FOSTERING REVOLUTION WITH OPEN-SOURCE DATA INNOVATIONS

Hey, likewise, Harshit, it’ll be fun talking about marketing, which is usually the least appreciated discipline within the company, don’t you agree? Everybody could be a marketer because we’re all consumers, but it’ll be fun talking a little bit about both the art and the science with you. I appreciate the invitation, Harshit.

All right. I grew up in California. I currently live in Texas, but I grew up in California in Silicon Valley, so I had somewhat of an unfair advantage of cracking a Silicon Valley job, I grew up in a laborer family, and like a lot of kids, these days they don’t trust children to do these jobs, but I delivered newspapers. I worked in a restaurant, washing dishes. I did a lot of things there to earn money for all my music endeavors when I was a kid, but I realized I wasn’t going to be a musician, so I joined the Marine Corps and did it with a high enough score that I was able to guarantee myself to go into electronics and IT. I’m so grateful for that because it gave me not just the military experience, for which I am very grateful, but it also gave me experiential learning such that when I got out of the Marine Corps and went back to college with the GI Bill, it was super easy to get straight A’s because I was already an IT guy. Six years of doing the job made it easy to get the degree afterward.

I’ve been blessed. I’ve had a chance to do a lot of technical things, but I found I probably was better at talking than typing. Over that time, switched from being an IT person and a QA engineer to working as a technical marketing person. First a systems engineer, technical marketing, and product marketing, and now I, for the past decade or so, doing marketing leadership roles. I’m one of those working men’s PhDs or blue-collar marketing executives who didn’t start as a marketer but finished as a marketer with domain expertise in their area. In our case, it’s boring. We’re a corner of IT that, albeit ultra important, where data is stored, lives, and protected and does all the great things that we do with the internet today, that technology is so far down in the infrastructure. When you store something on Amazon, do you know where it is? Of course not, or what it’s stored on and such. Our audience, if you think about it, has a consumer angle, but our business model aims at a B2B IT audience where we monetize our passions. That’s good enough for a background?

It’s a funny iX. They say the genie pool in Silicon Valley is rather shallow. I grew up in California and worked there for many years in the iX systems. The corporate office was on my commute home from two different jobs that I had working in San Jose. I was always familiar with the company and the company started in the year 2002. It’s now 20 years old and profitable, but not a household name. And so, for me, it’s fun working on the, let’s just say, the VC-funded or the PE or public company way of doing things. This company is private and profitable, has no investors, and is playing what I like to call the get rich slow scheme, which we’ll get into a little bit more, which is about building, using what is free technology or collaboration amongst the community to drive this business model, because our goal is to give first and through reciprocation. If we have a higher purpose and we think of people before profit, it’s just a fun way to work. And I think that’s how I found the company. I applied because of my background in similar companies, but the job’s become very rewarding because it’s a very different culture and it gives us a chance to do marketing a little differently hopefully, I can share some of those ideas with your audience.

Sure, iXSystems is the company behind TrueNAS. TrueNAS is an open-source software for data storage, and your IT people would use that from a business perspective, but we’re more well-known as the company behind TrueNAS, which is the world’s most deployed operating system for storage. It’s free to use, not just free to download, but free to use it all. And so, our business model is for folks to try it, not unlike a SaaS. Try it, like it, and we encourage them to continue doing the types of engagements that would allow us to perceive buying signals and we hope that they just ask for a quote. Whereas for my sales team, most of the demand that I send to them is in the form of people who’ve already raised their hand to ask for a quote. And it’s one of the ways we can drive a lot lower cost and sales and marketing versus the more traditional methods. So, our core offering, think about it as software that IT people use, but it’s most used by people of all skill levels at home to build a network-attached storage or a NAS or a protected storage inside your home.

It could be used from the home to the largest computing environments on the planet.

Sure. I’m somewhat biased since I work for an open-source company and I’ve worked for another open-source company before as well. The fundamental difference for those who don’t know is that you either have software that’s free to use and then there’s certain licensing or there’s software that can only be used under a paid-for license. So open source just means that it’s free to use, but moreover, that all of the code is put in the public for anybody to see. That’s one of the pros of open source is that it allows a level of transparency to the person using the technology. It’s not available in other technologies, so you can’t look under the covers to see how it’s working. And as the technology matures, the area of the data center where I work in storage is among the last of those areas where open source has taken over. So, people may remember that there were only Windows computers in the world and Macs and Amigas and all that stuff, and this idea of a free operating system, Linux came up. What’s the number one operating system in business technology today? Linux. You look at databases where it used to be Oracle and SAP and all that.

Now the most common are unstructured, no SQL databases, and in the cloud, as cloud services, right? So, you’ll see that things change. And I would say that open source is one of those technologies that from a marketing perspective, allows us to focus on the value of the technology and not having to buy it. As a marketer, it means I’m just trying to get you to try not buy, which is fine. And if the goal is to get engagement and engagement, not necessarily with any specific rules, just engagement that leads to more engagement, you have a lot more flexibility in how you can do some marketing campaigns. But here’s the other trick. If you work at a company like this, odds are you make a lot less money as a company from a margin perspective and such. So, you can’t buy the same marketing stuff that everybody else buys. So, a lot of it is you have to do sweat equity, homegrown things because most of the offerings in the marketplace are priced for folks who are public companies or VC-backed or PE-backed from a technology perspective.

All right. From a product development standpoint, it’s a well-known model. Instead of hiring engineers, paying them to test everything, and releasing it on day one as being bulletproof and ready to go as a solution, open source is very different because even before the first functional prototype is done, folks in the community are encouraged to use it, and it’s that use over approximately the same development cycle. Most software companies work in six-month development cycles. You can think of the development happening over that time. The difference is, instead of being done by a small number of the employees that work for you, it’s done by a larger number of community members, and it gives not just more of a diversity of the types of people are doing the quality assurance, but it means that the number of use cases tested is most diverse. From a product development perspective, we could not exist as a business if it were not for the value that’s given back to the community in the form of quality assurance, testing, documentation, and all that stuff. So that’s one of the things. What this means, though, is you as a company have to be okay with the idea that your beta is indeed a beta.

There’s no such thing as a beta in this other technology because if you’re going to buy it, it has to work out of the gate. Our technology, we’re not trying to help you buy it, we’re just wanting you to use it. And with that, I think, what changes the development. Now, how that translates to marketing, I’ve alluded to it a little bit so far. For us, we have a model where we aim to get as much engagement possible, obviously digitally, but our key metric is whether or not they’re engaging in our enterprise content or they’re engaging and giving the signals that they would benefit from using the technology. And once we see that and we see people using stuff, we can see exabytes of storage, a huge number that I don’t need to explain. Imagine data is getting so big, right? We can see those things, and so from a marketing perspective, our goal is to stay top of mind, not necessarily to get them to buy stuff just to keep them engaged. And I think that to me allows for almost a more consumer type of emotional buying there, where I’ve said this to other folks and friends who work in SaaS companies that are for profit, there’s free stuff.

Not only can you test the software, but there are the methods and the knowledge and the business process stuff that goes with that. And oftentimes we don’t feel that’s of value. But if you can say, Hey, that’s valuable stuff, you’re just advanced marketing. We’re just evangelizing the positive traits of the technology to get you to consider it the next time you’ve got a project at the top of your mind. We, in our space, in IT, given the average selling prices, there’s almost always a short list of technologies that are then compared against each other, often even tested against each other and benchmarked and all that stuff. Really, from our marketing perspective, we don’t sell the same way those other guys do with direct sales and SEs at the customer site. We’re a fraction of the size of the other folks, but we wind up on the shortlist of these opportunities because the folks who are involved in looking for solutions know our name and have tried it, and they just bring the idea up. And the cool thing is, even though you might be a challenger brand, you can beat the bigger brands if you get a fair comparison.

And so, for me, a lot of the marketing here is just to convince people that thing for free, and that’s the weird thing in this business. In IT, one second of downtime is bad and five minutes of downtime is a failure. It’s harder for folks to look at things that might be considered more garden variety and open because that’s not the premium good stuff. But if you think about how technology matures, and this is certainly where we are in this market space, among the last ones to have open source affect the way people make decisions, I just think for most anything, if you follow that Gartner hype cycle, at least in our industry, a lot of our customers do that. And for folks who know that you got the peak of inflated expectations, the trough of disillusionment. But once the technology gets on that plateau of productivity, and it’s been there for 10 years, and one might argue the storage industry has been there for 10 years, it only makes sense that new solutions that are fundamentally lower cost and have become mature over time just become a choice. I’d say, at least in my case, while it sounds like a bad analogy from a business perspective, and even times from a challenger brand perspective, you’re somewhat the generic version.

If for no other reason than you don’t have the brand name, but if you have a generic version that like generic pharmaceuticals, literally matches the thing, most people will go for the generic form of a drug because at that point they see them as equal. And I think that’s one of these ideas. How is your stuff as a challenger brand seen as equal to the incumbent brands? And how do you get on that shortly? I think it’s a good list. For me, it’s just driving as many reasons for the audience to engage and do something that shows value back to them. Sure.

This is great. I have in the past used this strategy that wasn’t exclusively open source. As you probably know, influencers are better at putting out content than most companies. I have in the past used a similar technique. You give your product to an influencer and they are seen using it, or they mention that they use it somewhere, and then more people go check it out. And in this case, you can imagine a technology like storage being important, not just for companies, but think about anybody for whom data is important. A wedding photographer. Imagine losing data. That would be terrible. All forms of content creators, people who are hoarding content at their house and stuff, so they have it, right? In case the internet goes down they still have their 10,000 hours of entertainment. There’s a lot of need out there that people have. And from a community perspective, the hope would be that an environment could exist where that exchange happens. Now, from a marketing perspective, we find that the environment is often in the comments of the videos of influencers who post content. We’re lucky in the sense that our segment has a couple of channels with very large viewerships, and these influencers have taken a liking to our company, TrueNAS, and they have essentially created videos.

My video creation department comes largely from three influencers. We don’t have to create videos because all I have to do is just put it out and they create the video. And that’s cool. It’s like a symbiotic thing. Our content is such that it drives viewers back to them, they take content that we put on our forums and market, which drives it back to them. So, I like to call that the virtuous circle. That’s one of those elements that’s a little bit different when it comes to the community because those influencers can reach people you’d never reach, and as long as your story is one that their audience likes, you can get that going. So, I’d say that’s one channel that is always good to try to break into. Another one that I might say is around simple word of mouth because we can do lots of case studies, we can do all those things, but for me, and I’d ask you harshly, how do people manage word of mouth? Because that’s one of the original marketing strategies of all time, and in today’s society it’s hard to do that. But at least I found from an open-source perspective that is a bigger part of it than I’ve experienced in other parts of my career.

Yeah, we consider SEO to be a hygiene thing. It is certainly doable if you have the will and discipline to do it. We haven’t needed to focus on it that much because, as I mentioned, most of the searches that people would search for our keyword terms would come back to our forums or to some place where the content points to us anyway. Everybody points back to us because why not give the people a backlink for the story that you’re writing? So, we find that SEO is a little bit less important because if they don’t find us on our site, odds are they’re going to find something that points to our site anyway. Ads are a hard thing for us because I can’t calculate cost per lead and cost per click in the sense that we have a fundamentally different philosophy on how dollars turn into revenue. In that case, just a lot of the things on the market we can’t necessarily buy. We do a fair amount of social, but I’ve found that our audience tends to be a little bit more old school, let’s just say, in the sense that we do have people on social, and a lot of socials around our community and doing the free stuff, but from a revenue perspective, we find that good old fashioned email newsletters still carry the day when it comes to marketing.

They may not love us per se. We’ve had some scuffles, let’s just say, with some of our resellers who have gone out and done some stuff there. One of the things I’ll mention about our business too, is that we do sell things directly, but we’re also just the way our model works. A lot of organizations buy IT solutions through a third-party value-added reseller. We certainly do have that, and before I forget, add to that value-added reseller thing. One of our challenges is that we are a more economical solution, which usually means lower ASP head-to-head. But what we’ve found now is, especially as, and you talk about SaaS, talk about just organizations turning into doing services. They want to make their money on services, so they can still charge the same amount for the project, just their cost to buy the material to deliver the project in the form of our technology, just less expensive. So, we’re finding that our strategy, as you might expect for any challenger brand, is to grow bottom up. And the company has been able to double over the past four years, which is a good thing, definitely grow faster than the market.

And I think we’re in a good position to drive continued growth. I just think that it can’t carry the same expectations that most commercial companies have because it just takes longer. And the cool thing is the business model is optimized not to have to do it today. Not that I’ll ever do one of those jobs again where you have to answer. We still do our quarterly metrics and we still track everything, but as a business, we’re not as stressed because we know this is a super long game and that’s what makes it fun. Now, can you do those same techniques in a company where this is the most important quarter in the company’s history, where every quarter is, maybe a little harder to do, but I’m hoping that I shared some ideas that might give some folks just some thoughts about how to drive more engagement. Because I think the challenge is we’re all trying to drive engagement, which means we’re in a world where we’re just begging for everybody’s time and eyeballs and all that. And so, it’s almost like it has to be not just valuable, just super easy. We just find that attention spans have also gone short.

And that’s one of the things where I know that you put out chunks of videos like this to do that. It’s just really you have to do the commercial for every piece of content almost as a means of driving them to measure those engagements and lead scoring.

I won’t give a specific name, but I’ll just say in general. One of the things that we at iX can do with our TrueNAS community is that, and it’s the same thing value that it applies to the influencers. Oftentimes, you’re a challenger brand asking a bigger brand to associate with you so you can have a higher confidence solution presentation to the marketplace. And for most commercial companies, can’t have every challenger brand to do that with, right? They tend to pick the larger ones as far as that goes. And so, what we have as an advantage is that with a large community of 250,000 people active, it allows us to be able to offer even more value to the partner upfront than we actually receive because the first thing that happens is 250,000 people see their value prop, and I can show that I can reach more. Even though we might be one-tenth their size, we might reach 10 times more people than they do. So that’s where I think there’s that exchange of value that we have to do because we don’t have the money to otherwise exchange hands. Another thing about being open is great because we don’t have to have any affinity over any partners.

The idea is anybody could become a partner, write the code, deploy it, put it in the app catalog, you’re a partner. No one’s stopping you. And I think what’s cool about that is it drives this organic thing where a bunch of people in the community try a bunch of stuff. Those companies say, hey, those guys are doing this thing. Maybe we should do something there. I think if you as a company don’t have that value built in, part of the way to attract partners is to sell, if not that immediate value, what value to the investment they’re going to make now that will give a total return? Because most of the time, partnerships are just a superficial type of announcement that is, It feels good, but it doesn’t necessarily result in a lot of joint business. I’d say that in most press releases of partnerships, one out of 10 become one of those killer solutions, and the other nine just join the portfolio.

All right. Well, at the end of the day, this is infrastructure. What used to be specialized devices to do things like networking, storage, and servers are all essentially commodity off-the-shelf hardware with components from the open marketplace assembled and the differentiation is in the software. So that’s one of the things. So, if that’s the case, there is this view of the world much like the way you view cloud storage. You don’t care what it runs on, you just want it to deliver the service level agreements. In organizations whose data doesn’t work ideally in the cloud, and there are some of these cases where there’s a lot of SaaS companies who’ve done this base camp, moved from in the cloud to on-premises because they were able to chop 70 % off their costs. So, this idea that the cloud is going to be where it wins isn’t necessarily correct for all data. I think we tend to, in technology, see that it is very binary. There are winners and losers, when oftentimes the market grows more than double and the losing technology still grows. It just doesn’t grow as fast, right? So, in this case, the value is shifting from what would be just appliance-type things to a more software-based approach that works independently of the hardware you put it on, because a networking switch a server, and a storage device are all the same.

It just depends on how much they’re optimized. A truck, an F1, and a passenger car are all vehicles. They’re all optimized for one thing, but essentially, it’s the same technology if you think about it that way. So, the challenge is, will industry participants, the brands that we’re chasing, will be able to adapt given their business models rely on 70 plus % margins to even make money? Will they, in a continue further declining commoditized market, continue to be able to get those margins? And we feel we’re well-positioned to be there when the marketplace decides that this open-source, software-defined thing works just as well, if not better than the other one. They realize it’s safe now to move forward to a new technology.

Harshit Gupta (29:10)
Why don’t you please tell us, basically share some notable success story or use case where you feel like iX has made a significant impact on a business or maybe the public library? Organization, anything?

This is an easy question for me to answer, Harshit. By being open source the way our business model works and the way we operate our business, we are recognized as a digital public good. And there’s an organization, the Digital Public Good Alliance. It’s an UN-backed organization to bring, process, and technology to the developing world. The developing world can’t buy it the way the richest companies in the richest countries can. While we might be a $100 million commercial company, our software and technology deliver billions in real value that never would have been created had a free version not been available to go do it. And in that regard, the idea that those in the developing world can still have the same quality of stuff, they may not be able to have the same brand of whatever it is that helps that go, but they can have something that does the same thing. I can say that our technology today is widely used in universities, and particularly in areas where they’re doing scientific research and other very demanding things: cancer research, geospatial intelligence research, all of those things, everything to do with AI is being done.

We enable those organizations to do it where otherwise they just wouldn’t do the project because there was no money to buy the storage to do it. So, we feel good as a company for being a digital public good. I’m just hoping that as we as thinking about ESG, as a company environmentally, our technology prevents rare earth minerals and hazardous waste from being put into the ground earlier than it needs to be. Where you would use something for five years and destroy it, you can now use it indefinitely until it no longer makes sense. Not because it’s the green thing to do, but because why do you throw something away? It’s still perfectly good and works and can store data for you that’s all these other projects. We’re already enabling a bunch of innovation that otherwise wouldn’t, and our message to the marketplace is that by not doing away with other technologies, but considering adding open source to their mix, they can do a lot of things, whether it’s extended the valuable life of their technology, or moreover, have both their Have all of their data on a single platform. As you might know, it’s hard to move data from one place to another.

Okay. All right, let’s go.

My last Google search had to do with some concert tickets in my local area and I’m going to buy my wife the tickets.

That’s a good question. What tortures me as a person is seeing something out of place. I’ll give you an example. Far too many times in movies, they will show military uniforms and the decorations will be inaccurately displayed. I’ve always wondered why didn’t they ask somebody. Why didn’t they just put it out on the internet? Hey, is this picture, right? Anybody who served could tell them. But interestingly enough, those details are always missed. That’s one of my little pet peeves.

It could be for talking the longest without taking a break, though I imagine that’s a pretty hard one to break. I’m likely an average human being who isn’t likely to break any world records.

I’d say I’m more bold. I think marketers need to be that way because else you’re just not going to push the envelope. I think that’s a good selection bias for me in terms of a career.

It depends on when you ask me that question. In the past, naturally, it was door number A. My wife and I were door number B now.

Thank you so much. All right. I appreciate the time, Harshit.