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Interview with Rick Hoffman, CEO of Clearcube

In our continuing series of interviews with local executives and entrepreneurs, we thought it would be interesting to talk with Austin's ClearCube (www.clearcube.com), a firm which is in the blade computing market. The company has been around for awhile, but has recently seen a shift into software, and new developments as the world adopts virtualization. To get a perspective on this, we spoke with Rick Hoffman, the firm's CEO.

For those of us who aren't familiar with your company, tell us a little bit about Clearcube, and your products?

Rick Hoffman: Clearcube has actually been around for ten years now. We started out in Austin, Texas, founded by ex- IBMers working on how to extend video over twisted pair. The company got started on what is called KVM - keyboard, video, mouse - extension technology. We figured out USB, and how to extend a KVM and USB to 200m, which is about 667 feet. We were mostly in research mode from 1997 until 1999 or 2000, when our customers asked us to marry our products up with the computer on the back end. We were the first to create a blade computer.

Unlike companies who have created server blades, what we did is create desktop blades. In 2001, when I came on board, we knew in addition to our hardware, we really needed to provide software to round out the solution. Over the last six years or so, we have been building more and more software to fit on top of that solution. In 2003, we were actually one of the first companies to build what is called a connection broker, which is now a complete little industry in itself, with a number of companies in the virtualization space. It's very hot--they connect from a thin client, to our user port, back to a blade infrastructure. So, over time, we do not like to call ourselves a PC blade company, but a centralized computing solution company, because the software side has become more and more important, and hardware has become more and more commoditized. We have many, many customers wanting to leverage their server virtualization, and move into desktop virtualization. There are many tier one guys, like VMware and Citrix, who are looking to create a virtual desktop initiative (VDI) solution. Here at Clearcube, we're trying not to reinvent the virtualization infrastructure piece, but to provide the management that goes on top of it.

Can you talk a little bit about your transition from the blade computing, and how that transition came about?

Rick Hoffman: Our early software was really just asset management of systems. These are like Compaq's Insight Manager, and Dell has their OpenManage product - these are what are typically called health and asset management. In 2003, we went from hardwired solutions to an Ethernet-based solution, which meant the distance limitation wasn't there anymore. Now, you use software to connect your user port into a blade or virtual machine, and that where the software part started to take off. You had to use the software in order to enable the solution, but we found that in order to make the user experience feel like they were running on a regular box PC, there were things like not having to log in twice--for example, your users wouldn't want to log in once to the user port and once into the blade. So we worked on single sign on, which meant we had to integrate with Active Directory. To make the product scalable for our very large customers--for example, Morgan Stanley or Wachovia, whoa re running thousands and thousands of users on this product--it had to be very scalable. So we added a SQL back end database. So, over time, you can see we started to develop more and more technologies to integrate with enterprises.

What type of users typically use your product?

Rick Hoffman: We are focused mainly on three different verticals -- including financial services and trading floors. They are sensitized to ergonomics -- with box PCs under a desk, you've got a crowded desk, heat, noise, and other issues. We take that, and move that heat and noise back into the data center. The other thing that the financial services firms really like was the availability. When a box PC fails, they have to run to the desk to change out the hardware--and they literally lose millions of dollars every hour or even every minute they're offline. So in our product, we can actually switch them over to another blade instantly, in a little more than a second. They can just log in and they're up and running--the availability is very high. Lastly, we provide a lower TCO - traders typically get moved around two or three times a year, and especially in New York, it might take three union guys to move a workstation, and it costs you over $1000 to move a trader. With our product, you don't have to move the PC at all, you just use the software.

In the federal space, the government loves the security that comes with it. With a jumper on a blade, you can disable mass storage devices--things like disks on key, CDRW on USB, etc--and the system back in the blade in the data center will never actually see those disk on key devices. It's all about security. In addition to running over copper, we can run on only fiber. We have people like NORAD and Central Command actually running the Iraqi War on our equipment. Lastly, where we gets lots of leverage is in the healthcare market--it's all about data security. There's a thing called HIPPA, which is driving security around patient data. It's challenging to have doctors and nurses with access to PCs, who can log in and get patient records. What we do, is load our software on either a tablet or laptop, and where the patient data actually doesn't go on the user device itself. It stays locked on at the data center, where the data stays secure. One more thing in the healthcare area is in operating rooms, where you need a very clean environment--you don't have to have a boxed PC with fans blowing out particles. We can move it all back to the data center, and you can have a very quiet, very secure device in the operating room.

Has the trend toward virtualization helped or hurt the blade computing market?

Rick Hoffman: It's actually helping. Because of our cost, we have been driven towards niche markets--those niche markets, such as the trading floor, or in the federal space, or healthcare--where they have had real large pain points, because the customer's cost for a solution could run three times that of a PC. With virtualization, where you can put many users on a regular PC blade, you can actually drive the cost point down to parity with a PC. As the price points go towards parity, we are able to move much more into the mainstream. All that does is continue to drive more and more acceptance and usage.

How big now is the company now, and how many people do you have in Austin?

Rick Hoffman: We have about one hundred people in Austin. Worldwide, we have about 125, with offices in New York, London, and Tokyo. Because we deal with financial services companies, who are multinational, we have been dragged worldwide. If you put a system on your trading floor in New York, you've also got to have that deployed in London, Hong Kong, and Tokyo. Even though we're a relatively small company, we've got a pretty large customer base--we've got five hundred customers, many of them Fortune 100 companies.

Thanks!