"Organic innovation" high on new F5 CEO's agenda

He’s only just into the job, but new CEO François Locoh-Donou says F5 is primed for growth.

When we spoke at the end of May, François Locoh-Donou had been CEO of Seattle-based F5 Networks for all of two months.

“So far so good,” he says, “It's been a good couple of months.”

Locoh-Donou replaced the outgoing John McAdam – the company’s long-term CEO who stood down in July only to return after his replacement Manuel Rivelo resigned just five months into the role due to “personal conduct” – after a long stint at networking company Ciena, where he rose to become COO.

So, what made the prospect of taking the helm of a 21-year-old company that specializes in application delivery networking (ADN) technology appealing?

“I was fascinated by the challenge. I think probably number one is the position that the company has achieved in the industry is pretty amazing,” he says. “The application and networking talent that exists within F5 is unapparelled, I haven't seen anything else in the industry [like it], and in terms of application services, I think the company has achieved a strategic position which is a very good platform for growth.”

But beyond the numbers, he says, there were more human reasons to join F5.

“Emotionally I got connected to the culture with the culture of the company, where I could live a real good human experience with people who care about what they're doing, and are passionate about their customers and technology, and want to achieve something.

“That was important to me because I'm not a professional manager who goes from company to company to manage. I'm somebody who wants to live an adventure with people. I had that at my prior company, and when I got convinced I would find that at F5, I said 'this was the place for me'.”


Respecting the past, preparing for the future

So, is this a case of new CEO, new way of doing things?

“This is a company that's been very, very successful. And it's been successful for a reason: it's done a lot of things very, very well.”

“One of my priorities is to make sure in the first few months here that I spend a bit of time understanding why things are done a certain way, and why we've been so successful,” Locoh-Donou explains. “Learning about the culture of F5; respecting the past.”

“And a lot of that understanding comes from spending time with our teams, customers, and partners.”

Another part of respecting that past is how the company approaches that old argument of build vs buy: is he planning to promote innovation internally or go out and buy a ready-made product and/or team?

“F5 is a technology company, it's done great organic innovation over the years, and the mission of a technology company is to innovate organically.”

“I'm going to make sure the organic innovation engine at F5 continues to hum and outperform competitors.”

While F5 doesn’t have a long history of acquisitions – and hasn’t made any since the purchase of Defense.Net in 2014 – he does admit that if the right opportunity comes along to ‘complement the portfolio’, the company is in a strong enough position to do so: the company’s Q2 earnings showed a balance sheet of around $1 billion.

“But that isn't where we start. We start with innovating organically and making sure that engine is really well run, and then where we need to make compliments, we will do that.”

While he doesn’t plan to shake things up too wildly in his earliest days, Locoh-Donou does have a vision for where he wants the company to go. At the company’s Agility conference where we spoke, the message from F5 was all about consistency: delivering a consistent set of capabilities to customers whether that’s on-premise, Private Cloud, Public Cloud, Hybrid, or other.

“The way to think about F5 is as a company that really understands application services, that understands applications very well - understands how to make them scale, how to make them perform, and how to secure them - and is going to be an enabler of services for applications, wherever these applications reside.”

“The hardware appliance form for the last few years has been the dominant mode of consumption of the technology, and [now] there's going to be other modes of consumption: software, in the cloud, public cloud, private cloud, by the drink, perpetual license, subscriptions etc.”

“So, it's not a move from hardware to software, it's a move from hardware only to hardware and software and subscription and in the cloud, etc.”


New models and new competition

While F5 is well-versed in dealing with competition from traditional rivals, the rise of the Public Cloud offers new challenges. The likes of Amazon Web Services, Microsoft Azure, and Google Cloud all offer their own set of load balancing services. Should F5 be worried about these ‘new’ companies muscling in on their turf?

“I think those guys will get a share of the virtual ADC market. How much share we will get depends on how good of a job we do at continuously creating and reinforcing our differentiation.”

“They have, I would say, basic load balancing offerings. Which you could say is a competitor to what F5 offers,” Locoh-Donou says. “If a company comes in and they have just a single application and just needs basic load balancing in a single cloud, just Amazon, and they're not going to have implementations anywhere else, then probably the basic offering from Amazon works for them.”

But, he argues, that isn’t the case for most modern companies.

“They're going to be on multiple clouds, they want to be able to port applications and from one cloud to the next, they don't want to be locked in to somebody's infrastructure. Most companies for economic reasons will not want to be beholden to the economic power of just Amazon or just Azure.

“Secondly, they have needs for their applications that are more than basic, they don't need just load balancing, they need security, they need policy enforcement, they need sometimes a lot of flexibility in the way they implement their ADC decisions. F5 is actually going to be an enabler of that.”

But, as is often the case in the modern world of platforms and Cloud, the competition are also partners. Offering services via the likes of the AWS Marketplace is now a reality for most companies, along with adjusting to new consumption models that comes along with the Cloud.

The traditional, hardware-based ADC market is currently “flattish”, according to Locoh-Donou. And while he says he plans to continue to maintain or even grow market share in that space if he can, software is where the growth is.

“If you look forward over time, a more significant proportion of our revenues will be subscription than they are today, because more and more of the customers want that form of consumption model.”

“Yes there's going to be a transition because more revenues will go to subscription over time, but I don't see it as a binary 'oh we're going to have to suffer and then we'll come back'. A lot of companies that went through this had a bit of a turbulent time. Maybe it's wishful thinking on my part but I just think we're going to figure this out, and walkthrough.”

“How long is that transition, how much is it a transition, and what proportion of our revenues are subscription over time, and will we suffer financially from it? Frankly, I don't know. But that's part of the challenge and the thing that's exciting.”


Also read:
F5: Consistency of capabilities is key to all Clouds
F5 Networks brings back retired exec after CEO resigns over "personal conduct"