PodcastsSeptember 1, 2022

DriveNets co-founder on the white box way to lower TCO

Hillel Kobrinsky, chief strategy officer and co-founder of DriveNets, joined the podcast with an update on how DriveNets plans to invest its new $262 million Series C round of funding, and how the company’s focus on virtualization software is impacting innovation and sales cycles with its service provider customers.
Source: DriveNets co-founder on the white box way to lower TCO (Light Reading)

Full Transcript

Phil Harvey 00:07
Hello, and welcome to another Light Reading podcast. My name is Phil Harvey, I am an editor here at Light Reading.
Kelsey Ziser 00:14
I am Kelsey Ziser. I’m also an editor at Light Reading.
Hillel Kobrinsky 00:18
Hi, my name is Hillel Kobrinsky. I’m the chief strategy of DriveNets and happy to be here.
Phil Harvey 00:25
You are also a co-founder of DriveNets, is that right, Mr. Kobrinsky?
Hillel Kobrinsky 00:29
Absolutely. And a co-founder.
Phil Harvey 00:32
Yes, yeah, very good. Well, that’s a big piece of information we have to put in there, because you’ve been at the company since the beginning. And it’s a very interesting company, we’ve covered it quite a bit. More importantly, the reason we’re talking about it now is the market you’re in seems to be heating up. And I say that because all of the competitors in the space seem to have seemed to be incredibly well funded, including DriveNets. Can you tell us about this last funding round you closed? And, and exactly sort of what the motivation was behind raising more money at this point in time?
Hillel Kobrinsky 01:13
Absolutely. So DriveNets went into Series C funding round, and we raised $262 million, which is our C round, totally funding of over 808, sorry, $500 million. And the reason is that we are growing, we are growing fast, we are very focused on our service provider customers. And we need absolutely to support them. So the funding will be to support our customer on the you know, network deployment on a global basis is very high task, it’s very important to be accurate to meet the standards of the service providers is, you know, the five nines, and therefore we needed the money and we are happy that our investor were supporting us.
Phil Harvey 02:14
That’s fantastic. Go ahead, Kelsey.
Kelsey Ziser 02:17
Oh, yeah. And so, you know, with that funding, are you planning, what kind of expansion? Are you planning in terms of adding any new employees or focusing on any new product development? Can you share a little bit about that?
Hillel Kobrinsky 02:33
Yeah, so first of all, we are focusing on tier one and behind. So it means that we are in right now, relationship sale cycles with around 100 service providers around the globe. So this is a huge tax. So this is one, obviously, we increase the employee numbers to we are 450. It’s like 30% growth in employees, on all areas, like corperation and support sales, and obviously, engineer, and, again, we need our customers rely on us. And therefore we need to really invest and help them to move from the old infrastructure to the new infrastructure, which, you know, they are conservative, the network is very important to them, of course, and this required a lot of resources and investment.
Phil Harvey 03:43
So there’s a lot of testing that has to take place, and a lot of proving out that, you know, like you were saying the reliability of the product. And it’s also such a cultural change for the service providers, because they’re going from a situation where they bought routers, and switches from a handful of suppliers. The innovation cycle has moved at the pace of those companies that were, you know, supplying that equipment. And you’re bringing, you know, a different model. So you’re able to constantly update, you know, the product with features, it runs on white boxes, so there’s no custom hardware to to build, what can you tell us also about, you know, the, the, your, your company’s ability to cluster, how it sort of clusters, different sizes and implementations for service providers to kind of fit their needs.
Hillel Kobrinsky 04:46
So, yeah, we are bringing really new way of how you design, build and operate a network. Just think about the fact that service provider today have like, three networks, at least the mobility, the enterprise, the broadband, some of them have another one for IoT. And we can collapse all of them into one. Because as you mentioned, there is the white boxes underneath. And this is the shared resource on top of if the virtualization layer, and then we can run all the routing functions in a way that it’s on a needed basis. I mean, whatever you need, it’s, it’s there and the resources are available. So it’s not only that you can run a large instead of the old chassis, you can large large clusters, that for example, people like AT&T are using, but also you can collapse networks into into one. And this is huge, moving forward for them as economics wise and operation wise.
Phil Harvey 06:02
Is the process of selling to a service provider any faster than it, you know, going with what you’re doing? Is it, is it any, are they any quicker now at adopting new technology than they have been traditionally, because you, we used to think of service providers as having, you know, eight to ten year sales cycles, you know, that these were like, really long, long decision process a long time to prove the technology and that sort of thing. How are you finding that environment?
Hillel Kobrinsky 06:35
So the good news is that, and this is one of the reasons we needed to raise more money is because all of them are very interested. I mean, if a few years ago, they would doubt the capability and the ability or the real need of faith. So right now, this is over, all of them are like, want us to be in their labs wants to see a POC wants to touch it wants to integrate into it. And all of them understand this is this, this is the future, this is how they will change the network. Obviously, there is no shortcut, because it’s so crucial for them, the network resiliency. So again, we need to go into labs and POCs. But the door is open and really open. It’s not, you know, in the past, and they’ve been here, I’ve been around like 25 years in this business. And in the past, you just can be, as you said, seven years in the labs. Now we are going to the lab, but people want to see us very quickly, in in the field, how and they want to feel it, they want to see that it’s really what we are promising as, as we have more and more customers, those customers, the happy customers, so therefore they are willing to take calls and encourage others to move this direction.
Kelsey Ziser 08:09
Yeah, happy customers is always good. So, you know, along those lines, what are some of the big benefits to service providers in working with DriveNets? Are they you know, is there are there some upfront cost savings, new features or services? What what are some of the big wins that they can expect?
Hillel Kobrinsky 08:32
Yeah, so, so obviously, no one is doing right now any move without looking into total cost of ownership. And, and we are bringing those right away, but they are much higher layers of it not only for for saving, total cost of ownership and operational costs. But think about just COVID that we went through that people were shift, work from home and all the offices and enterprise says where we’re empty. So think about the billions of dollars invested in those network that supported the offices and the enterprises where nobody used them. And they couldn’t move those resources to support the growing use from home. In our case, if the network is built as a cloud network, cloud is our technology. So the if the network is built as a cloud, like we are offering, so there was no problem like that because it doesn’t matter if they use it from home or they use it from the enterprise offices. It’s all shared resource and it’s all coming into the same place. So the ability for those investment to be utilized in high performance It’s higher. So again, walking in with the total cost of ownership. That means a lot on for the next year budget. But looking into the future, a lot of saving, honestly, it’s sometimes very hard to calculate.
Phil Harvey 10:20
Yeah, that’s interesting. I, I keep forgetting how how the pandemic lockdown affected folks on the IT side, specifically the way that you mentioned where they had centralized a lot of their assets, a lot of their value and a lot of their capital investment. And then suddenly, when you have to take advantage of the fact that people can work remotely, and you’re forced into that environment, it really does change. I think we’ve, you know, Kelsey and I have talked about it a lot from the security point of view, because there was sort of like this. Centralized security was kind of a big thing in a lot of it. Organizations inside the companies, but you’re right, about the just the network capacity and the network services themselves, if it’s all centralized, and it’s all being, you know, centrally managed, it doesn’t allow for that kind of flexibility. So the investment needs to happen in a slightly different way. So I can see that they could see that the that the pandemic lockdown may have sped up some decision making, you know, in
terms of going more cloud centric, I guess, is that an easy enough thing for a service provider to do though, because they’re not just, you know, adding on capacity, they’re already running hugely complex networks with all these legacy services attached to them and stuff like that. I mean, when you take out a router, you know, there’s there’s, it seems like there would there would be all kinds of things that could go wrong when you’re replacing a router with a different from a different vendor or a different technology configuration? How are you guys able to overcome that? I’ll call it the legacy problem of service provider networks, the fact that they never just turn anything off that everything kind of keeps running no matter how old it is.
Hillel Kobrinsky 12:14
Absolutely, this was a challenge. That is I said, we are in this business for a long time. And we knew we need to solve it. So what we did, and this is our best practice, we are building network with network cloud technology parallel to the existing network. And we just start to shifting the growth of the network into the traffic that’s growing into our network until a day. And we are doing all the interoperability, and obviously all the integration into us as BSS. But the this way, service providers feel very comfortable to start shifting traffic while they are having the existing network. And as they feel more and more comfortable, they are shifting more and more traffic into our network until they are you know, shutting down the old stuff or repurpose them to other areas in the network. So this was definitely a challenge in the beginning. But now we have enough experience to how to do it, we have the tools and everything so and remember networks are growing 20,30 50% depending which area in the globe you’re talking or which part of the network you’re talking. And if you shift only the growing so after three years, the new network is is bigger than the old network in a sense, and the decommissioning the old network. So it’s a very good question. And we feel very comfortable in our customers really like the way that we delete and this is why they feel comfortable to move this direction.
Kelsey Ziser 14:17
And are you also able to help your customers automate more of their network functions and just continue to move faster as Phil is, you know, talking about how typically telcos are known for moving a bit slower but does this shift in working with DriveNets help them to speed up processes in the future?
Hillel Kobrinsky 14:42
Yeah, absolutely. So this is definitely one of the biggest promises in the in everything that is cloud right because they every feature that we are bringing or ever need are asking and we are I’m bringing so you can light in our network, you can put this software in a virtual way and start running it, you don’t need really to deploy boxes and integrate them in the physical layer, even, you just upload some software on our virtual layer. And then you can start using it. And by the way, you don’t need to do it through all the network, you just need to, you can pick an area or function, and just in a small place to light this software in a way and start using and see how it works and see if your customers wanted and what they think about it. So the flexibility of bringing new product, new features, services, capabilities, it’s really a new word that, by the way, we know it from the hyperscale, right, they are bringing every day, new stuff into the cloud, there is no reason why those service providers will not be able to do so.
Phil Harvey 16:19
Yeah, that’s particularly exciting for network services, too, because it’s taken so long traditionally, for them to, you know, in that same way, just kind of tethered to the way they were buying technology, it takes them a long time to roll out new features, new functions, and maybe new services. I like the idea to have, if it works the way that I think it does, the way you’re describing it, that this could allow for service providers to maybe have different features and functions available to different geographies, depending on you know, whatever the needs of the local population are or whatever the needs of, you know, maybe they’re, you know, maybe there’s different government regulations or privacy regulations or things like that. And maybe some of that might be some simplified or at least automated as well.
Hillel Kobrinsky 17:05
Yeah, absolutely. The flexibility of turning turning on different services is in three dimensions. It’s the local, its type of customer, and it’s even different features in the same set of capabilities. And all of them again, you don’t need any boxes to ship and integrate. You just upload the software and it’s an it’s running. By the way we can also third party software, it’s not necessarily to be …
Phil Harvey 17:46
Okay, that’s important, as well. So, before we let you go, I guess one last question would just be we’re getting we’re getting a bit tight on time. But one last question would be, you know, what? Where’s DriveNets going from here? Since you’re, you know, co-founder, chief strategy officer, where do you expect to see the company in the next year to 18 months in terms of, you can either answer that in terms of customers or expansion or just in general where you, you know, where you expect the company to be headed?
Hillel Kobrinsky 18:23
So we are very focused on our customers, if you think about it, so there is not many software company like us that are focused only on the service provider, we are not competing with them trying to sell to the enterprise, which are their customers like other SaaS companies. So we want to be really into these tier one, customers, service providers globally. And tier one and tier two. This is our main focus. So we grow our revenue, we doubled our revenue year over year and we expecting to keep doing it and keep growing the number of tier one customers that we have, and not only having them as the customer, but lending and expanding in their network, which is the most important part. So execution, execution, execution, this is all about if you want to win, and again, we have a huge market as you as you know it and huge opportunity. So we will keep expanding in the future, related to the raising money, so I think we are aiming IPO but IPO is just another tool. So we need to be really focused again service our customers make keep them happy making them supporting us. And then we will find the right tool or, or vehicle to keep funding us.
Phil Harvey 20:12
All right, well, we’ll keep we’ll keep following the company will keep tabs on it and see, see where you go from here. Hillel Kolinsky. Thanks so much for your time today and and, and thanks to the DriveNets team for, for keeping you up. well into the evening on a on a on a on a long workday. I do appreciate it. Yeah. Thank you so much.
Hillel Kobrinsky 20:35
Thank you very much, Phil and Kelsey. Thank you very much, and I was really happy to be here.