After selling his company to Cisco for $475 million at just 26 years old, Ido Susan is now determined to compete with Cisco, and other network infrastructure giants by disrupting service provider networks.
His new company, DriveNets, again addresses critical challenges in the networking space, following on the focus of the previous venture that he co-founded, Intucell, which developed a technology for automatically optimizing network performance.
Challenges Facing Service Providers
As bandwidth demand grows and network capacity is strained, service providers face a battle on two fronts: constantly investing in expensive infrastructure to maintain uninterrupted service while their revenue shrinks as third party services like Netflix enjoy the revenue while running over their network infrastructure.
Service providers can’t pass off their costs by bumping prices for network connectivity.
With the imminent onset of 5G networks, many more data consumption services will be relying on the network. 5G inspired services require low latency and need to run at low cost like virtual reality and gaming, industrial and smart city IoT, and connected cars. Service providers need to improve operational efficiency and lower the cost of infrastructure, while supporting service quality and ever growing consumption – while maintaining profitability.
A Network Rising: DriveNets
DriveNets is introducing a radical new way to build networks, enabling higher capacity and services scale at a much lower cost. DriveNets disaggregates the network infrastructure in multiple levels with cloud-native software running over standard networking white boxes.
Founded in late 2015, Susan, who served in an Israeli military intelligence unit, and co-founder Hillel Kobrinsky, a veteran entrepreneur, financed DriveNets activity by themselves for the first few years. In February 2019, the company announced a $110 million financing round, one of the largest first financing rounds ever in Israel, from two venture capital funds: Pitango Venture Capital and Bessemer Venture Partners.
DriveNets is Remaking the Service Provider Industry
DriveNets wants to help the world’s service providers cope with their growing infrastructure burdens and their challenging financial situation. Susan realized that while these companies are doing billions in revenue, they still rely on technology from the 1980s.
They are based on router hardware functionality sourced from multiple vendors such as Cisco, Juniper, Huawei, Nokia [Alcatel-Lucent] as well as others, with multiple operating systems that make them not only a nightmare to manage but also expensive due to licensing costs. In founding DriveNets, he is taking inspiration from hyperscalers, like Google and Facebook, where they disaggregated the data requirements for compute and storage. He is looking to adapt this approach to the network with routers and switches.
DriveNets is out to remake an industry. DriveNets is tackling the economic challenge of data growth, by working directly with service providers at cost levels that would undermine the core business at the giants like Cisco. Currently communication service providers need to add more and more capacity but without seeing revenue in step.
The DriveNets software-focused solution enables service providers to meet the need for additional capacity, without greater spending. It allows a service provider to expand network operations, without feeling like they’re constantly investing in expensive infrastructure.
DriveNets is out to Make Service Providers Profitable Again
The structural problem for network equipment vendors like Cisco or Juniper is that their business model focuses on making a profit on bundles of hardware, software and services, driving up their margins. By running software on merchant silicon white boxes, DriveNets turns hardware into more of a commodity, offering a cheaper alternative, as well as one that can scale as demand requires.
DriveNets has developed a software solution that was designed to free companies from the burden of buying expensive proprietary equipment from incumbent manufacturers. It doesn’t eliminate equipment procurement, but instead of being based on sophisticated routers, it puts the brains in the software and runs on cheaper and smaller “stupid” white boxes.
DriveNets Takes Bold Steps
All of this puts DriveNets in direct competition with the likes of companies such as Cisco, as well as all other incumbent router vendors. Those companies are both at odds to undermine their current business approaches in developing an equivalent approach to the DriveNets innovation, as well as facing technological challenges.
They would have to rewrite their network operating systems from scratch to try to become truly cloud-native in order to support the same capability to scale at cost. Eventually, they will be forced to follow this route when they realize that the cloudification of network functions is the basis for the network of the future.
DriveNets now has the financial resources, traction and drive to give the incumbent router vendors a worthwhile fight.
About Author: Grace Bynes
Grace is a Business Analyst by profession with more than 7 years of experience of working with digital businesses mainly eCommerce and SaaS startups. Grace also loves to travel and explore the world!