ExtraHop Improves Application Performance

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Untwisting one kind of knot can mean plunging into another set of tangles. That’s what ExtraHop Networks, a 5-year-old Seattle startup, is finding with its appliance that helps complex computer networks run smoothly. But those jumbles contain some big rewards.

Engineers like ExtraHop cofounders Raja Mukerji and Jesse Rothstein can remind us how a company’s information technology was once a single computer that filled an entire room. Today’s IT systems are made up of many computers that all talk to each other to get an array of jobs done. And while each computer is considerably smaller and more powerful than its predecessor, together they still fill a large room. The devices that connect to a network are increasingly diverse, from desktop computers to smartphones and iPad tablets.

To picture the snarls that can occur, imagine a hundred kittens in a house full of yarn. Multiply that mess by 10.

For Alaska Airlines, congested responses from its Weight and Balance computer program kept airplanes on the tarmac waiting for clearance to take off. For the Norwegian retailer Axstores, how effectively the IT systems of acquired businesses merged with its own networks could speed up or slow down its strategy of growth. ExtraHop’s under-$50,000 appliance helped resolve the issues for both firms.

The device watches IT traffic independently of the system to create what CEO Rothstein calls “Google Maps for your network,” logging what is being said to whom and when, to identify problems. The style of monitoring, known as Application Performance Management (APM), applies more awareness of the content of traffic than conventional monitoring of network exchanges. Rothstein explains it as the difference between looking at a list of telephone numbers on a monthly bill and knowing what was said in the conversations.

Mukerji, ExtraHop’s president, recalls how in his first job as a computer engineer for financial firm Strong Capital Management, the software to identify networking problems was more complicated than the brokerage operation it was monitoring. It also took 18 months to implement.

For ExtraHop’s customers, the process is a little faster. “We did a full installation last week in 11 minutes flat,” Mukerji says. “When management sees they can get that, it’s eye opening.”

Like executives at most privately funded startups, Rothstein and Mukerji are more eager to discuss their product than details about their company. ExtraHop does not disclose its sales figures or revenues. Yet the company has received more than $19 million in two rounds of venture funding. Most of the nearly 100 employees work in downtown Seattle. The firm’s lobby is fast filling with tiles that mark the growing list of Fortune 1000 customers, including Microsoft, Adobe, Zappos, ING and The Seattle Times. ExtraHop opened an office in the United Kingdom last year and continues to expand into new territories.

The company progressed rapidly from its first year of self-funded operation in 2007 and sales meetings held in what Rothstein jokingly calls “the Prius conference room” —when he or Mukerji had to retreat to the quiet of his parked car for a cell phone call.

The pair is equally reluctant to talk about themselves. “We’re both family men and technology entrepreneurs in Seattle, so there’s not a lot of time for much else,” Rothstein confesses grudgingly. “If my family wasn’t so much fun and this company wasn’t so interesting, that would make me a boring person.”

They both have Midwestern roots: Rothstein grew up in Ohio (later attending Rice University in Texas) and Mukerji transferred to a school in Wisconsin after the U.K. and India. Both worked at F5 Networks in Seattle, where they met developing APM systems before striking out on their own.

Their partnership, by their description, is an equal one born of the comfort of working together for more than a decade. Where some divide their duties by their professional and personal strengths, the two engineers exchange their management responsibilities loosely.

Rothstein, a compact man with an intense gaze and graying ponytail, is the one Mukerji cheerfully acknowledges as the visionary. “He sees things it takes the rest of us longer to see,” Mukerji praises. In his wool blazer and open-collar dress shirt, Mukerji calls himself the tactician of the business, challenging the technical staff to execute ambitious goals.

The market for ExtraHop’s product is as tangled as the networks its device serves to fix. According to research firm Gartner, revenues for network monitoring and APM products reached $3.8 billion in 2011, growing 8.5 percent from the previous year. ExtraHop’s competitors are many, including the leading French company InfoVista, as well as the cofounders’ former employer, F5. Yet no company currently has a market share greater than 5 percent.

“Despite this space being around for awhile,” notes Rothstein, “no one has yet crossed the chasm.”

Avenues of growth appear to be nearly unlimited, especially as IT systems get more complex and difficult to diagnose. Technologies like server virtualization, in which one computer pretends to be several, and cloud computing, which supports thousands of far-flung devices of varying types, create new problems to be solved.

The biggest challenge ExtraHop faces, says Rothstein, is customers’ disbelief that its product can really be so fast and effective. “Vendors have been overpromising for years,” he observes, noting that a demonstration quickly dispels skepticism.

As the company advances into new areas such as health care and thin-client systems, Mukerji notes, “This market is taking off extremely fast. It’s an exponential ramp. Someone is going to take ownership of this space. We want to be sure it is us.”

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