You can put Barry Eggers, a partner at venture capital (VC) firm Lightspeed Venture Partners, in the bull camp on Software Defined Networking (SDN). He believes it’s big. It will shake up the networking and telecom world and will deliver some players along the lines of how VMWare rose to power, following the template for disruption of server virtualization in the data center world.
LSVP, was an investor in Nicira, a startup that was sold to VMware for that nice round number of $1 billion in 2012, setting off the rush in SDN startup craze. [Disclosure: LSVP invested in Light Reading, the company where I was Editorial Director for nearly 10 years.]
Eggers says that LSVP isn’t done investing in SDN. They’ve built one of the widest portfolio of any VC in the space: Avi Networks, Embrane, Nicira (already acquired), and Plexxi. Their latest investment in the space is Avi, which I’m told is focused on Network Function Virtualization (NFV), though Eggers is mum, saying that it’s still in stealth mode.
Below is a condensed version of our recent chat, when I asked Eggers questions about SDN and his startup investments.
Rayno Report: How big is the opportunity in Software Defined Networking?
Eggers: We invested in Nicira, so we believe in it. We are seeing a shift from hardware to software-based networks. It’s going to happen. People want more efficiency. It’s an interesting trend and it’s one we are investing in.
Cisco had a press release today on Opflex (April 2), three of our startups were mentioned, including Avi, Embrane, and Plexxi. The whole idea is there is an ecosystem developing around the software-defined network (SDN), or virtualization — I’m not sure what term to use. It gives you a lot of agility in how you deliver the services. It’s not just about taking cost out of the network. It’s nice to see Cisco embracing the ecosystem.
As you think about an network that has more and more virtual machines (VMs) in it, more applications — thousands of applications, tens of thousands of VMs — users are demanding those applications on a dynamic basis. And then you look at the network today with purpose-built hardware, it doesn’t fit.
The networking managers ask why don’t we have more analytics and deliver services more dynamically. And why can’t we make it really easy to provision applications on a dynamic basis? The network has got to be more agile. Nicira was early to recognize this, and now Cisco recognized it.
Rayno Report: How big a threat is the SDN movement to the incumbents like Juniper and Cisco?
Eggers: Is it Juniper and Cisco or the service delivery guys like F5? There are a whole bunch of people that deliver layer 4-7 networks. They all understand this is happening. Layer 2-3 you will see them change. But that is not going to happen overnight. Companies like Cisco want to provide an evolutionary path for their customers.
If you think about it, virtualization took 11 years to get to 66% penetration of servers. Was virtualization great for the server guys? I don’t know. The network guys look at that and they will probably embrace the trend more than the server guys embraced virtualizaiton. There is an ecosystem of startups that will build the next system. It won’t be built in the big companies, it has to be built by the startups. But there will be partnership.
Rayno Report: So for example, you pointed out to Cisco’s OpFlex announcement. Tell me what this means.
Eggers: Cisco is making steps to embrace the idea of software control in the network. They are reaching out to an ecosystem that will help them do that. A lot of people say Cisco doesn’t get it, but they get the trend. For them it’s about how to offer their customers an evolutionary path. There are a bunch of startups that will help them do that.
VMware might want to drive customers to a more revolutionary path. The startups are going to be helpful to both paths, obviously VMware has more to gain if this happens faster. Either way, you need to create a path to help people do this. VMware and Cisco probably have the same vision of these networks, the question is the timing.
Rayno Report: How fast do you think this will this happen?
Eggers: The question is whether it will be slower or faster than [server] virtualization I think you will see people moving to SDN in the next few years. We already see people moving early.
Rayno Report: Who are the leaders on deployment?
Eggers: The financial guys, all of the ones you would expect. The service providers, cloud service providers. We’re seeing more verticals participating. Everybody is interested, the question is where they fall on the adoption curve. I think it will be consistent with the timing of virtualation. But virtualization took 11 years to get to 66%. But with virtualization, you could get the benefit on the server. With SDN you have to go broader to get the benefit.
We always overestimate how fast it will happen but underestimate the impact.