Alan Skidmore and Troika Networks: Technology’s saving grace Have you wanted to check your bank balance, make a credit card purchase or resolve a billing discrepancy lately only to be told, no can do, the server is down? The ever-increasing role of technology in daily life has turned these once minor annoyances into big-time headaches for businesses and transformed an obscure science into a commercial hotbed. Alan Skidmore, the president and chief executive officer of Troika Networks Inc., a company that makes networking systems for data storage, has a front-row seat to the revolution. The son of a farmer-turned-scientist whose work played a key role in preventing soil erosion from wind, Skidmore was hired last March to help mold the Westlake Village-based startup into a full-fledged business on the data storage network stage. Until the advent of a relatively new technology that uses Fibre Channel for these storage networks, businesses continued to add server onto server to store all the data and run all the applications they require, creating a tangled web of systems that were often difficult to access and share. So difficult and critical has the job of managing all that data become, that these storage area network (SANs) products have grown to account for about $7 billion in sales last year, according to industry estimates. Some analysts project that SANs products will account for a whopping 70 percent of information technology budgets by 2005. The three engineers who founded the privately-held Westlake Village company in 1998 labored for two years before they delivered their first product to market. Troika won’t divulge sales data or the names of its customers, but the company said that over the past year, about 80 of the controllers it makes for data storage applications have found their way to market in companies ranging from communications to retailing, insurance, health care, electronics and energy, and the company’s size has doubled to about 100 employees. Last summer, Troika raised $41 million in funding from a group led by Amerindo Investment Advisors. Question: Why is the demand for data storage networks growing so dramatically? Answer: If you think about all the digital content that exists in terms of digital audio content, digital imaging content, digital video content and the explosion in the Internet, what you’ll see is the world of data is growing at an explosive rate. Today there are businesses that have data on desktops, data in data centers, data on laptops, data in different divisions, different departments, different locations. And most of that data is critical to the business. If manual management of the data is left to the operating staff, they typically have to deal with issues of locating data or recovering data or restoring some data subsystems or servers and, as a result, they have a loss in the continuity of the business. Today we live in a 7-by-24 global economy, and no one in the business world can afford to be without their data for very long. Q: Why were you brought on? A: I came on board to take the company to the next level. This was a sound tech company that needed to recruit the rest of the executive team, and really define the product strategies to take the product to market. The founders were design engineers, so they had designed some products based on emerging industry standards, and they had had sufficient success to give them confidence that we could commercialize that technology. Now it was time to create a sales team, a marketing plan, a public relations plan and a manufacturing plan where we take these product technology concepts and make them commercially successful. Q: What are the challenges your business is facing? A: The two biggest challenges we face in our business are: number one, rapidly growing the sales channel. We do not have a standalone product. We are part of a larger (information technology) ecosystem, so we’ve got to rapidly grow the sales channels with our partners, other hardware manufacturers, other software manufacturers, other integrators and resellers and original equipment manufacturers and so forth. The second biggest challenge for us is to accurately predict the timing of technology twists and turns because our technology changes so rapidly that we could stand no chance to be successful if we were frozen on last year’s products. Q: So are relationships like the one you recently established with Hitachi Data Systems the company’s primary strategy for increasing sales? A: That is one of two ways that will become important for us. One is through our reseller partners, who combine our product with their product and resell it to end customers. The second method is to sell our products to systems manufacturers who incorporate ours inside of theirs, and call it part of their solution. Q: How difficult is it to run a company as an outsider when the founders are still very much a part of the business? A: The first thing I did before I made a decision to come here, I tested the three founders. (I asked them,) if in fact I come here and make a decision to zig instead of zag, tell me the emotion you’re going to go through. And they all gave me the correct textbook answers, which were the following: “We want this company to be a long-term sustainable business. That’s more important than (our) role in the company.” Q: How do you navigate the divide between theoretical engineering pursuits and the needs of the business on a day-to-day basis? A: Probably the most interesting story regarding that is the story of the engineers’ desire to have the perfect product, because most engineers want to have the perfect product. I have reminded the team that this is not about perfection. It’s about customer value. Rather than wait for the perfect product and continue to evolve it one more time, add one more feature, provide one more function, what we do is deliver products that have value in phases. So phase one would be a product that has essential functionality that matters to a customer with quality and reliability. Phase two would be an increase in functions and features that provide even greater value to the customer and then phase three, maybe the ultimate level of functionality. So what we do is phase in the product evolution with commercial success from subsequent phase to subsequent phase rather than wait for the perfect product. Q: How difficult is it to project the company’s financing needs given the high rate of growth in the industry and the vagaries of the technology? A: I think the rule of thumb is we have to look at whatever the cash requirements are for the upcoming period and double it. Q: Is that how it’s typically done? A: That’s how I’m doing it. Q: Isn’t it difficult to justify those kinds of estimates and explain them to investors? A: It was not last year. The market has soured this year. So I think the story now is you’re either going to make it or you’re not. If you’re going to be successful raising money, I think you can raise a significant amount because the investors want to see some sustainability. They don’t want you running out of cash and seeing their investment devalued. But because people are being more particular, it’s more difficult to be successful in raising money. Q: This market has become so hot, yet there are not many competitors moving into it. Why? A: The barrier to entry for what we’re doing is very high because of the complexity and because there is a shortage of skilled resources to address these kinds of unique technology applications. Q: Do you think you would be able to do your job if you were not an engineer by training? A: I think this job requires some kind of technical background. I don’t think it necessarily requires someone that’s been working as an engineer, but I think it requires some technical background, and I think there’s two reasons. One is there are subtle differences between decision “A” and decision “B” that may not be comprehended by someone that doesn’t have the background, and the second reason is leaders are only successful if people follow. Individuals placed in leadership positions that are not able to earn the respect of technical employees have difficulty in gaining the respect they need for those technical employees to follow them. Q: Which is the favorite part of your job? A: I think my favorite is talking to customers. There’s great satisfaction that comes from someone who’s willing to pay you for something you’ve built. But I also love working with employees.