4 MARCH 2017 Alexandra Frean, The Times
Clouds have parted for the executive who lost and then won at WANdisco
When WANdisco reports its final results next week, David Richards, the Sheffield-based tech company’s founder and chief executive, will only be looking at one number.
“The most important thing is that in 2016 we neutralised costs. In the fourth quarter we reduced cash burn to $200,000 from $6.9 million a year earlier. That surprised virtually everybody in the market,” he says.
To say that this comes as a relief for Mr Richards would be a huge understatement, after what has been a tumultuous few months. He was abruptly sacked in September after a prolonged share slide and concerns that the company, which helps businesses move data from their old systems to the cloud, had failed to fulfil its early promise and was instead just burning through cash. But within a week he was reinstated with shareholder support, while the two directors who dismissed him, including Paul Walker, chairman, resigned.
Mr Richards’ sudden fall and return were well documented. At the time he complained of having been “ambushed” and described Mr Walker as a “f***wit”. About five months later, he says that far from denting his self-confidence, the events had the opposite effect. “I got contacted by shareholders, who said: ‘We are going to fight this.’ It buoyed my confidence, if anything.”
Mr Richards claims he still doesn’t understand why he was kicked out. But his insistence that his chairman should have known that the company’s fortunes were poised to improve because “it was in the public domain” that it aimed to reach cash-flow break-even by the end of the year, suggests he may not have done a good enough job at convincing the board this was true. He has, after all, been criticised in the City for over-promising. He bristles at this suggestion, pointing out merely that, in the event, not only did costs flatline, but bookings also nearly doubled in the fourth quarter to produce annual increase of 72 per cent to $15.5 million.
To explain how WANdisco pulled off this transformation, Mr Richards points to Yeturu Aahlad, 58, an Indian-born computer scientist who is part of the team that founded the company in 2005. Dr Aahlad, a distributed systems architect, is key to everything that WANdisco does, even though, like the wizard behind the curtain, he is rarely seen.
As far back as 2000, Dr Aahlad understood better than most the needs that companies would have to store and replicate data at scale between data centres over a wide area network while at the same time keeping all datasets in sync with each other in real time.
Armed with this breakthrough, Mr Richards was convinced that WANdisco was due to become a leading player. But the company initially took a wrong turn. Its first product was built for the Hadoop ecosystem, an open-source software framework, which the company believed was going to “take over the world”. Then cloud computing came along and moved the goalposts. WANdisco had to go back to the drawing board. “This often happens with tech businesses,” Mr Richards says philosophically. “You sort of build the wrong product.”
The setback largely explains why the AIM-listed company plunged from a £1 billion market valuation in 2013 to £50 million three years later. Today, however, after reworking its technology for the cloud and bringing it to market in 2015, it appears to be on the mend, with a valuation that has crept up to £140 million.
“The requirement to move data is suddenly facing every single company on the planet. If you need to move data from point A to point B and you can’t have an outage, there’s only one way to do it, which is using our technology,” Mr Richards says with characteristic bravado. He notes that if customers of Amazon Web Services’ cloud storage services, who suffered a massive and potentially damaging outage this week, had been using WANdisco’s technologies, they wouldn’t have suffered because all their data would have been replicated in real time.
“Having that kind of exposure at such a very young age probably meant that I wasn’t fazed by risk because I could see what rewards looked like on the other side of the fence,” he says.
Thanks to stock options, he received a tidy windfall when Druid floated. He travelled to the US, where he set up two software companies that were later acquired before founding WANdisco — it stands for Wide Area Network Distributed Computing — in 2005. The company has offices in Sheffield, Belfast and San Francisco, where he lives with his family, playing golf at weekends and keeping bees.
A second key element in WANdisco’s recovery, apart from its technology, is a partnership deal it signed a year ago with IBM. This enables IBM to deploy WANdisco’s patented cloud solution, WANdisco Fusion, rebranded as IBM Big Replicate. It also means that IBM’s 5,500-strong sales force began selling the product to its enterprise customers.
Nearly all the company’s sales are managed through channel partners, which also includes Oracle and Amazon Web Services. It hopes to form similar strategic partnerships with Microsoft, Google and Alibaba.
With his new product, intellectual property and channel partners in place, costs under control and gross margins running at more than 90 per cent, Mr Richards says that WANdisco has a simple challenge. “I’m not worried about the market, I’m not worried about the product. Now that we’ve built the mousetrap, we have to demonstrate that we can execute.”