Software-defined wide-area networking (SD-WAN) vendor Talari Networks hired Patrick Sweeney as its new CEO. Talari's former CEO Mark Masur will remain as chairman on the company's board of directors.

Sweeney, formerly with the security company SonicWall, plans to move Talari to a near 100 percent channel model. The vendor wants to sell its technology through managed service providers and value-added resellers.

[caption id="attachment_55474" align="alignright" width="210"] Patrick Sweeney[/caption]

Today, Talari has a mixed business model. In 2016, a minority of the company’s transactions went through the channel. “I think less than 30 percent,” said Sweeney. “This year we’re above 50 percent. I just reviewed our pipeline, and we’re north of 70 percent of pipeline deals going through the channel.”

Selling through channel partners is a different tack than many other SD-WAN vendors take that sell directly to enterprises or that strike up partnerships with service providers. Asked why Talari is moving to this business model, Sweeney said the company prefers to be circuit-agnostic and not align its future with the service providers that sell connectivity. “We believe in being circuit-agnostic to allow the customer to have the choice of any providers.”

Talari’s SD-WAN can aggregate multiple bandwidth sources and transports such as MPLS, VSAT, LTE, and broadband/DSL Internet.

The channel approach also provides Talari with a different target market from other SD-WAN vendors that are competing for a limited number of service providers.

Enterprises have traditionally used MPLS for mission-critical traffic. Those SD-WAN vendors that partner with service providers gain access to the service providers’ market share of MPLS customers. They then offer SD-WAN to help enterprises save some of the cost of MPLS by shifting non-mission-critical traffic to other connections.

But Talari prefers to tout the reliability of its SD-WAN technology rather than focus on a service provider’s MPLS. Sweeney said Talari’s technology has proven to be fail-safe because the company has won a lot of its business with government 911 organizations.

“We’ve won multiple 911 call centers," Sweeney said. "With these call centers, there can be no failures. You’ve literally got to have life-or-death reliability. Once we started winning the 911s, it gave us the halo effect.”

He attributes the company’s fail-safe SD-WAN to the fact that the technology “speaks the language of granular packets.” In a 2016 conversation with SDxCentral, John Dickey, Talari’s president and COO, said what makes Talari’s technology unique is that it tags every packet in one direction for Layer 2 and Layer 3 traffic. In addition, it tags Layer 4 traffic.

Sweeney said Talari also won the business of a “major car company in the Bay Area.”

A recent IHS Markit report ranked Talari No. 3 among SD-WAN vendors in terms of revenue. IHS reported Talari had $3.8 million in revenues, or 6 percent market share, in the first quarter of 2017.

Talari is a private company that doesn’t disclose its revenues, but Sweeney said it will exceed $3.8 million in revenues in the fourth quarter of 2017. “We’ll hit a record quarter,” he said.

The above-mentioned IHS Markit report ranked Viptela and VeloCloud as the top two SD-WAN vendors in terms of revenue. Both of those companies have since been sold: Cisco bought Viptela for $610 million; and VMware is in the process of buying VeloCloud for an undisclosed sum.

Asked if Talari is looking for a buyer, Sweeney said, “Any small company keeps all its options open. This market is growing fast enough to allow for organic growth. We have the ability to grow organically, but it, ironically, also makes you attractive for acquisitions. We have lots of opportunity.”

Sweeney was involved in various business transformations at his former employer SonicWall. He helped take the company private under Thoma Bravo in 2010. And in 2012, he helped sell the company to Dell where he served as vice president of security marketing in the Dell Software Group. In 2016, Sweeney helped spin out SonicWall from Dell as an independent company under private equity firm Francisco Partners.

SD-WAN stakeholders would like to know how much VMware is paying for VeloCloud. Talari executives have looked at valuation models. Sweeney said, “There’s art and science in valuation.” Major factors include the size of the market over the next five years, the growth rate of the market, and the quality of the product.