What Enterprises Can Learn From The $55 Million Investment in Cato Networks

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We just announced the results from a fantastic 2018. A year where bookings grew by 352% year-over-year, business from the channel increased fivefold, and customer growth exploded to 300 enterprises serving thousands of branch locations worldwide.

It’s an incredible achievement by any standards, perhaps only surpassed by one other piece of news — a $55 million investment from Lightspeed Venture Partners and with the participation of all current investors — Aspect Ventures, Greylock Partners, Singtel Innov8, and USVP all top-flight firms. (Co-founders CEO Shlomo Kramer and CTO Gur Shatz also invested.)

SD-WAN is a small part of WAN transformation

For those who don’t follow every tick and tock of the VC world, raising such a significant sum at this time of the market is remarkable. VCs tend to be conservative bunch when it comes to their wallets. They like to invest in companies that are going to win. Kind of like IT managers, actually, who look to deploy products that will last.

And yet today,  some 50 companies claim to have SD-WAN capabilities. The last thing a VC wants to do is invest in a company with a “me too” product. All of which begs the question: how was Cato, a leading SD-WAN provider, able to raise such a significant investment?

That’s because the investment isn’t about SD-WAN.

Yes, SD-WAN is an integral part of WAN transformation. Being able to select the right underlay for any location gives IT the agility long missing from MPLS services. But the networking challenges facing IT go far beyond site-to-site connectivity.

If you’re like many of the IT pros, you probably need a networking platform that will last you today — and tomorrow. You probably need to provide mobile users with secure, reliable access from anywhere. You likely need to connect your sites and mobile users with cloud datacenters and cloud applications. You need to protect all of those entities against Internet-borne threats. And you’d like to connect them in any way that’s flexible enough to encompass that new IOT widget or that next new trend.

Managed services: the platform for global enterprise connectivity

The only way to do that all of that everywhere and at a scale is with a global managed service. Appliances simply can’t cut it, at least not without massive investment and exponential increase in complexity.  Managed network services provide the operational cost model, global reach, technology mix, and technical personnel to address the gamut of challenges facing WAN transformation.

It’s not just me saying this. You can see it in the partnerships SD-WAN appliance vendors have made with service providers. You can see it in research coming out from leading analysts.

In the “2018 Magic Quadrant for WAN Edge Infrastructure,” (registration required) for example, Gartner recommended that companies “Evaluate WAN as a service for your next refresh, even if you have traditionally pursued a DIY approach.”  

And in the “2018 Strategic Roadmap of Networking,”  Gartner Analysts Andrew Lerner and Neil Rickard said that “Based on a recent Gartner survey of enterprises, by  year-end 2018 (YE18), 66% of enterprises globally plan to employ managed network services for their WANs, which will represent a 20% rise since 2016.”

The right kind of managed service is critical

The question then is less about if enterprises will adopt managed network services and more about what kind of managed network services should they adopt.

The telcos have offered one well-known approach based on appliance integration.  We believe that’s a recipe for the same old, same old. The telco experience has translated into a stable service of unexceptional (or worse) customer service. It’s meant opening tickets to resolve even the smallest of problems, waiting for ages to deploy new sites, and being charged a premium in the process.

Cato offers a very different kind of approach. The Cato model takes the best of telco world and combines that the best of cloud services. It’s an experience that delivers a network with the uptime, predictability, reach, and “white glove” service enterprises expect from the best of the telcos. At the same time, it’s an experience that delivers the agility, cost structures, and versatility enterprises need in this cloud and mobile era.

“Cato is a transformative force in the stagnant managed network services market,” says Yoni Cheifetz, Partner at Lightspeed. “Businesses are looking for an affordable, agile, and scalable network to drive strategic initiatives like global expansion, hybrid cloud, and workforce mobility. Today’s rigid networks aren’t built to support this growth, and this is the multi-billion dollar market opportunity Cato is going after.”

We couldn’t have said it better.

Here’s to an even better 2019.

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