Startup lessons from OpenFlow creator Martin Casado

By Edwin Yapp September 5, 2014

‘I remembered walking away feeling as if I had failed as a researcher’
‘If you believe in your company … get real money to fund it’

Startup lessons from OpenFlow creator Martin Casado RENOWNED for its research prowess and situated in the heart of Silicon Valley, Stanford University has been the bedrock of innovation for the better part of the last century.

As the birthplace of traditional tech stalwarts like Hewlett-Packard Co, Sun Microsystems Inc and Cisco Systems Inc to Internet-based giants such as Google Inc and Yahoo! Inc, Stanford continues to churn out the best and the brightest.

Martin Casado (pic), the cofounder of Nicira Inc, a networking startup founded in 2007, certainly fits in with such illustrious company.

The 38-year-old doctorate graduate – one of the few entrepreneurs who finished his dissertation and graduated with a PhD in Computer Science from Stanford – is widely regarded as the inventor of OpenFlow, a new network protocol that is the basis for a new technology called network virtualisation.

Casado’s work on OpenFlow, which was the basis of his PhD, led him and two other computer scientists, Professors Nick McKeown of Stanford and Scott Shenker of the University of California in Berkeley, to form Nicira. The company was subsequently acquired by virtualisation and cloud vendor VMware Inc in 2012 for a tidy US$1.26 billion.

Taking time off from his busy schedule at the recently concluded VMworld 2014 tech conference, Casado tells Digital News Asia (DNA) that the name Nicira is of Sanskrit origin.

While the word does not having any purposefully-designed meaning, it literally means “vigilant’ in that ancient language, he notes.

“We wanted a foreign-sounding name as well as a name that was available as an open domain,” he says in an exclusive interview with DNA. “Ironically, we didn’t know at that time but the meaning ‘vigilant’ has the idea of ‘security,’ which is one of main tenets and use cases of network virtualisation.”

Perhaps the most interesting thing about this company, besides the fact that VMware paid over a whopping sum for a then little-known company that had only one product to offer, was how Nicira was born.

When asked how and why he started Nicira, Casado says that as a researcher, there is nothing more exciting or rewarding than having discovered a new innovation and wanting to share that innovation for the sake of improving things.

“All [tech] academics are interested in developing technology that changes things. I remember sharing my [OpenFlow and networking virtualisation] ideas with people from a leading networking company, telling them that this is the way they should go as it was the future. Instead, I was turned away.

“Senior researchers from that company told me that my ideas would not work. I remembered walking away feeling as if I had failed as a researcher, that the fruits of my labour were not worthwhile,” he shares.

Discussing the situation with his advisors McKeown and Shenker, Casado then decided to co-create Nicira with them.

“It was then that I realised that you can’t give your ideas away for free and that I wanted to make an impact, and so Nicira was born,” he adds.

Funding phase

Armed with determination and a little help from angel investors including the likes of ‘super angel’ Ron Conway, VMware cofounder Diane Greene and others, Casado laboured the first year-and-a-half to understand the market he was trying to break into, while staying laser-focused on developing the concept for his network virtualisation core business model.

Quizzed as to what was it like in the heydays when he was starting out, Casado says his experience wasn’t any different from the countless of startups that went before him.

Budgeting was extremely important to keep things going as one has to have at least a year’s worth of funds to survive, he says.

“But the one good thing for me was that having come from being a graduate student at Stanford, we [his wife and him] were used to living meagrely and not having a salary,” he quips.

Eighteen months after starting Nicira, Casado and his mentors felt they needed more serious money to expand and grow, and it was at that time that venture capitalists funded Nicira’s wider ambitions.

These investors included Andreessen Horowitz, Lightspeed Ventures and New Enterprise Associates, Casado says, noting that Nicira received about US$3 million in Series A and US$10 million in Series B funding. In total, Nicira received about US$50 million in venture funding, he adds.

At that time, Casado also tapped industry veteran and former Cisco executive Steve Mullaney to helm the company as chief executive, while Casado himself focused on being the chief technical officer, taking care of customers and investor relations, as well as sales.

Eventually other talents hired included Bruce Davie, a Cisco Fellow, as chief service provider architect; Cisco’s Alan Cohen as its vice president of marketing; and Rob Enns formerly of Juniper Networks, as vice president of engineering.

“The first 18 months was total confusion but [we] never took on venture money,” Casado recalls. “But as soon as we knew what we were building, we executed our business plan as we planned and surprisingly, we didn’t really deviate much from the original plan,” he shares, adding that this wasn’t typical of startups in Silicon Valley.

With funding in hand, Casado and his team of about 30 at that time began focusing on productising OpenFlow and network virtualisation technology, and spent the next two years trying to get early customers on board.

It wasn’t an easy task and the process was often fraught with disappointments and hurdles because big companies weren’t willing to bet on a nascent technology, especially when traditional tried and tested networking worked.

Eventually, Nicira broke into big names such as AT&T, Rackspace, and Fidelity Investments, as well as online auction powerhouse eBay and Japanese telco giant Nippon Telegraph and Telephone (NTT) with its product, the Nicira Network Virtualisation Platform, which has since been rebranded as VMware NSX.

Soon after that, VMware came a-calling and after the acquisition, Casado became the chief technical officer (CTO) of VMware’s networking business unit, while Mullaney became senior vice president and general manager of VMware’s networking business. Casado was recently promoted to VMware general manager and vice president of its network and security business unit, replacing Mullaney, who is leaving VMware.

From startup to enterprise

Startup lessons from OpenFlow creator Martin Casado

Besides Nicira’s technology itself, what was the company's secret for success?

“The team is everything. Also, it’s impossible to be perfect and you’ll have to keep iterating and there is a lot of hard work that goes into it," says Casado.

"For example, when you have a [software] bug, you’ll have to solve it and build a process to respond to the needs of the customers. This doesn’t only apply to technology but also to the business and funding.”

Casado also believes that a startup environment is very different from being in a large company, which hit him when he joined VMware.

“In a startup, you could be a year from running out of money. You’re always one deal from making it. This creates real cohesion and everyone gets behind the idea and the company. You don't have that in a big company.

“But at the same time, you’re always nervous about that because you’re a startup, and sometimes this causes you to be too myopic and your focus is so narrow that you can’t be more disruptive.

“I think there’s good and bad on both sides, but I really enjoy being in a big company, and to have access to resources that you’ve never had before – such as hiring the best and the ability to scale and bring value to the customer.”

On the differences between being in a startup and being in a big company, Casado says it’s an entirely different environment and you’ll need to respect this and accept that the two are different environments with different strengths and weaknesses.

“You’ll need to buy in to this idea. Often entrepreneurs are too used to the small company 'feel' that they don’t accept that they have to change. This makes them unhappy,” he says. “But if you accept that it’s going to be different, I think it would be great.”

Asked what the best part of his job is today, Casado says, “I feel that I’m growing and I love being in a big company, and the fit that Nicira has with VMware is a good one.”

His advice for budding entrepreneurs?

“Don’t play cute with money. If you believe in your company and what it has to offer, get real money to fund it.

“A lot of entrepreneurs are very conservative and if that’s the case, I don’t believe they believe in what they’re doing. If you believe in what you’re doing, think big and focus on what you need to do, fund it appropriately and don’t try to ‘optimise’ the money you have.

“Another thing is go after the big market. If you get a 100% of a US$50 million market, you’ll have a small company. Finally, team is everything. A good founder will spend most of the time recruiting.”