Jack McDonnell, Chairman & CEO, Crosswalk

For more than 20 years, Jack McDonnell was the Mickey-D behind switch maker McData Corp. (Nasdaq: MCDTA), serving as founder, chairman, and CEO. Then he made a few changes.

McDonnell, who gave up his CEO post at McData in 2002, stepped down as chairman in January 2004. I was thinking I’d take some time off and kick back for a while, but that didn’t work,” he says.

Instead, he started another company – this time in the software space. With a couple of old McData cronies, he founded Crosswalk Inc. in February 2004 (see McData Names Kelley as Chairman and Crosswalk).

The new company owes a lot to McData. Besides McDonnell himself, former McData execs Mark Stratton and Rob Kelley are Crosswalk’s VP of solutions and CTO; the startup’s Westminster, Colo., shop is down the road from McData’s Broomfield headquarters; and the new venture licenses McData’s SANavigator SAN management software as well as Tek-Tools Inc.'s Profiler Rx storage resource management application.

What's more, while McDonnell doesn’t say how much money he put into his startup, he sold more than $6 million of McData stock last year.Crosswalk isn't into competing with its alma mater, though – nor with Brocade Communications Systems Inc. (Nasdaq: BRCD) and

Cisco Systems Inc. (Nasdaq: CSCO). Instead, Crosswalk is trying to elbow its way into selling storage management software to midtier companies.

The startup's Crosswalk Storage Manager builds a knowledge base of a SAN’s physical and logical resources, employing that base to monitor and manage the resources – more in line with what AppIQ Inc., CreekPath Systems Inc., Softek Storage Solutions Inc., and Veritas Software Corp. (Nasdaq: VRTS) aim for.

“We’ve primarily developed a knowledge base that allows us to relate all elements of this storage puzzle together,” McDonnell says. “A customer can determine how the operation for a switch or particular storage device can relate to an application. We build a knowledge base, create relationships between physical and logical components, and then populate the base with information we’ve discovered with our own tools and the software we license.”

Although he hadn’t started a company since 1982, McDonnell, 60, says the process was nearly the same the second time around – except his age and the cost of doing business had both gone up.

“A lot of things are the same. It’s all about having a good idea and putting together a good team," he says. "It’s more expensive to do today than it used to be, but most of the issues are the same. There are a number of trends that keep repeating.”We recently caught up with McDonnell to discuss his new venture, why he thinks management software holds great value in storage, how he names his companies, and other topics:

— Dave Raffo, Senior Editor, Byte and Switch

Byte and Switch: Did you know you’d start another company when you left McData?

McDonnell: Not really. I was thinking I’d take some time off and kick back for a while, but that didn’t work.

I brought John Kelley in [to McData] and turned over the reins over a period of time. [See McData CEO Lights a Fire.] But soon after I retired, I saw my wife’s to-do list, and I thought I’d better find something else to do!Byte and Switch: Once you decided to start a new company, did you plan from the start to develop software?

McDonnell: I had a pretty good idea. I had been looking at where the value proposition was going and knew it had to be a software company. But the specifics didn’t get worked out until I started Crosswalk.

[Years ago] I started out as an engineer, and did hardware and software. After working in the space program, I worked for a small company in California called Computer Communications from 1969 to 1980, where we designed communications systems.

Byte and Switch: So how did you go on to start a switch company?

McDonnell: McData started out competing with IBM on cluster controllers in the mainframe space. Of course, that market declined and we got into channel extension and even Unix-based products. Then we got into Escon switches with IBM.Byte and Switch: What do you think of the Fibre Channel switch business these days?

McDonnell: You get out there, you get a lot of momentum, then sell switches with an OEM model and it becomes commoditized. That’s where that business is now.

Byte and Switch: Is that why you got into software?

McDonnell: That has something to do with it.

The storage side is going through consolidation and commoditization. It’s very expensive. Arrays are expensive because of software content, not because of the number of disks plugged into them. I feel the best place for that software is in the network layer, not in the array itself.Byte and Switch: Where did the name "Crosswalk" come from?

McDonnell: Who knows? Finding a name these days is real hard. Some manufactured names are hard to pronounce. We went through a million names and found one we liked. It doesn’t have magic to it, but hopefully we can generate magic.

Byte and Switch: What about McData? Does that name have magic?

McDonnell: That was intended to be a temporary name while we thought of a really zippy one like Cisco or IBM. But nothing ever came to us. And I think those other names were taken.

NEXT: A New VentureByte and Switch: How did Crosswalk come about?

McDonnell: When I started my career 100 years ago, I was a software guy and did a lot of systems projects. Over the last 20 years [at McData] our game has been primarily connectivity, which was a lot of fun. [But] I was excited to get back into software, because that’s where the value lies.

I see a compelling need for a different approach. I’ve seen a lot of tools available over the years, but mostly for monitoring and recording and focused on infrastructure and narrow functions. There’s a need for products that tie storage devices to infrastructure and the applications that use them.

Byte and Switch: How is starting a storage company different today than when you started McData?

McDonnell: I’m older. When you’re young, you think you have more energy. A lot of things are the same – it’s all about having a good idea and putting together a good team. It’s more expensive to do today than it used to be, but most of the issues are the same. There are a number of trends that keep repeating.Byte and Switch: Will you seek VC money for Crosswalk?

McDonnell: So far, we’re self-funded. We’ll probably go outside in the near future, but I don’t feel a lot of pressure to do that.

Byte and Switch: How long will it take to be profitable?

McDonnell: That’s a secret. But my wife tells me it will have to be soon!

We’ve been growing on a pretty steady basis. In 14 months, we’re already up to 65, 70, people. We’re adding to the sales force and to the engineering organization. Over the next couple of months, you’ll actually see some marketing from us.NEXT: Product Developments

Byte and Switch: Explain Crosswalk Storage Manager’s architecture.

McDonnell: We licensed some components that plug in to our architecture. But we’ve primarily developed a knowledge base that allows us to relate all elements of this storage puzzle together. A customer can determine how the operation for a switch or particular storage device can relate to an application. We build a knowledge base, create relationships between physical and logical components, and then populate the base with information we’ve discovered with our own tools and the software we license.

We’ll develop more of our own software as we go along. We’ll continue to license as we see the opportunity to use point products, but more of our focus will be on internal development.

Byte and Switch: What value does Crosswalk add, as opposed to just using SANavigator and Profiler Rx together?McDonnell: We add the ability to take whatever information is discovered and make the reports far richer in their content. Customers can understand a lot more about what’s happening in their storage infrastructure.

They can do much more in-depth discovery of their environment. We passed all four profiles of the Storage Networking Industry Association Conformance Testing Program – disk arrays, switches, fabrics, and host bus adapters. [See Crosswalk Passes SNIA Testing.] We’re adding a lot of discovery capabilities.

We saw that the midmarket customers that have 25 to 200 servers in particular have the same problems as enterprise customers, but they don’t have same solutions. They don’t have the people resources that enterprise guys do. We need to give them management tools and make them simple enough for people who aren’t experts in storage to use them.

Byte and Switch: Where do you see the product going as far as functionality?

McDonnell: Most products are focused on monitoring and reporting, which is good and necessary. Our big push coming is active management – provisioning, service level agreements, things like that – so customers can define at a business level what they want and can set the rules. That’s where most of our development energy is focused.Byte and Switch: Will you get into other types of software applications?

McDonnell: Not specifically, but if you’re going to help customers solve problems you have to have influence in the data path. But you’ll have to stay tuned for that. If you can help a customer change how he deals with storage and change how he can optimize it, he can change his operation model.

NEXT: Going to Market

Byte and Switch: Who is your target customer?

McDonnell: Typically, we’re saying the sweet spot is organizations with 25 to a couple hundred servers, although we have customers with more than 400 servers. Also, we’re targeting companies with five to 15 IT people. It’s not typical to see one or two, but over time we may push down further.We describe our target as SME. Everybody’s talking about SMBs, but most of the work being done there is pricing and packaging as opposed to making it useful. With SMBs, you do not have storage architects and people who are experts in storage technology. Repacking enterprise stuff is not going to cut it there. Our products are enterprise-ready, but the opportunity is in the midmarket. Our ambition is to grow towards the higher end of that midmarket.

Byte and Switch: Whom do you see as competition?

McDonnell: Look at the midmarket space. What we see is enterprise competitors taking products that are too complex and too expensive, and repackaging them for the midmarket.

Our approach is to make it dramatically more simple, more open, and more powerful. Competitors go from proprietary management software and extend it to make it open. Customers are skeptical of that. That approach is typically a failure.

Byte and Switch: What’s your go-to-market strategy?McDonnell: Our model is to go through reseller channels. We have one distributor now in Arrow Electronics and 11 or 12 VARs, and we will continue to expand VARs. We’re looking for VARs with significant storage practices, particularly ones that have professional services offerings and can take advantage of our tools. [See Crosswalk Announces Partners