Portfolio Monitor - Spotlight Edition

Dear Longworth Friend,
Welcome to our spotlight Edition of the Longworth Portfolio Monitor, where directly from our company CEO's, you can learn more about some of the game-changing companies in the Longworth Portfolio. 


In this edition, we highlight VKernel, which provides award-winning tools for solving critical virtualization management challenges such as virtual server performance and optimization.  VKernel was acquired in November 2011 by Quest Software.  We are thrilled with this exit and we're fortunate to have Doug McNary as CEO of VKernel.  Read on to learn more from Doug.

The Company
Doug McNary - VKernel
What does the Company do?
VKernel provides performance and capacity management software solutions that reduce the cost and ensure performance of virtualized datacenters.  We have over 700 customers throughout the world in a wide range of industries including financial services, healthcare, consumer, media and manufacturing.


When was the Company founded?

The Company was found in 2007. We started as a virtualization tools company and evolved into a virtualization management solution provider for mid to large enterprises.  We had our first revenue and raised our A round in early 2008. We then raised our B round in 2009.


What is your role at the Company?

I'm the CEO.  I originally got involved with VKernel as an outside board member. When the CEO role was presented to me in early 2010, I jumped at the opportunity.  The thing that attracted me the most to the Company was the combination of the business model and market space.  


Virtualization is a major disruptor in the systems management market and the web based/low touch sales model is the most cost effective and efficient route to market. 


How's business?

Very strong.  We have been growing 3X yr/yr and are currently profitable and cash flow positive.  We are recognized as one of the leaders in the Capacity Management space.  It's a one of the reasons why we were an attractive M&A candidate.


Product & Marketing

Who buys the product?
VKernel sells to small and medium sized enterprises and divisions of large enterprises.  The buyer is the Director of Operations or Virtualization Administrator.

How do you sell the product?
We sell through both a web based download and an inside sales model.

Why is that a pain point or must have product?
Virtualization introduces a whole new set of management challenges because of its shared nature of computing.  Virtual environments use shared resources much like mainframes do.  Without a balanced approach to capacity management, organizations will have either application performance problems or infrastructure cost issues.

How do you market the product?
We market primarily through web based and online programs.   We use SEO and SEM extensively to drive web traffic and actively market our database via various email and on-line programs. 

How is the market evolving for that product?
As organizations continue to virtualize their datacenters and move mission critical applications to virtualized and cloud environments, the market opportunity and need for these types of solutions has significantly increased.  With this came a number of established system management and platform providers entering the market via acquisitions, the most notable was VMware.


Inside VKernel

Where is the Company located?
Our headquarters, sales and marketing operations are all in the Boston area. We also have a development operation in Moscow. 

Why is that an attractive location for your business?
Boston provides exceptional access to the type of sales and marketing professionals we are looking for.  Moscow provides cost effective access to mathematical oriented developers.  This dual location approach has proven to be very successful for us.

What's your company culture like?
We are very sales and marketing driven with a heavy emphasis on measuring and analyzing key business metric.
VKernel Award

Why sell the Company now?
This is always a tough decision.  The market was quickly consolidating and we realized that to continue to grow and expand, we needed a significant partner to do that with.

Why choose Quest?
Our business models and approaches to the market were very tightly aligned.  In addition, their significant footprint in IT management and global channels provided us a way to quickly scale the business and address competitive pressures. It is a win - win situation.

VKernel solo logo
Why Longworth

Why did the Company choose Longworth as a financing partner?

Longworth actively reached out to us and proved they understood our market. We felt like they could provide some key guidance, which is so critical in the early stages.

Has Longworth helped you and your business?

Longworth has provided key advice and input at critical junctures of the Company. They've been a great business partner.


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