The Future Of Wireless, From Ruckus' Top Dog

Selina Lo is the feisty, passionate, M&M-chomping president and CEO of Ruckus Wireless and, thanks to the growth Ruckus has posted since its 2004 founding -- Gartner and IDC both ranked it the fastest-growing wireless LAN vendor by revenue in 2009 -- she's a force to be reckoned with. The crowded wireless LAN space doesn't scare her, and neither do its incumbent players. Lo sees Ruckus as a channel powerhouse, and in the past year especially, even the most jaded cynics among wireless and networking solution providers have started to take Ruckus seriously.

Lo was born in Hong Kong and earlier in her career co-founded Centillion Networks, which developed the first token ring Ethernet switch. Later on came one of her best-known roles, as vice president of marketing for Alteon WebSystems, which went public in 1999 and was sold to Nortel in 2000 for $7.8 billion, earning Lo a bundle. When the Ruckus story began -- as a stealth company owned by Sequoia Capital -- Lo was two years removed from Nortel and she became an investor in Ruckus and its CEO.

Ruckus now has 285 employees in 20 countries, and after growing its revenue by 100 percent from 2008 to 2009, when it booked $56 million, it's on track to hit the ambitious $90 million target Lo and her lieutenants laid out at the beginning of the year. Lo sat down with CRN Networking Editor Chad Berndtson at Ruckus' recent Big Dogs conference in Atlanta to bring us up to speed.

You've got a growing, supportive and actively engaged channel, and business is also growing in every one of your segments. What is your biggest challenge right now?

I think the big challenge is to really break out. The Wi-Fi market is huge, so everybody can survive, and if you look at Meru and our other competitors, when the tide goes up, all the boats lift. I think if we just want to have built a nice business, we would be fine just treading water. But you know? I'm greedy. I want market share. The key thing for us in grabbing market share in a very crowded space like enterprise wireless LAN is to not only do well by our partners, but also sign up partners and develop the right class of premium partners, and really help them get to a significant, multimillion-a-year business with us. Another piece is the carriers, which have significant muscle, and have a brand that in the bigger Fortune 1000 companies is very powerful. I think they will become an important piece of our delivery chain.

NEXT: How Wireless Is Changing

What's going on now is that the carriers can look at new business and can't just count on voice, and can't just count on how they've historically generated revenue. They're all looking at enterprise, and I think that may compete with some of our existing channel partners, but in the big scheme of things, it's a good thing. A lot of the carriers, especially the tier-one carriers, they don't have the resources to do a hotel, or a school. They are the big systems integrators, and they'd farm out that deployment piece to partners. The carriers can work with our existing partners but they'd bring credibility in terms of brand name, and access to markets that we're not in. That would be a big step for us, trying to get tier-one carrier partners.

But you do acknowledge that by going that route, you naturally invite some conflict in your channel. In every IT channel there has to be a balance, and it's not perfect, but what do you say to the service-oriented VARs to mitigate their fears about losing business to carriers?

Well, forget that they're carriers. When you grow, in any channel, some of your closest partners are not going to like the fact that you are bringing in more partners. Just like all good channel practices, the ability to do that without hurting your existing partners is critical. Having the strongest formal processes like deal reg, things like how you handle leads and how basically you help them continue to trust you, that's being a channel company. But on top of that, I think, we need to help our channel see that these carriers can be partners. The market is huge enough to have multiple players, and I think new opportunities are coming out with the whole mobile Internet that are making everything co-dependent. We just have to make sure we minimize the fear, and maximize the leverage.

You mentioned market share. This is a hugely crowded space, as you said, and more players are coming in at different points and in different niches. If you're ripe to be gaining market share, and are going to continue to grow at the CAGR levels we've seen, who are you taking share from?

It's interesting. I don't stand around and pound my chest and say Cisco, but the reality is that Cisco had been losing share. IDC and Gartner both show that Cisco has lost more than 10 points over the last couple of quarters in wireless. A lot of people can benefit from that. I think HP is another one that's potentially in a bit of turmoil because of what's happening from the Huawei-3Com integration. There's a chaotic situation in there we can take advantage of. And Motorola, with its company breaking into pieces, there can be some gap that we can take advantage of, too.

NEXT: The Competition Heats Up

But you don't see more immediate competition from Aruba, Meru and the dedicated wireless players?

We compete with everybody, and of course Meru and Aruba, but I don't single them out because we don't compete with them more or less than we compete with Cisco and others. We have to make sure we keep the gate closed to some of the newcomers, too. Since Ruckus had become successful in the midtier, you see people now going after our tail in the midtier. We have to make sure we close the gate and grab as much midtier market share away from HP as we can. HP is the biggest competition for us in the midtier. Motorola, as well, because Motorola through Symbol is so good with noncarpeted space, but because the mobile Internet levels the playing field for everyone, now we don't need as many special things from Symbol for tablets and handhelds. I think that over time, Motorola's control of the noncarpeted space will lessen.

You told your Ruckus partners that you are pursuing OEM relationships. Talk about that.

I can't tell you who we are talking to, but certainly we see that our channel partners are looking into the whole ecosystem. They don't just want to build wireless networks, they have components in video, or voice, or RFID or other things in the network. Some of our partners are very proactive -- they've pieced together a solution template themselves. Other partners are less sophisticated or they don't see a particular space, and they want to have the whole thing set up for them.

From the point of view of somebody OEM-ing Ruckus products, I've looked, for example, at the OEM relationship that Aruba has with Alcatel-Lucent, and also the relationships that Trapeze has. A lot of times, if you don't do it right, you create a very adversarial relationship between your OEM partner and your channel partners, and that's not at all what I want for Ruckus. If we were to OEM our product to someone else, we'd need to find a place to expand where Ruckus can play and not someone to compete with our existing channel. What comes to mind immediately is partners that could take us into tier-one carriers in the U.S. That's a space where I see some potential. But I don't want an OEM to take our product to the midtier enterprise, because we already have channel partners doing that.

NEXT: Will Ruckus Go IPO Or Be Acquired?

The other big thing at the partner conference this year is the presence of developers, whom you brought for the first time. What's your appeal for the developer community, and what types of developers and applications is Ruckus seeking?

Managed services in this space is something that's going to grow significantly, and all the pressure is on the channel to do that. We want to develop our FlexMaster platform as a managed services platform. I think if we have developers that actually can build value-added applications on top of FlexMaster, that would become very useful. Anything to expand the ecosystem, to me, is a big part of momentum. I want to have a party that's full of people. You don't want a party and only have a few people there. We have channel partners, we have system integrator partners, and we need some development, value-added software partners that can build on our solution.

So for developers, you are in recruitment mode for sure?

Yes.

You're on IPO watch, and you will be until it happens because you've reached the stage where people talk about it. Assuming that's still in the cards for Ruckus, I think you mentioned you have no immediate plans because it's a tough climate to do it. Can you explain?

It is a tough climate, and we do continue to monitor the market, but to me, the IPO is not the end in itself. After an IPO, that's when the real hard work starts. So I don't want to take it lightly and go IPO for the sake of going IPO; I really want to build the business. Then, I can choose the time when I want to do it, and focus on building the business, because we are getting to a point where there is some critical mass. The next piece isn't so much IPO as predictability in the business.

Will you look to be acquired?

Acquisition is something ... well, basically that you don't look for ...

Is it something you're open to?

It's like dating. It takes two parties. If you're looking for a dating partner, it takes attention away from what you're doing. And suitors want to go after the right price for them, so if you are searching for a suitor, you may not be at the right space at the bargaining table. But on top of that, really, if you build companies looking for them to be acquired, you may put your focus on the wrong things. Ruckus is never about looking for an acquirer. Give us a number we can't refuse? Of course we will do the right thing. But it occupies very little mind share now.

Next: What's Coming In Wireless

Turning to the wireless industry at large, we've seen the FCC and its recent decision to open up the so-called white space portion of the television broadcast spectrum, which has been a big point of discussion among VARs. There's a lot of cynicism and a lot of FUD. As top dog at a wireless vendor, what do you make of it?

I think more spectrum is always better, especially unlicensed spectrum. But right now it's really just for talking about over a cocktail. You need chipsets that can handle those frequency bands, so it'll be a while before we see what kind of applications there will be for the white space. I think potentially a number of applications would emerge, but it's way too early for people to speculate. It's a good thing to get more spectrum; we all need that. But interference will have to be managed, and for us, it's all about managing interference anyway, so I'm not worried.

The Power Of Mobile Internet

But it's not something you're spurring your R&D team toward right now? A few vendors have declared their intentions to develop technology.

You really can't, though. At the silicon level, you need support. My CTO is thinking about it, but my R&D engineers aren't working on it.

In your keynote, you gave us a few trends that promise to reshape enterprise wireless over the next five years. What's really the top one? If you're a technologist, what's the one you have to get?

I think everything is going to go wireless; that levels the playing field. The reason why wireless Internet is going to be so much bigger than fixed Internet is because it opens up the Internet to people like my mom. She wouldn't attempt much on a computer, but she knows how to use a cell phone. So one part is that it opens up the Internet to a segment of the population that might not be really participating.

It also means the network is going to get a lot messier. There's only so much spectrum. The ability to reuse and the ability to manage interference -- the ability to survive in very polluted air space -- are all very important issues and will get more important. The ability to support all kinds of client devices -- the whole thing about the mobile Internet is that things pop up out of nowhere and there is commoditization of everything. Nobody can hold the control on devices anymore. No one has total control of apps anymore. You can develop whatever you want. Have you heard of that app that was developed by a music teacher that turns the iPhone into a flute?

Right, right, the Ocarina.

That guy sold a million copies of that in the first year! And that's his part-time job. The mobile Internet is about democratizing. But to make everything work well, it's about the network. The network has to compensate for all these devices doing all these things. For people who build Wi-Fi devices, it isn't always Wi-Fi that's top of mind. They have other intentions and then at the end, they say, 'OK, where do we put the antenna?' Being able to compensate for all of these devices will be the networker's job.

The Truth About Ruckus' Bark

Ruckus is a very personality-driven company, and a lot of that comes from you. You and your team take the lead in everything from the passion you exhibit to the partners down to Ruckus-branded dog bowls with M&Ms that we see here at the partner conference keynotes. It takes more work, I would think, not less, and passion, to do that: to appear loose, to project that passion, to move beyond what would be a staid partner conference and a staid wireless channel appraoch.

It is higher risk.

But that is important to you.

Ruckus is about culture. If things are too safe and too easy, we get bored.

You're easily bored.

Very easily! We like having some fun. Like, people ask me, why the dog? Well, that dog represents our spirit in a number of ways. It's noisy and barking. We make a lot of noise and we don't take things sitting down. It's also unleashed. You can't control us. It's very much our personality. We like it.