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Friday, Dec 8, 2023

Digital Pioneer

With computers becoming faster and used for ever increasingly complex projects in the entertainment and media industries, storing data and having access to that data by multiple users takes precedent. That’s where DataDirect Networks enters the picture. The Chatsworth-based company’s storage systems are used in hundreds of post-production houses, in 40 of the 100 fastest computers in the world, and by government agencies, including NASA, which was its first customer and remains one today. DataDirect got a jump in providing the storage needed for large digital files used in feature films and television and that has helped in its growth, said co-founder and CEO Alex Bouzari. Taking a self-financing route, Bouzari and his business partners broke even at $25 million in revenues in 2002. Last year, the company exceeded $100 million in revenues. The company’s next financial milestone is reaching $500 million in revenues. To achieve that goal involves taking the company public. Already DataDirect has done a three-year audit, made a preliminary selection of an investment banker and made additions to senior management, including a new CFO. “Our goal right now, provided that market conditions stabilize and cooperate, is to take the company public in the next six to 12 months,” Bouzari said. Question: Where does DataDirect fall within the storage sector of the tech industry? A: If you look at data storage there are two types of data. There is the traditional data, which tends to be small chunks that are random in nature. These are data that reside in databases. The applications are things like airline reservation systems, ATM banking transactions, stock market transactions. Then you have the new bits of data, typically called unstructured data. This is data which has images in it; it has the attachments that you have on an e-mail. It is video content, any kind of simulation. Today about 85 percent of all the data being created is unstructured data. There is a shift taking place between the old data and the new data. We play in the new emerging unstructured data environment where the growth resides. The environments are Internet content creation and distribution, gaming, rich media, video, post-production, simulation, and online archives. These are requirements which, frankly, 10 years didn’t really exist. Q: When the company started in 1998, why the focus on storage for digital content? A: The background of the engineering team is storage and the video world. As we started drilling down into what people were doing in Hollywood post-production facilities, what was happening to the movie industry, what was going on with TV trends what we kept hearing from people was everything is becoming digital. We also had ties into the government and high-performance computing communities. As we started talking to people in high-performance computing environments we kept hearing over and over that scientists needed simulation tools with performance requirements which were orders of magnitude higher than the tools they had at their disposal. We looked at rich media, post-production Hollywood, we looked at high-performance computing and said both of these are environments where the needs are not going to be short term; these are trends that will go on for decades. It made sense to develop a storage architecture that catered to these needs. Q: When you and your partners started the company you did not use outside investors. Why did you make that decision and what challenges did it bring? A: We had heard like everybody lots of horror stories about [venture capitalists] and so on. Our biggest concern probably was getting involved with venture capital firms who would have a short term view and who would push the company to do unnatural things in order to get a quick return on their investment. The positives were we were able to develop a technology platform and a go-to-market strategy that has gotten us to where we are today. The flip side to it is it’s certainly a lot more painful to do it with your own money than to do it with somebody else’s money. It focused us very sharply on profitability. That’s why we achieved break even at less than $25 million in revenues that is why the company is operating income positive for the last five years. There is no easy way to get things done. If you want to do it right there is nothing better than putting your own money on the line and every dollar that you spend comes out of your pocket. It helps you focus on the right things. Q: What was the go-to-market strategy? A: Initially we said that in order for the company to scale, we have to build up a leverage model. We said we don’t want a go-to-market channel that relies on legions of sales people and have these people sell directly to end users. We said we are going to want to have partners who would resell our product. From the beginning we said we are going to sign up key strategic end users and going to leverage that into partnerships. We are sitting here today with people like IBM, Dell Sony who are reselling our product. That gives us the ability to have a much more cost effective infrastructure than trying to sell direct. Q: Can you describe the company’s overseas expansion? A: The company was focused on domestic markets up until 2006 or so. Starting last year we saw significant opportunities to expand internationally. We started to staff up outside the U.S. The areas where we focused were initially Asia and Europe. In Asia, Japan was one of the markets where we saw opportunities, mainly because the level of sophistication of the computing infrastructure is fairly significant. We recently made an announcement that we are going to invest for long-term growth in Japan so we’re investing close to $5 million into the expansion of that market. We will do the same thing in some of the other strategic foreign markets where we see growth. Broadening our international revenue is something we view as strategic. Q: That includes China where the country’s main television network is using your storage systems to broadcast the Olympics this summer? A: In China for instance we are the market leader for rich media implementations. We have more than 50 TV stations in China which are being enabled by DataDirect storage. CTV is the largest Chinese network that is basically in charge of providing all the content for the Olympics. So the ability to broadcast live to air and the ability to deliver content to a billion people in China was mission critical for them. They ended up selecting us because they felt that we were the best game in town when it came to that kind of requirement. SNAPSHOT: Alex Bouzari Title: CEO and Co-founder of DataDirect Networks Age: 47 Education: B.S.,Engineering and Economics California Institute of Technology; graduate studies in Engineering at the Massachusetts Institute of Technology; graduate studies in Engineering at Stanford University Most Admired: Warren Buffet Career Turning Point: Realizing the company’s products are applicable to a multitude of market segments beyond HPC Personal: Married Memberships: Managing Director, Board Member and Angel Contributor, Los Angeles Opera; Member of Board of Overseers, Los Angeles Philharmonic; President’s Circle Sponsor and Member of Collector’s Committee, Los Angeles County Museum

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