RDVP Seminar: Jose-Luis Sanchez (1/26/2005)

Jose-Luis Sanchez of Hispanic.net and Barracuda Networks spoke at the RDVP seminar. He started off with a quick overview of Hispanic.net, a business networking group that focuses on identifying promising companies started by Hispanics and providing them with mentoring, assistance with fund-raising, etc. Although a relatively small group, they have managed to attain some visibility, even at the international level, and had succeeded in attracting corporate support from companies like HP and Telemundo.

The second (and longer) half of the talk was about Mr. Sanchez’s current company, Barracuda Networks. Barracuda is a young (started in 2002) fast growing (approximately 80 employees, 12,000 customers) startup that sells a hardware supported spam-filtering service. A Linux box incorporates 10 filters (7 open source) that are updated hourly from a centralized service. It processes all incoming mail scanning for filters and spam; high-end versions also have a mail client plug-in that allows end-users to teach the spam filters by marking false negatives. Spam can be marked and passed through, deleted or “quarantined”. Outgoing traffic can be inspected by a second box to insure machines haven’t been compromised to send spam and that no internal users are sending out inappropriate information (e.g., credit card numbers, large attachments, etc.)

He attributed their rapid growth to their value: while not the most effective at filtering spam (~92% vs. 94% for the market leader) they are significantly lower priced (by a factor of 5) and use flat pricing (buy a machine that handles the volume of mail you deal with) rather than per-user licensing. He had been responsible for the growth of their distributor/reseller channels in Spanish and Portuguese speaking countries (in Central and South America plus Europe). He was very sanguine about the prospects of the company, and optimistic that a lucrative exit (IPO or acquisition) awaited them soon, following the development of three new products that were in the works.

In response to questions, he spoke a little bit about the role of open source in their products (Greg speculated that their use of open source, like Spam Assassin filter, would obligate them to release their source code to any customer that asked for it, but pointed out that the real value of the company and service resided in the hourly updates). He also talked about the price differential between US and international markets (about 3X) and response to resulting gray market (shut off updates to boxes that were connecting to the service from an IP address in a country other than the one they were sold in). He described “Voice Spam” as a growing market opportunity as Voice over IP (VoIP) carries more traffic. He described his relationships in Latin America and experience as the key values that he brought to the role, critical in a youthful company.