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McClatchy-Tribune  08/09/2014 11:20 AM ET
Austin software startup competes -- and wins -- against tech giants [Austin American-Statesman :: ]

Aug. 09--

It's Stephen Crye's job to keep the El Paso Independent School District online.

He and his tech support team constantly monitor the 4,000 devices that connect the district's 60,000 students to the Internet.

To find trouble before it happens, they rely on Zenoss, a fast-growing Austin startup that sells network management software for large computer systems.

"They're small, but we took a chance on them and it paid off," says Crye, the district's network infrastructure manager. "When you call support with a big company, the experience is usually terrible. With Zenoss, it's completely different. You get a skilled U.S.-based engineer who speaks the same geeky language we do and knows exactly how to fix what's wrong. That's what's kept me coming back."

Zenoss, which competes with computer giants including IBM and Hewlett-Packard, has set itself apart with stand-out technology and hands-on tech support, users like Crye say.

The company's 250 customers -- including Apple, General Electric, Intel and CNN -- use Zenoss to monitor complex systems, find problems and fix them.

In addition to its commercial version, Zenoss also offers a free open-source version of its software, which engineers from around the world have collaborated on. More than 35,000 customers use the free version.

Now the company, which is backed by $45 million in venture capital, is gearing up for a new phase of expansion. In June, Zenoss recruited software industry veteran Greg Stock as its new CEO and charged him with growing revenue.

Stock was most recently an entrepreneur-in-residence at Austin Ventures and chairman of cloud-based mobile broadband provider Macheen. Before that, he led several software companies including Vovici, a consumer analytics vendor that was acquired in 2011 by Verint Systems. He has led two companies through initial public offerings and says he hopes to do the same this time around.

Stock replaced founder and CEO Bill Karpovich, who remains on the board.

Zenoss was founded in Annapolis, Md. in 2005 by Karpovich and Erik Dahl, two former employees of USinternetworking, an early software-as-a-service company that AT&T acquired in 2006.

Last year, Zenoss, which already had a development center in Austin, moved its headquarters here to tap into the region's deep talent pool in network, systems and application management software.

"Being in Austin gives us access to very experienced software talent, in what we think of as really the hotbed of the systems management industry," says Tom Jennings, managing director of Summit Partners, a Boston-based venture capital firm that has invested $20 million in Zenoss. "You look at all of the great systems management companies that have come out of Austin over the years, and you know it's the place you need to be."

Zenoss leased a 45,000-square-foot space on Four Points Drive in Northwest Austin to give it with room to grow. The 175-person company is currently hiring in sales, marketing and engineering, as well as filling out its leadership team with a search for senior sales and business development executives.

Stock wants to increase revenue to more than $30 million this year, a 35 percent increase over last year. To get there, his strategy is to leverage Zenoss' startup culture to move faster than big players in terms of product development and being more responsive to customers.

"All my life, I've competed against the big guys. We're fleet of foot and we can out-hustle them," Stock says. "We have a team of developers that have built this solution from the ground up and we can react more quickly to what our customers want than our competitors do."

And rather than trying to replace a potential customer's IBM or HP system, Zenoss will pitch itself as a complimentary solution. "You can try to dislodge what they're currently using or you can try to co-exist," Stock says. In the past, Zenoss "has tried the replacement strategy, and it's a bit harder way to market. We're taking a software approach to gaining customers."


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