and petabyte applications involve a whole new level of complexity.

Byte and Switch: What are the key requirements of enterprise customers for VTLs?Worhach: People have a real need for performance and scalability in an appliance. Everything needs to be done within the backup window, which keeps shrinking... Tape is still less expensive than disk and de-duplication helps with that... Also, based on the RFPs we're seeing, that you'll also be seeing more of a push toward increasing secondary storage capacity. The next battleground will be to store more information on the appliances. That's where de-duplication comes into play.

Byte and Switch: You don't have 1-Gbyte drives yet, do you? Is that on the roadmap?

Worhach: We're shipping [750-Gbyte disks] as part of our latest release. [See Sepaton Announces VTL.] One-gig disk is in the labs and on the roadmap.

Next Page: The merits of different de-dupe approaches

Byte and Switch: There's been a lot of talk about the relative merits of different de-dupe approaches. [See De-Duplication Rumors Highlight Controversy.] Do users really care about how it's done, as long as it's done?Worhach: I think it's very important. We do post-processing, and we believe this is the best approach. We think you'll see it taking off sometime in mid-2008. With in-line, you're trying to do the backup at the same time as the de-duplication. We separate the functions to make sure you can do everything in the backup window. Post-processing is the best approach to guarantee that happens.

Byte and Switch: What's your biggest challenge right now, and how are you facing it?

Worhach: It's all about execution, about growth... We raised money in March of last year, we added a new marketing executive, we're growing and expanding our business in Asia and especially in China.

Byte and Switch: What about partnerships?

Worhach: Solution-centric resellers who understand our value proposition are very important. We've also strengthened our relationship with HP. The HP VLS [Virtual Library System] 9000 is HP's first offering in the VTL space. It's de-dupe ready. We have a strong relationship with HP as an OEM partner.Byte and Switch: HP OEMs the VLS 9000 from Sepaton?

Worhach: The product is built to their specifications with our software.

Byte and Switch: What about the competition?

Worhach: Our major competitor is EMC, as the incumbent supplier. We believe we have a better-performing product. We have our own, and they OEM.

Byte and Switch: What about the enterprise spending slowdown?Worhach: We're responding to RFPs from very large companies, million-dollar opportunities. People need to do something. VTL is a real requirement they have. VTL is maturing, and de-duplication is coming into its own.

Byte and Switch: You're saying that any enterprise spending slowdown doesn't apply to your segment of VTL, de-duplication?

Worhach: Right.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.