Interview with Scott Roza and Sundar Raghavan, Skytap

Last week, Seattle-based Skytap announced another round of funding, $10M in a Series C funding, for the firm’s cloud automation software efforts. To hear more about the company, we spoke with Scott Roza, CEO of the firm, along with Sundar Raghavan, Chief Product and Marketing Officer.

How does Skytap fit into the cloud automation software market?

Sundar Raghavan: The cloud computing market is a broad term, and there are lots of companies playing different roles. The particular area we focus on is helping companies to make their IT operations very agile. We serve two audiences. One, is functional users like you and me, who can use Skytap to create virtual environments for any number of purposes—for developing new applications, or running existing applications in the cloud without any changes. You can also use it for development, developing new applications, running existing applications, training end users and customers, and for sales demonstrations. We also help IT organizations, helping them to offload the pressure points in their data center to the cloud, so they can use the cloud as an extension of their data center.

Do you provide and run your own cloud or do you use other cloud providers?

Sundar Raghavan: We fundamentally focus on the solution value. Our primary value is how we help users with our self service web interface, which is very easy to use, which we run on our own infrastructure. We’re also capable of running in other partner infrastructure, and CSC, our partner, also runs their own version of Skytap.

There are lots of cloud software firms—how you are different, and are you just providing virtual PC environments or is this something more?

Sundar Raghavan: We are a lot more solution oriented. We can certainly do individual PCs, but our customers tend to focus on creating complex, multiple machine data centers. They really look at Skytap as an extension of their data center. It’s not just about managing a single PC. There are a variety of application use cases, including building new applications, migraing from existing applications, or using us for SharePoint migration or SAP migration. We’re about creating a complete, virtual data center, with storage virtualization added, network virtualization added, and with the entire cloud automated.

Let’s switch over to finances. What will you be using the funding round for?

Scott Roza: It’s a $10M round, led by a new investor, Openview Venture Partners out of Boston. Also participating were all our former guys involved with our Series A and B funding, including Madrona, Ignition, and Washington Research Foundation (WRF). What we’re going to be doing with that funding, is continuing to grow. We’ve been growing at a pretty rapid clip over the last twelve months. If you look at our capital spending and budget, it’s probably 60 to 65 percent in sales and marketing, and the remaining 35 to 40 percent around engineering and product development.

How did you connect with OpenView?

Scott Roza: These guys had actually been doing research over the last year around emerging cloud computing companies. They focus is really on expansion stage capital. They’re not looking for companies doing a seed or Series A, or where they product is only in beta with no customers. They’re looking for ventures that have proven themselves, have delivered, and are growing. Based on their analysis of the market and firms like Gartner and the 451 Group, they came across us and reached out. Over the last half of the year, we got serious about fundraising and re-engaged with them. They were one of many firms we talked with, and they emerged as the winner.

Talking with investors, did you find that investors are now finally understanding the cloud market?

Scott Roza: All investors are now fascinated and interested in the cloud market. But, I do think there is still a little head scratching as investors try to figure out what are going to be the models that emerge, trying to figure out the model that is a winning solution and strategy, and which may not. At the same time, there is lots of media hype around the cloud. Talking with investors, there is a lot of money being poured into cloud ventures. That said, I think it’s in the early days in terms of customer spending, and moving money from internal data centers to the cloud.

Are there any things you think will shift that, and might help trigger growth for you and others in the market?

Scott Roza: The key thing that will trigger it—and has been triggering it—is overall acceptance that companies can focus on things they do well, and move away from managing infrastructure for infrastructure’s sake. They can maintain focus on their core business—pharma for a pharmacy company, or building airplanes for an aerospace company—with solutions delivered via the cloud, better provided by someone else. They have to become more comfortable about security, integrity, and performance of those cloud options.

How do you get past those issues with your customers?

Scott Roza: From the selling perspective, we’re looking for companies asking the question of “Why Not?” rather than “Why?”. If the company has the mindset of “Why Not?” and they’re learning towards the cloud, this should make sense. That is where we want to validate that, from a use case perspective and a security perspective. But, if you have a company basically saying “why should I ever do this?” — they’re just looking for a reason to say no.

Finally, what’s next for the company?

Scott Roza: The big goals we have for the next year is to continue to grow the business rapidly, and double the customer base and revenue. We also want to continue to grow on the sales and marketing, and engineering side. Just like we have a very large partnership with Computer Sciences Corp., we’re hoping to have another large partnership in place in the first half of this year. Thanks!