Cloud computing Venture

Aryaka CEO Matt Carter On What’s Driving Surge in Demand For Private Network Services

Matt Carter, Aryaka

Plenty of companies and their employees are still working remotely nearly eight months into the COVID-19 pandemic. And many of them may continue to do so permanently. As a result, tech companies that support remote work have been seeing an increase in demand. One of those companies is San Mateo-based Aryaka Networks, which provides private network services for companies, taking a cloud-first approach.

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The company has raised $184 million to date, per Crunchbase data, from investors including Goldman Sachs, DTCP, and Third Point Ventures, and has a post-money valuation of $550 million. The company was named to Inc. magazine’s list of fastest-growing private companies in 2020, with reported three-year revenue growth of 144 percent.

Crunchbase News sat down with CEO Matt Carter to learn more about the demand the company is seeing, consolidation in the industry, and how a remote-hybrid work model will affect the future of networks. Carter previously served as president and CEO of Inteliquent, a publicly traded provider of cloud-based networking services for enterprises that was acquired by private-equity firm GCTR for roughly $800 million in 2017.

Note: This interview has been edited for length and clarity.

Will you tell me a bit more about the company?

Essentially, we provide secure private network services for the global enterprise. Our niche has always been the most complex connectivity challenges, anywhere around the world; something a company would typically call on us to solve. But what has happened over time as we add more products and features to our platform and companies are going through more digital transformation activities, we are being asked to do more enterprises and global networks, basically reconfigurations.

What’s driving a lot of the growth we see is that many companies are realizing they’re living in a cloud-based app world, and they want to have consistent, reliable and secure connectivity across their various locations. And they would like to be able to do that with a single source provider. Hence, Aryaka has found itself getting asked to the door to help with a lot of these digital transformation efforts as a single-source supplier.

Are there any kind of metrics you can share? Can you expand on why you’re seeing businesses do so well?

There are a few things driving the growth. Many companies are going through this digital transformation activity. Certainly the pandemic has accelerated many companies’ desire to move more toward a cloud-based world. What empowers all of that is a global network.

If you’ve got employees around the globe you’re working with different vendors to patch together a network that can work seamlessly and reliably across the board. Because you’re working with different vendors with different levels of quality there’s no consistent performance for your employee body. All of that is what’s driving companies like Aryaka to the forefront because we can provide–using the backbone of the internet and within our layered software–patented software and protocols. We’re able to deploy that consistent, reliable, secure network to the enterprise around the globe.

We’ve seen a big quadrupling of our sales pipeline in over a year’s time, and a lot of that growth has come since the pandemic started. So we’re just seeing a lot, and what we’ve seen is bigger enterprises asking us to help do the full A-Z transformation of their network architecture around the globe.

How is the work-from-home trend affecting the sector?

Think of it as if our primary offering had been a branch location, for example. We provide the connectivity inside that building for the on-site employees to access all the critical applications the enterprise is offering its employees.

Today, however, many companies are down to just one or two people in the office. So what has happened is that the enterprise is realizing that at some point it’s going to have a hybrid work model with people working from home and people working at the office. And they want to make sure that they’re able to provide employees the same consistent, reliable access to all of its critical applications.

The implication for Aryaka has been around accelerating our product development in order to be able to accommodate the sort of binary but interwoven worlds of work-at-home and the branch location.

What can we expect to see in terms of consolidation in the industry?

There’s been a lot of that going on with a lot of companies being acquired over the past year. The consolidations will continue mostly around companies that are security rich and SD-WAN (software-defined networking in a wide area network). And those two companies coming together cause the market demand for an integrated platform of SD-WAN and security by a single service provider.

We’ll see more of the security firms, or SD-WAN companies, coming together to form what’s called a SaaSy platform to serve the global enterprise. We’re seeing that today, and will see that going ahead further as more of these companies come together to create that sort of de facto platform.

Are more of these companies coming together that way, just because customers want that kind of one-stop shop?

Yes, I think there’s some integrity around having an integrated platform. I mean, today you can be an SD-WAN provider and have a strategic partnership with security firms and vice versa, and offer each other’s solution as part of an offer being set. And that works. But what creates more value is having your own IP on both fronts. Enterprises and customers are demanding more of this integrated sort of offering from the security companies as well as from the SD-WAN companies, so it’s all being driven by customer demand.

Today, when we go in to sell our SD-WAN platform, the conversation within 10 seconds is: “What’s your security offering as part of that?” The same thing is happening to the security firms that just got the security piece: “Help us understand around the connectivity piece, around the SD-WAN component.” So a lot of this is being driven by customer demand.

From your perspective, what is needed for a next-generation network?

One that is designed to accommodate a cloud-based world. When you think about the legacy networks, they (are more) hotwire driven and very inflexible, and will not architect for a digital world. They’ve been force-fitted to work in a digital world, but they will never optimize a built-to-live wholeheartedly in a digitized world.

So the next generation network is really all about being built for and by folks who understand a digital world, a cloud-based world. That’s where Aryaka is so unique; our network was designed with the cloud in mind, we didn’t have to force-fit it. We understood right from the start that it’s a cloud-based world, that we were riding a wave. We’re an 11-year-old company, but we always knew this wave was coming.

The next generation network also will include the the security components. So it’s not just about connectivity, but also security. All of that, is really what we see as the next-generation network. And that’s where the market is moving.

How do you see your company playing into what work will look like in this kind of new normal?

We’re adaptable and flexible. We have a lot of businesses based in branch locations, for example, with people working in the office. We also look around the globe: In Asia we’re seeing people returning to the workplace, and we’ve seen some of that gradually improving in Europe and in the United States, maybe less so. Our whole premise is that what the pandemic has given corporations is some flexibility around the future of work that we see today. I don’t think companies are going to go completely virtual.  Some will, but I think those will be more outliers. People are social, they need to be around other people, so we believe that that will continue to be part of the equation.

The question now is: How do you accommodate access to companies’ critical cloud applications outside the work environment? How do you ensure that that stuff is secure and safe, and that everybody has a reliable, consistent experience across the globe? What we will continue to do is add functionality features to our platform that will allow us to be able to provide and deliver that experience for our customers anywhere, any place, anytime around the world. So we’re preparing for a world in which work-from-home and going back to the office co-exist for the enterprise.

When did you realize that you needed to prepare for this hybrid model?

I think in the first couple of months we realized that this was going to be normal and we needed to make sure we had the right products and services to address that. As any enterprise, we were just trying to get our arms wrapped around the implications of COVID. We did significant outreach to our customers, trying to understand what was going on with them. We were able to help them quickly deploy new sites within a matter of days so they could remain productive as they shut down one site and opened up another site. It became obvious that there’s going to be a new normal created out of this pandemic.

As companies like Google and Facebook started making announcements that they were going to extend work from home for another year-plus, we felt that those were indications that companies were not only trying to keep employees safe, but they were really thinking through how work will get done post-pandemic–that not everybody’s going to be returning to the office. Shashi (Kiran, chief marketing and product officer) and others on the team really took that insight and infused it into our product development efforts and our sales and marketing go-to-market motions. They really started to sort of fine-tune the value proposition of: We can accommodate this hybrid world. If you like this at the branch location and loved that experience, we can help you do that for your work-at-home employees, too.

Is there anything else our readers should know about the future networks, cloud, etc.?

I think we’re accelerating into a digital, cloud-based world. Forward-thinking companies are preparing foundationally to have network reliability and security that’s compatible to a digital world.

For the company that’s trying to just hold on to what it’s always had, competitors and other forward-thinking enterprises are moving on to the next generation. Similar to the cellular business, there’s 4g. Now they’re talking about 5g being the next network and all the capabilities that a 5g network will provide.

It’s the same sort of thing on our side of the house: The embedded base has been on this 3g/4g legacy type of network, the enterprise, and we’re now moving toward the next generation network that promises a lot more capabilities and compatibility to what global enterprises are looking to do.

I would say that the call to action is that we can help them securely move into that world without ripping apart their current network, augmenting their existing network and creating a path, an incredible bridge, to where networks are going for the enterprises.

Photo: Courtesy of Aryaka

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