Riverbed’s ‘firework’ CEO, Jerry Kennelly, retires

In 2010, pop singer Katy Perry released a song called Firework. Some of its lyrics are: “Cause baby you’re a firework, come on show ’em what you’re worth, make ’em go oh, oh, oh.”  In addition to being one of my favorite Katy Perry songs, it’s always reminded me of the firework that was Riverbed and its charismatic and often outspoken CEO, Jerry Kennelly.

Riverbed was the face of WAN optimization

Riverbed was indeed a firework, as it hit the market with a bang and became the face of WAN optimization. (Note: Riverbed is a client of ZK Research.) Riverbed wasn’t the first vendor in this market — that was Packeteer — but Riverbed evangelized it and became synonymous with the technology.

Part of the company’s success was a great, and I mean great, product: its SteelHead product. It was fast to deploy and easy to manage, and customers couldn’t get enough of it. In fact, one network manager once described SteelHead to me as “network crack” because once you put it in the network, you need to have more and can never take it out.

The two men responsible for Riverbed were co-founders Steve McCanne, who was the engineer and CTO, and Kennelly, CEO and front man for the company. Riverbed was perhaps the hottest startup of the early 2000s. It went public in September of 2006, and its initial public offering (IPO) was nothing short of a smashing success. Even CNBC’s Jim Cramer got into some Riverbed action when he did a bit of research and pontificated on how the company was beating larger vendors like Cisco, Juniper, and Citrix consistently — and he was right.

Kennelly compares SteelHead to fire

I recall an investor meeting in which Kennelly was asked why he doesn’t sell Riverbed to a larger network vendor, such as Cisco or HP, and his answer will go down as perhaps my favorite CEO quote of all time. He said if you invented fire, why would you sell it? Fire changed the world, and that’s something you couldn’t put a price on — and Kennelly was comparing his company to that.

To understand why Kennelly said that requires knowing Kennelly’s personality. He was bold and brash, and he was never afraid to call out a competitor for having an inferior product. The WAN market is massive, and Riverbed had the best product — and he wanted everyone to know.

Kennelly picked on every competitive vendor, but his favorite target was Cisco, which he claimed had a product that was broken — and he was right. Cisco’s entry into WAN optimization was through the acquisition of Actona, which had built a product to optimize the movement of files across a network. Riverbed’s solution was a lot more complete and worked with a wide variety of applications. Its closest competitor was Peribit, but Juniper stepped in and did Riverbed a solid by acquiring Peribit and then mismanaging that asset into irrelevance.

Cisco’s lack of a product and weak competitive landscape were the fuel and Kennelly’s outward-facing bravado was the spark the company needed to become a firework and make the industry go “oh, oh, oh” as the company’s value skyrocketed, reaching a peak market cap of just under $6 billion in 2011.

Riverbed wasn’t afraid to acquire to move into adjacent markets

Being brash wasn’t the only thing Kennelly was good at. Along the way, he made a number of acquisitions to set the company up to expand its market opportunity. These included the following:

• Mazu Networks in February 2009
• CACE in October 2010
• Global Products in November 2010
• Zeus Technology in July 2011
• Expand Networks in January 2012
• OPNET in December 2012
• Ocedo in January 2016
• Aternity in July 2016
• Xirrus in April 2017

Those were all solid technologies, particularly Mazu, CACE, OPNET, and Aternity, which were the building blocks of Riverbed’s current SteelCentral network (NPM) and application performance management (APM) suite. There are many NPM and APM products available, but Riverbed has one of the broadest and most complete solutions.

Riverbed goes private in 2014 to retool

Despite its hot start and meteoric rise, Riverbed’s growth could not be sustained and the market for WAN optimization slowed down in 2012. And in late 2014, Riverbed announced it would be taken private by Thoma Bravo for a value of $3.6 billion. Riverbed’s success in WAN optimization became its curse, it had become so well branded in that particular market that it struggled to move into adjacent markets in any meaningful way. 

Also, despite its massive install base of WAN optimization appliances, the company was slow to catch the SD-WAN wave. Going private gave Riverbed the cover to re-tool without having to worry about the pressures of being publicly traded. In 2016, Riverbed acquired Ocedo, which gave It a rock-solid SD-WAN solution that became the foundation for its SteelConnect solution that it launched in 2016.  

Riverbed looks to Paul Mountford to lead the company into its next phase

Now Riverbed sits on the precipice of its second act, and Kennelly is stepping aside and turning the helm over to Senior Vice President and Chief Sales Officer Paul Mountford, who joined Riverbed about four years ago. I’ve known Mountford for years and interacted with him regularly when he was at Cisco. He’s a strong leader and clearly understands how to capitalize on market transitions based on the success he had at Cisco.

Riverbed was late to SD-WAN, but it’s biggest asset is its massive install base of SteelHead appliances combined with its high customer satisfaction scores. I’d like to bid a fond farewell to Kennelly and say thanks for the memories. The ride would not have been the same without you, but I look forward to seeing what Mountford can do with the new Riverbed.