Editor’s note: CohesiveFT is a cloud networking company that creates “overlay networks” on top of existing cloud infrastructure to connect data centers and clouds to create a hybrid cloud network.Ryan Koop, a co-founder and director of products and marketing, explains the company’s cloud solution and shares insights and advice for other software startup entrepreneurs.
Please describe your company’s vision and market.
Ryan Koop: Patrick Kerpan, Craig Heimark, Dwight Koop, Alexis Richardson and I founded CohesiveFT in Chicago in 2006 after working together in enterprise IT and financial services management. We’ve helped over 500 enterprise customers extend their corporate and data center networks to public, private and hybrid clouds.
We saw changes coming as the industry grew into the cloud; virtualization and middleware would present both security challenges and opportunities for large enterprises. We built our company and products around the idea that cloud customers would ultimately demand scalable, secure, on-demand and easily consumed computing capabilities to quickly adapt to the shifting market landscape. Enterprise IT teams should be able to use their existing resources and skills without redoing and relearning everything for the cloud.
Please describe your product and its differentiation.
Ryan Koop: Our virtual networking product, VNS3, helps enterprise IT teams control network settings such as addressing, topology, protocols and encrypted communications from their data centers up to the cloud. Essentially, VNS3 is the cloud version of a network security appliance complete with virtual routers, firewalls and security.
VNS3 creates “overlay networks” on top of existing cloud infrastructure to connect data centers and clouds to create a hybrid cloud network. Traditional vendors want to sell you a physical networking appliance to install in your data center. We deliver a software-based networking application that’s a combination of networking devices. It’s customized to fit our customers’ needs in public, private or hybrid clouds as well as a traditional data center.
CohesiveFT and our products are completely vendor, script, operating system, cloud provider and application neutral. We’re one of the few companies promoting an application-centric approach to cloud networking.
Is there a story behind your company name? (If so, please describe it.)
Ryan Koop: We started with “cohesive.” Our backgrounds and our goals are to help the market come together after years of silos and sprawl. The “FT” originally stood for “financial technology” because we started with a focus on virtual appliances for the financial services industry. Soon after the company’s start, the global recession hit and then the public cloud began to emerge. We reshaped CohesiveFT into a more broad enterprise software company and renamed the company Cohesive “flexible technology” to reflect our new scope in late 2009. That’s a lot to say; hence we embraced a shorter version: CohesiveFT.
Did your company change direction at some point during product development? If so, please describe what led up to the change.
Ryan Koop: Like most startups, the global recession taught us to be flexible. From 2008 to 2009 we struggled with how to adapt to the changes in our market, and our customers’ markets. In 2009 we pivoted from our single-industry focus in order to expand our potential customer base and survive. The challenge of shifting to a broad industry and broad size focus eventually helped us create a very adaptable product. We stopped thinking about the early versions of VNS3 as a financial product and created a multi-purpose networking tool for enterprises that use private and public clouds.
Over time we also evolved the product’s name to better fit its capabilities and our market position. The first network software product we created was called VcubeV. It evolved into VPN-Cubed when we moved from testing to customer production. We believed that VPN-Cubed would explain how our product was like a VPN, but enhanced. It helped to some extent; yet we found the name VPN-Cubed also confused some people since it did more than just VPN services. We’ve now rebranded the virtual networking product as VNS3 to reflect the range of features of this virtual network solution.
How did you determine the right pricing for your product?
Ryan Koop: Flexible is our middle name. Our customer use cases vary from a single, small project to a complex, multi-region customer setup; so our pricing has to be flexible too. We initially offered customized pricing plans, but we discovered that people like a price scale to work from. So we created “editions” to fit the proximate size and complexity of each customer need. We also recently reintroduced our free edition of VNS3.
What challenges have you encountered that you didn’t anticipate?
Ryan Koop: Stairstep growth. Hiring and quickly training new talent based on customer demand has been a challenge we still haven’t been able to solve. Given our focus on large, global organizations, we have to deal with long lead times in enterprise sales. At any one time we have multiple proposals out. Historically, when a few projects start at the same time, we have to scramble to increase our headcount and get the new hires off the bench quickly.
Our “elasticity test” is one of our best practices. We like to make sure candidates can adapt quickly and apply new ideas to their role at CohesiveFT. We give the test to everyone who applies, from software engineers to sales people. The test itself is not technical, but a way to measure how someone processes, learns and expresses new information in a limited amount of time. We’ll have a CohesiveFT employee take the same test, then compare notes about what they found. If a candidate can quickly grok, organize and present a new idea or topic, he/she becomes our new hire.
What are some of the things that took longer than you anticipated in getting your product to market?
Ryan Koop: Market education. Because cloud terminology and market understanding are still evolving, it has been very challenging to express what we do and how our products deliver business outcomes. We started CohesiveFT before “cloud computing” caught on, and now cloud networking is going through similar growing pains. As IT buyers are becoming more savvy, they are starting to seek out the solutions for their problems. We are confident that our technology can help them; we just have to make sure they find us.
What is one of your most successful strategies for sales and marketing?
Ryan Koop: Selling a new technology without creating fear, uncertainty and doubt (sometimes called FUD), while also being an approachable advocate for the enterprise. We have walked the fine line between friend and salesman; and it can be tricky.
Our biggest success in overcoming those fears and lack of technological savvy has been to co-create CloudCamp, which is an “un-conference” where early adopters of cloud technologies exchange ideas.
The point is to share cloud experiences, challenges and solutions with others in technology roles without the fear of winding up with a sales pitch as an answer. The London team came up with the great idea of audience “red cards” — if anyone launches into a sales pitch or goes off topic, they are voted out. We found that hosting CloudCamps encouraged a vendor-neutral, unbiased way for future cloud users to start answering questions and discussing issues with local cloud experts. There are CloudCamps all over the world now.
How do you decide what software products to use in your business operations?
Ryan Koop: Internally, we use Amazon Web Services to run our chat servers, website servers and some dev/test. We strongly believe we should “walk the walk” and own very little hardware at all. We have a few networking devices in Chicago, London, Palo Alto and Brazil. Recently, we also started building out dev/test and federated networks across several cloud providers. That way we aren’t just a cloud enabler, but an actual corporate public cloud customer as well.
What book most influenced you, and how did it influence your thinking and decisions?
Ryan Koop: Blue Ocean Strategy, which I actually read eight years ago, continues to have a powerful influence over our thinking. Essentially, normal markets are red oceans where firms fight over limited market share and exploit existing values, markets, knowledge and so on. Blue oceans are a new way to look at a possible industry segment such as Circque de Soleil, Zipcar and Netflix.
We actually used this book as our framework for building the CohesiveFT business. The founders drew up a comparison of traditional competitors and positioned our new company to dominate in segments the market wasn’t addressing at all. We wanted to create mass-customized, self-service, multi-sourced cloud networking products that enterprises can easily create and use.
Describe a pitfall you were able to avoid because of a mentor or other advisor’s advice.
Ryan Koop: Board member Patty Seybold advised us from the start to focus on the customer. She has written books and advised countless other companies to put customers first and build a business around what customers need. We’ve adapted and customized VNS3 to fit customers’ needs, and our upcoming 3.5 version release will be a huge co-creation project with some really interesting cloud networking use cases. Her advice saved us from building a product the market did not want.
Besides your upcoming 3.5 version release, what do the next 12 months hold for your company?
Ryan Koop: We’ve built out the new VNS3 version to include Docker technology. Docker lets our customers build lightweight, portable self-sufficient “containers” into VNS3. Customers can now collaborate and co-create a super customizable VNS3 solution for their specific use case. We are very excited about the possibilities for customers.
Also in 2014, we hope to continue to grow our partner programs. We have been working with regional and big global cloud providers such as AWS, HP, Google and Abiquo to offer better cloud networking experiences to our shared customers. Our goal is to help cloud customers really harness the power of the cloud. We will see cloud computing really catch on for enterprises when there is a strong ecosystem with providers and vendors working together. We’re still working with global and regional players. As the cloud provider market grows, we want to make sure our customers can work with all the major players and emerging game changers.
What is your top advice for first-time entrepreneurs or startup CEOs?
Ryan Koop: First, keep in mind that it’s going to take more work and more money than you planned.
Second, whatever product or service you sell, your end goal should be to make the customer’s life easier. Customers are attracted to the “magic” in cloud computing because they want something that will just work.
We’ve tried hard through the years to offer both a product that simplifies cloud networking and support that’s responsive and very fast. Our customers might not even care how our technology works, but they really appreciate that we make their jobs easier. When you reduce the “cognitive load,” people will find you and use your product.
Ryan Koop is the director of products and marketing at CohesiveFT, and a member of the founding team. He is responsible for product development and manages teams for public relations, international events and content marketing. His role spans the technical product development, customer support, business development and thought leadership needs of a growing company. Previously he worked with other CohesiveFT founders at a trading platform software company in the U.S. Derivative Markets.
Kathleen Goolsby is managing editor at SandHill.com.