CEO Chat With Jerry Guo, Casa Systems
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the C100G – which quickly became a hit in the majority of the world's leading cable operators. In fact, when I visited the company in Andover, Mass., it was shipping so many of the products that they had overflowed into the reception area and corridors of the entire first floor of its HQ -- a great visual metaphor for its success.
The success of Casa -- and its CCAP -- comes down to some visionary thinking by its president and CEO, Jerry Guo, who placed a big bet back when he founded the company that IP video would drive a need for a lot more bandwidth in cable networks.
But Casa's ambitions don't stop with cable. In fact, Guo made sure that the C100G product was built around an architecture that can flex to accommodate pretty much any high-bandwidth next-gen comms need; the company has just upgraded the platform to handle mobile traffic, and is looking to place it into other markets beyond that. When you visit Casa, you immediately notice the atmosphere -- this is a company that is kicking ass, and having a good time doing it. I've never especially wanted to work at an equipment manufacturer, myself (and amazingly, none of them have ever offered me a job… I know, shocker, right?!) but if I was going to work at one it would probably be Casa.
Click through to see what Guo said about his plans, which, perhaps not surprisingly, include an IPO.
Page 3: Moving into wireless
Page 4: Comparing competitors
Page 5: The vision thing
— Stephen Saunders, Founder & CEO, Light Reading
Next page: The history lesson
The history lesson
Steve Saunders: Last time I was here [at your HQ), the entire lobby was full of products being shipped to customers. I thought: well, that's funny. So I took a photograph of it. It was a great visual for the success that Casa is having. What do you attribute that success to?
Jerry Guo: Two things. The passion of the team -- the team is really passionate about creating the new technology. And talent. So it's both.
SS: You think they're taking it all personally, then?
SS: So it's a mission.
JG: It's a mission. We don't say this is a business; we don't say "nothing personal." It is personal.
SS: Yeah, I say the same thing. People will tell me Light Reading lost a contract or something, but hey, "don't take it personally." I'm like: how else am I supposed to take it? I own the business. How much more personal could it be?
JG: I take it very personally.
SS: Exactly. Tell me a little bit about the history of Casa. What's the relationship between Casa and River Delta? How did River Delta set the stage for this company?
JG: Legally of course there is no relationship. But a lot of the original founders of Casa came from River Delta, including myself. I was the VP of Engineering at River Delta. So we developed the CMTS at River Delta. And at the end of it, we realized that it was a good CMTS for its time but it was not something which could be used for the kind of streaming video content which was going to come next. The design was limited by what was available at that point, and also people were focusing on web browsing. We realized that's not what the industry would eventually need. And we also believed that the whole industry will go "all IP" and will go through this conversion phase to video.
SS: When did you realize that?
JG: Our first product could do IP. We released that one in 2005. It may have been a little bit ahead of its time but we believed that convergence was going to happen, and, longer term, the migration to IP.
SS: Do you think it's happened faster than you thought it would be?
JG: Slower than I thought.
SS: Why is it taking longer, do you think?
JG: You really need a lot more channels than what was available ten years ago. We were doing 16 bonded channels. Not enough. You need more channels for video and DOCSIS together. And it takes a lot of time for people to even think that way. People were so used to what they had at that point.
SS: You have an engineering background. Do you think engineers have different attributes as CEOs than the CEOs who came from, say, a financial background?
JG: You see successes from both sides, right? There are pros and cons in both. CEOs from a technical background tend to be much more passionate about technology. And the creation process itself. So I'm biased because I'm an engineer.
SS: You got a huge round of investment at one point; almost $100 million.
SS: Were you surprised at the size of the investment that you were able to attract? Had you been looking for less and the investor just came in and said we want to go all in, here?
JG: We didn't need the working capital. So it was actually a secondary run.
SS: Really? What did you do with the money?
JG: We bought back some of the shares.
SS: That's always nice. So they were really coming to you?
JG: Yes. We had multiple investors very interested at that point.
SS: What's the investors' hope for the company?
JG: As with a lot of the investors, they hope for a very large return, and at the same time they want to leave a legacy as well.
SS: Do you get a lot of pressure from them for IPO?
JG: I'm not getting pressure from them but that's really their plan.
SS: Can successful IPOs happen in the communications industry?
JG: The short answer is yes. We're in touch with the investment banks and based on what they say the public market is very friendly to good technology companies right now. There is actually a big shortage of solid technology companies. So the market conditions are very friendly.
SS: That's exciting.
JG: Yes. And we have all the right ingredients for a successful IPO. We have very high growth rate. That's very rare, even compared to other successful big companies. And we are cash flow positive, and not too many of them are like that.
SS: It's the complete opposite of 2000. Remember the optical companies back then? No product, no revenue.
JG: Right. So we're cash flow positive and we have a diversified customer base. Even though we are in the service provider space we are global and we have hundreds of customers. We don't have just two customers. And we are also diversifying into new categories like wireless.
SS: Do you have any feelings about timing of the IPO?
JG: We are preparing for it and making ourselves ready. I was advised not to say specifically.
SS: I wouldn't ask you to say anymore. All I would say is remember your friends and family!
JG: [laughs] Yes, absolutely.
Next page: Moving into wireless
Moving into wireless
SS: Casa has a heritage in the cable market but now you're making this move into wireless. Why?
JG: We believe that the bandwidth provided today is at the infant stage. There is going to be a huge increase in the growth in bandwidth on both the mobile and the fixed product side.
SS: On the fixed side, it's still video driving it?
JG: Yes, it's the content driving it.
SS: And on the mobile side it'll be 5G?
JG: It will be densification and 5G.
SS: So this is history repeating itself, for you?
JG: Yes, we believe there will be a huge increase in bandwidth, going forward. And we believe in the convergence of fixed and mobile. From the technology point of view, I see that as unavoidable. And from a market point of view, we do see some convergence of operators in fixed and mobile. We basically believe that's happening so we started to invest in mobile broadband almost three years ago, now. This year is the time we started to really support it.
SS: Does it sit in the same chassis? Or is it a totally different product?
JG: No, it's in the same chassis. It's more of a software product. It's the same hardware platform. The platform has a lot of unique capabilities which are very extensible. It's very flexible.
SS: So you're not going to run into the same problem that River Delta had?
JG: No. We are getting into an era that we view ourselves as an ultra-broadband company, not just a cable broadband company or even just a fixed-broadband company. So we're going to be an ultra-broadband company in both fixed and mobile. On the fixed side, we have captured significant market share in cable broadband and we're going to expand into optical broadband. And on the mobile side, we're doing both WiFi broadband as well as LTE broadband. So we're diversifying a lot but at the same time we are focusing on one category, which is broadband.
SS: What's the road map for DOCSIS 3.1 for you guys?
JG: If you look at 3.0, we didn't do it halfheartedly. We did the full 3.0. We were the only one with the full 3.0 certification with what they call gold level certification. And then in CCAP, we didn't do this pretend CCAP of modular CMTS. We did the full CCAP with everything in the box out of a single port. That's what we're doing with 3.1. We're going to do a full implementation.
SS: How long does that take?
JG: We are planning to make that available this year.
Next page: Comparing competitors
SS: Let's talk about competitors' products versus your products. If you take your C100G chassis and you look at it versus Cisco's product, people have told me that you don't actually have as full a feature set. So how have you managed to sell it into accounts where Cisco has got what on the face of it might look like a more full featured product?
JG: Let me just compare the features from several categories. The first category is the DOCSIS features. We have better DOCSIS. Second is the CCAP, especially the video feature. We're the only one deployed and we support EDIS, which is the Time Warner type of video control system, and it will also support the NGOD video control system. We have both the privacy mode encryption (PME) and the PowerKey encryption (PKE) and we also provide a European encryption option (DVB Simulcrypt). We have the fullest video support compared to anybody and we are the only one deployed with video at Time Warner in New York City with both the VOD and SDV.
And then the third category is the router features. We have a complete routing protocol set. We not only do the regular RIP, OSPF, and BGP, we do everything in IPV4 and IPV6. We do ISIS as well and we do PIM [Protocol Independent Multicast] for our multicast. On top of that we have both the Layer 2 VPN MPLS as well as the Layer 3 VPN MPLS. That actually enabled us to win a few accounts. We have a very complete routing feature set.
I couldn't say that we are short of any features for cable operators in routing. We're really not short compared to others. I would say that we have the most complete feature set compared to the other products on the market today.
SS: Do you have to compete on price?
JG: First, we are not a low-price provider.
SS: You're not aiming to be the cheapest.
JG: No, we're not. And second, we stay competitive commercially. We are talking about total cost of ownership. We win a lot of the deals but we lose some deals, as well. But it's usually a very complex decision. For major operators, it's about whether you satisfy the business needs in terms of features, in terms of the direction they are going, and also in terms of the reliability of the system, the high availability and also how comfortable they are with the team support. Can they count on you to resolve issues when things happen? Very complicated, but it's never a price decision for us, at least.
SS: Let's talk about Time Warner, because that's really a revolutionary deployment.
JG: Absolutely, yes.
SS: What did you learn during that? What were the challenges and how did you overcome them?
JG: We have learned a great deal because that's the very first full CCAP deployment. First I have to say Time Warner has been a great partner. This deployment has to be based on a very strong partnership. It cannot be a regular vendor/customer relationship, because you are really creating a new paradigm. That partnership is the most important thing. Because we encounter -- during the whole certification, testing, design, implementation, deployment; the many different phases -- you always encounter issues. And the No. 1 rule is let's figure out how to resolve it, regardless of where the issue comes from.
SS: So there wasn't a lot of finger pointing.
JG: No. The way we conduct our business, regardless of whether it's our fault or not, with any customer, is: let's resolve the issues first. Then we figure out what the root cause is and how to avoid it. Another issue is that with these kind of new services, you have so many eggs in one basket. Redundancy is critical. That's why there's all those pretend CCAP systems that wouldn't work. You need the best high-availability system. You cannot afford to have this thing down.
Next page: The vision thing
The vision thing
SS: What's your long-term vision for Casa, like five years, ten years? Do you have one?
JG: Yes, absolutely. We believe that we're going to be providing the broadband technology for the whole communication industry. I see the industry evolving very significantly.
SS: Tell me what do you think is coming down the pike for people.
JG: When you look at the primary customers we have today, our cable operators, they provide two types of services: First, content, and content aggregation; second, communication broadband service. I think many of them -- all of them -- should be in that service category. And in that category, I see convergence to be unavoidable. There will be an evolved architecture.
Whatever we build today is going to change very dramatically in the next few years and we want to be the leader in that transition. And at the same time, we see a convergence of fixed and mobile broadband. Mobile broadband needs to get that level of bandwidth to be close to the fixed. There is an order of magnitude difference. There's going to be a huge need increase in bandwidth with limited spectrum. We see the way of getting there is by densification.
SS: What do you think the role of web-scale companies like Google and Amazon, Facebook will be in the communications industry over the next ten years?
JG: Well, some of them are getting to the communication services delivery. Some of them will be big players in content delivery and aggregation. Regardless, they're going to be very, very important, whether they’re getting to communication delivery directly or they are just doing the content delivery.
SS: The thing about companies like Google and Amazon and Netflix is that they're already developing the technology to be communications players; not service providers but actual -- they're their own equipment manufacturer, aren’t they?
SS: And you're impervious to that because of the specialty of what you do. Cisco, HP, Dell -- anybody who's making the data center devices is vulnerable to the fact that they have limitless money and almost limitless intellectual capital. So that's a dangerous combination. Originally it was the Tier 1s that were very worried about the Google and Amazon. Now it's the equipment manufacturers who are worried. Everybody's worried.
JG: They are not buying data center equipment from the equipment providers. They are building them themselves. As with anything, they are going to make the decision to build or buy. They actually thought the build part was much better for their own purposes. But nobody can do everything themselves. I see that there is always a market for equipment.
SS: You have to find the specialty which other people can't emulate and you've obviously done that in an incredibly successful way. Where the problem lies is for megacorp-sized companies that are under threat from sort of white box networking where there is an opportunity for generic solutions. If you talk to some of the people at Google who are working on SDN and NFV and they're saying we now have this data center hardware which is better than yours and it's almost free for us, and guess what, we can have open standard software which runs over it so why do we need anybody anymore?
So it's interesting, anyway. But I think we agree it's going to be really disruptive.
JG: It will be disruptive. They're going to be a big threat to some of the equipment makers. Especially on the data center side. But they are still buying communication equipment like the optical gear.
Next page: Getting personal
SS: There's not much information about you personally online. Is that intentional? Are you quite a private person?
JG: I'm a very private person. But it's not intentional. We just never got around to it.
SS: Actually, I think it's quite effective. Most people when they search on the bios for executive leaders, you see the same thing every time. So I think it's quite refreshing to have somebody who's just letting the results of their company speak for what they're doing. I thought that was quite cool, actually.
JG: Well, thank you.
SS: You should see my bio. It's somewhat ludicrous because I've done a lot of different jobs so I thought I might as well throw them all in there.
JG: I haven't had many jobs in my life. But I wasn't intentionally hiding.
SS: Does your work/recreation schedule leave you any time for fun? Do you have any hobbies or anything that you want to share with the Light Reading community?
JG: Unfortunately, that's fairly limited.
SS: Well, there's always the future. I have the same thing. I'm either working or looking after three kids so you know, not much time left over.
JG: I do like fast cars and fast boats.
SS: What do you drive?
JG: I have a Maserati.
SS: Sweet ride. I was in California recently and I had a new assistant and she booked my rental car at Budget. And I was like: I don't know why you're booking me at Budget. They're not going to have anything nice. And then it turns out they had a Maserati and they gave me a triple upgrade so I got it for $200 for two days. So now they're my favorite place to rent cars in California. Budget! Who knew, right?