Retuned Violin looks to play sweet music by focusing on roots in new strategy

Violin Systems CEO Ebrahim Abbasi talks with ChannelBuzz about his plans to return the all-flash pioneer to relevance and long-term success following their late-2016 Chapter 11.

Ebrahim Abbasi, Violin Systems’ CEO and president

Last spring, the former Violin Memory emerged from a bankruptcy filing with new leadership, new ownership – and a new name – Violin Systems. Ebrahim Abbasi, Violin Systems’ CEO and president, is one of the few C-level holdovers from the old regime, where he was the Chief Operating Officer. Abbasi has a very clear view on where the old Violin went wrong however. He also has a very clear conception of the strategy the company needs to take in order to succeed going forward. It involves regaining their focus on all-flash, while leveraging their new corporate overlords to acquire additional software, as well as being laser-focused on the channel for their go-to-market.

Violin Memory was a legitimate pioneer in the all-flash space, and Abbasi thinks their early success blinded them somewhat to some emerging problems.

“The company practically invented this market, and in the early days, they were smoking the competition,” he said. “Multiple challenges soon emerged however. One was that the products were expensive, which became more of an issue as new companies entered the space. They also were so successful that they made a fundamental error – they forgot people would learn from them and beat them to the punch. The competition introduced dedupe and cut costs. Violin didn’t. Violin also missed the virtualization phase altogether.”

Abbasi, who had been President and COO at Force10 Networks, which was acquired by Dell, joined Violin as Senior Vice President of Operations in March 2014. He thus had a catbird seat to watch the last stage of Violin’s decline that culminated in filing for bankruptcy.

“At that point, the company had two achilles heels,” he said. “First, they were spending too much money. Secondly, they introduced product at the beginning of 2015 before it was ready. The interoperability and solution testing were not done. We also went into primary storage at wrong time, when it was declining. So we basically stopped selling what we were good at, and introduced a product that we were not good at.”

In March 2016, Abbasi was made the COO.

“I cut the company size, and we also reintroduced software that was well-tested and well-regarded,” he said. “By the summer of 2016 I was running everything but sales and marketing, but these had become a  revolving door of demoralized people.”

The company filed for Chapter 11 bankruptcy, and was sold at auction in January 17. The winning bidder, part of the Soros Fund Management hedge fund, got Violin for relative peanuts — $14.5 million. At that time, however, the company’s equity value was only $1.5 million, as the share price had collapsed after the bankruptcy filing.

“I was asked to take over as CEO, and with the new ownership, we became a debt-free company with a healthy balance sheet,” Abbasi said. “I then visited most of our customers, and acknowledged what had been done wrong, and told them what we would do. We only lost one major customer. In fact, we had almost zero attrition from the company as well, throughout the whole restructuring process. That is unheard of.”

Abbasi said that the messaging given to customers a year ago remains the company’s strategy today.

“I said that we would go back to our roots, and that is what we are doing,” he said. “We are all about building on-prem private clouds for mission-critical applications. The target is larger companies. We won’t be competing with Nimble at the lower end of this market, because we aren’t competitive there. Secondly, we are part of an enterprise hybrid cloud strategy. And thirdly, we are placing a high degree of importance on integrations with key vendors like Splunk.”

Violin has three core platform offerings, all of which are scheduled to have a next-generation platform come out this year.

“These will stretch the limits and lower the capacity,” Abbasi stated. “We also have an NVMe platform on the drawing board, which we are planning to have out for the beginning of 2019.”

The company has added both sales and engineering resources.

“We just announced this expansion,” Abbasi said. “When we reduced staff before, we had shrunk the sales force to North America, and we are now going back. We are also partnering with an engineering services company to get access to more engineers. This is a significant investment in engineering.”

Abbasi also restated Violin’s commitment to the channel as the core of their go-to-market model.

“We sell about 98 per cent through the channel,” he said. “That includes fulfillment partners, partners who open doors and bring us into deals, and partners who bring us into broader solutions. I recently hired Rick Ruskin as our SVP of Worldwide Sales, away from Kaminario. He had been running their channel there, and I practically stole him away. I strongly believe in channels.”

Violin also just announced a new sales strategy that provides multiple ways that customers can acquire their technology. They can now buy it on a standard CAPEX model as before, through a set monthly acquisition free through Violin’s leasing partner, or on a subscription model for as low as 1 cent per gigabyte per month.

“This is all about customer choice,” Abbasi said. “We listen to our customers and we have some that  love our product, but who are not able to just write a check for $250,000. We made it possible through this subscription model to pay a monthly fee. This includes all the service costs, which are very affordable.”

Abbasi noted the irony that a company which had filed for bankruptcy now has the cash to support a subscription pricing model, as well as an aggressive expansion strategy.

“That’s thanks to our new ownership,” he said.  “Our new ownership lets us look at the big picture, and explore initiatives like expanding into converged infrastructure, and in-memory computing. We will also try and acquire software companies, and work with software and hardware partners to build out and recover the year and a half that we lost. We will be announcing some big partnerships, and you will see announcements around this very shortly.”

Abbasi noted that in rebuilding the company’s image, he had to deal not only with questions about the intent of their hedge fund owners – as well as his own past history of involvement with companies who were sold.

“This is my sixth company, but this one was the most difficult, because of the position of the company and the fact that its reputation was tarnished, which is why I lived out of my suitcase for months to visit customers,” he said. “Credibility is the most critical thing a leader can have. Some customers have brought up concerns that we will soon be flipped, as well as my own past history – that anywhere I go, the company is soon sold. The concern is that we were bought at a bargain basement price, so we will soon be flipped for a quick profit.”

Abbasi emphasized that both he and the hedge fund are in it for the long haul.

“We are now cash-flow positive, and are no longer a distressed asset,” he said. “They do much more than just flip assets. They bought us because they believed in our IP – that our problems didn’t come from the technology, but from leadership and strategy. That’s why they are investing in the company. I didn’t stay to flip, and they didn’t buy it to flip. We want to build value. This is all about value creation.”