Most technology CEOs get excited about taking a company public; Enterasys' new CEO Michael Fabiasch sees going private as an equally interesting opportunity.
Fabiasch comes to Enterasys after private equity firm The Gores Group bought the vendor in 2005 and took it private. He recently sat down with Network World senior editor Phil Hochmuth to talk about his new job, and what's next for the company that is the last vestige of Cabletron still in operation independently.
What are your impressions of Enterasys after your short time on the job as CEO?
One week into this, I'd say that I'm blown away by the technology, the intellectual property, the people. This company has been through some difficult times, and we've retained all of the things you have to retain: that is, we have great customer relationships, great people, and great products and a great road map. We have over 600 patents.
I have this fundamental belief that sales is a process; it's not a department. And that great companies basically treat sales as its own separate company, and they treat every customer interaction as an opportunity to really make the customer feel special.
We have perhaps been a little more product-centric; now I want us to be more customer-centric. It's one thing to have the product, but you have to make sure that people know how to market it. So they have to articulate why it's different and better and explain to customers how to use our products and take advantage of them.
The most interesting thing that happens in technology today is that a company comes out with a technology that [has a lot of features], but if you look at their customer base, most of the customers only use [a few of the features]. It's not only coming out with product - it's the training, documentation and best practices that go along with it. How one company uses it is totally different than how someone else might use it.
Learning should be empirical. These things should come from the installed base. Thought leadership should occur in the field. If someone does something with the product that's interesting and unique.
I believe you should find a way to bring it back and spread it out to as many people as you can.
How is it different taking over a hardware-focused company, coming from the software world, where you were once CEO of Aprisma - Enterasys' former management software arm - and most recently, a vice president at CA?
The thing about software, you really have no constraints. You can reinvent a software company, if you wanted to, and do something totally different tomorrow.
In the hardware business, you're basically tooled up - even if you do your own manufacturing. You gear your whole company around a certain product set. So you don't have the flexibility to change your business priorities as much as you could in the software business.
Having said that, the whole idea of selling solutions is almost identical. People don't buy a networking solution today without knowing what the road map is. They don't buy a switch from you today, just based on what you have today.
People want to know if you'll be around two years from now or four years from now. They want to have the kind of relationship with you where they give you input into your products going forward. So those things are all very similar.
Those are things where Enterasys can really be different, as a smaller US$350 million company; I can take the time to meet with people in customer meetings, with customers who are saying what they want to have. Customers love to be sitting across from the CEO.
Is there an advantage to being a privately held company?
I'm really excited to be taking the company private. First, I go back with the Gores Group people a long way. I know how they work. I'm very excited that we've taken the company private, probably for three reasons.
By going private, we can get off the quarter-to-quarter treadmill that public companies are on; we don't have Sarbanes-Oxley stuff that causes us to do things that don't necessarily add value to the business. And you can make decisions, long-term decisions that are in the best interest of the customers. You're going to see a lot more companies going private in the next several years.
Is there a downside to being private?
There really isn't. The only thing is that a [customer] prospect may say to us that they've looked at the financials of our competitors, who are public, that they want to see our financials. Frankly, if anyone wants to see our financials, we'll show them our financials under a nondisclosure agreement.
Enterasys has been strong in vertical markets - education, healthcare, state/local government; at this point, are you resigning to be a specialised network vendor catering to those markets, are you looking to expand?
We're going to do both. We're going to make sure that our higher education, state and local government, and healthcare customers are absolutely taken care of. The thing about IT infrastructure, you can sell the same solutions to many different kinds of companies. . . . We're very applicable to a lot of markets.
What we won't let ourselves do is spread ourselves too thin. If we can enter another market with the same set of product functionality, we'll do it. If we have to modify our product functionality to get into a new market, we're not going to do it.
How much of your product features come from the vertical market customers you have? For example, Enterasys' whole Secure Networks push seems to be borne out of higher education.
One thing I've learned is that an experience one organisation has can certainly be spread to other organisations in the same industry. But it can be spread to other industries as well.
There were security things that the higher-education users were experiencing before anyone else, in terms of viruses and peer-to-peer. We were seeing thought leadership really on the university side, really ahead of the enterprise on those issues. Then in government, the U.S. Army, a customer of ours, was experiencing a different kind of security threat - people randomly trying to barrage their networks and bring certain sites down.
There seems to be a gang evolving in the industry, comprising many of your competitors - Juniper, Extreme and Avaya in particular - with the goal of going after Cisco. Where does Enterasys fit into this, in terms of VOIP and other technology partnerships?
We're going to have to be internally focused for the next four to six months. I want to be the absolute best vendor in our space that there is, with regards to every aspect of the customer relationship.
We're not bad today; we're probably ahead of most companies, but we're not where I want us to be. So we're going to fix those things and do all that.
There is a federation of states, so to speak, that's ganging up against Cisco. And frankly, it's in the customers' best interest. Cisco is a big dominating player in this space. Over time, it's not in customers' best interest to have just one big dominant vendor who can boss them around. So we will be looking to join a federation like that when it makes sense. Perhaps we'll lead one, or maybe we'll participate in one.
It makes a lot of sense, and ultimately it's going to be in the customers' best interest. I applaud the fact that these things are happening.
Where the company stands now, what has been changed so that the controversial issues that have dogged Enterasys in the past - a 2002 investigation by the Securities and Exchange Commission into accounting practices, and indictments of former executives - never happen again?
All of the SEC stuff has been cleared up and is behind the company. The SEC commended us on our efforts. There were no findings by the SEC against the company. Anything that may still be happening in the courts is with individuals who have long been disassociated with Enterasys. So from this company's perspective, all of that is absolutely over, and has been for a few years. All of that was resolved prior to Gores buying Enterasys.
As for customer perception, it's old news for them. It's not like this was Enron or MCI or anything like that. But I do think customers are happy it's over and done with and they're on board with us. It's not an issue.
What is the state of your value-added reseller/channel system?
We have to strength the ecosystem. We need to know how to sell our own products, and we need to be able to articulate that and train companies how to do it before we can really expect them to go out and be successful on their own.
So for the next four to six months, we're going to be inwardly focused, like I said. Because I don't want to go out and start working with VARs and new partners if we don't really have all the things we really need to have in place for those folks. Six months from now, we'll be launching into these folks.
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