Extreme to unify wired, wireless campus with Avaya fabric software

Avaya customers as important as technology

Besides technology, Extreme’s acquisition of Avaya’s networking business brought a customer base that Extreme wants to hold. The company plans to keep those customers by honoring all Avaya contracts and continuing to support and service all products.

Catering to Avaya customers is important because Extreme would have had difficulty acquiring them on its own, given the maturity of the networking market, said Jim Duffy, an analyst at 451 Research. “It’s more of a customer grab than any benefit from the Avaya technology.”

Indeed, Extreme has been growing its customer base through a buying spree that started in September 2016 with the $55 million acquisition of Zebra Technologies’ WLAN business. Extreme announced the $100 million Avaya acquisition in mid-March of this year, roughly two weeks before agreeing to buy Brocade’s data center business from Broadcom, also for $55 million. The Brocade portfolio includes switches, routers, and network automation and analytics software.

Extreme’s combined revenue from the acquisitions will reach about $1 billion, according to the company. However, Duffy said he is skeptical the company will be able to grow much larger, given that Cisco, Hewlett Packard Enterprise (HPE), Huawei and other rivals have similar products. 

“I don’t see them taking any Cisco share, I don’t see them taking any HPE share, and I don’t see them taking any Huawei share,” he said.  Also, Extreme still has to effectively integrate all the technologies it has acquired and demonstrate that it can hold onto the new customers.

Real estate agents can help buyers and sellers ‘MoveEasy’

Have suggestions for products that you’d like to see reviewed by our real estate technology expert? Email Craig Rowe.
MoveEasy is a comprehensive move management platform for agents to provide to clients via white labeling or referral.
Platforms: Browser; companion app
Ideal for: All agents who assist clients with moving decisions and home services vendors
Top selling points

Highly detailed
White-labeled or personal URL
Extensive moving task list
Automated launch via CRM connection

Top concerns

Few. Luxury home buyers already entrenched with full-service moving coordinators would have little use for this software.

What you should know
MoveEasy is about 90 percent complete. It will formally launch soon as part of a national partnership with Realty One Group, hopefully before Inman Connect San Francisco.

Agents have been using the software in beta and the company is not exclusive to Realty One.

Having just completed a move, which took three days too ma…

Wall Street or Silicon Valley: Who will Compass turn to next?

From left: David Snider, Robert Reffkin and Maëlle Gavet

Standing on stage at Dogpatch Studios in June, Robert Reffkin rang in his 38th birthday by channeling his inner Steve Jobs. Clad in a black suit and T-shirt, the CEO of Compass addressed a pumped-up crowd of 300 agents at the former warehouse located along San Francisco’s once-gritty waterfront. A popular venue for photo shoots and parties, the space has been used by Google, which once rented out the building to debut a new tablet. Compass was there to celebrate the official opening of its first office in the city.

Compass had been growing fast – perhaps too fast, Reffkin admitted.

“I believe every company needs to know their mission,” he said. “I know, if I were to ask 10 people in this room, ‘What’s Compass mission?’ I’d get 10 different answers. For that, I am sorry.”

By now, the company is used to playing the industry boogeyman. And for good reason. In just four years, it’s become the first residential brokerage to leap past a $1 billion valuation, expanded to nine markets across the country and recruited some 1,500 agents, many of them headline names. Its competitors curse it, sue it and predict its untimely demise.

Having a bullseye on its head hasn’t hurt Compass’ ability to attract investor attention — it’s raised over $225 million in venture capital to date. But as it tightens its grip on the U.S. and eyes international expansion, questions persist about how the company will deliver returns to the early backers who propelled its growth.

At its current size and valuation, Compass may be too big to be acquired, leaving additional funding rounds or the public markets as the most viable routes to further expansion. But much-hyped tech companies such as Snapchat and Blue Apron have taken a hammering after they’ve gone public, unable to meet investor expectations for growth and revenue. And the industry’s eyes are on another player that’s going the public route, Redfin, which despite strong growth is still hemorrhaging money. Will Compass be able to avoid a similar fate?

“The public market is the great equalizer — now, you have to be clear about your economics,” said Charlie O’Donnell of venture capital fund Brooklyn Bridge Ventures. “You can’t tell some future story about how much you want to make. It’s about how much you’re making today.”

The new guard

In an interview at Compass’ Fifth Avenue headquarters, Reffkin predicted the firm would have an international presence within 18 months. He declined to specify which cities Compass would go to, but global gateway markets such as London, Singapore and Hong Kong, which already send referral business to Compass agents in the U.S., are a likely target.

The firm says it’s turning a profit in several markets, and that top-line (gross) revenues grew threefold last year to $180 million. It’s filled its management ranks with executives seasoned at public companies, and wants to go even bigger.

“The markets we operate in right now represent about $14 billion of the $75 billion [real estate] industry,” said CFO David Snider. “By next year, we should be in a third of that addressable market.”

To see these plans through, Compass has been beefing up its management team, adding half a dozen senior executives. The hiring spree, sources said, is a trademark gambit of Wellington Management, the investment manager that led Compass’ $75 million Series D round last year and is known for shepherding its bets into the public markets.

In January, Compass hired Maëlle Gavet, a top executive at Priceline Group, as COO. Gavet now oversees technology, product and marketing, with Snider moving solely into the CFO role. The same month, Julie Binder — who worked at public company ADT — came on as head of communications.

And there have been a slew of other hires. Pooneet Kant, who ran strategy and expansion for the Midwest at Uber, was tapped as director of strategy and business development, while Amy Middleton, a Sotheby’s alum, joined as director of marketing. On the real estate side, Allison Yazdian was hired to run Southern California. And connecting the agents and product developers, Jenifer Vandagriff was hired as the head of user experience, which involves conceiving new products for agents.

Some Compass stalwarts were pushed aside to make way for the new blood. Christina Allen, who became head of product in October 2015, is now serving in an advisory role. And Compass is hiring someone above Ciara Lakhani, who has been with the firm since 2014 and is currently head of people and culture. The firm has grown large enough that it needs someone with more experience, insiders said. Lakhani is said to be involved in the search.

It’s a common pattern seen at venture-backed firms, which feel pressure to innovate and constantly re-up talent to keep up with their explosive growth. Facebook CEO Mark Zuckerberg, for one, is well-known for taking this approach.

“Even though everyone he [Zuckerberg] brought in was strong, he replaced people as he figured: this is what I need to be at this level of scale, this is what raising the bar at this level of the game is,” LinkedIn founder Reid Hoffman recently told tech website Recode.

Co-working giant WeWork, which recently hit a $20 billion valuation and is expected to go public, also recently reshuffled its team, promoting Jennifer Berrent to the role of COO.

The value proposition

On paper, Compass is worth over $1 billion. But that valuation is based upon potential future earnings and the size of the “total addressable market,” a term telegraphing the potential revenue available for a product or service, rather than the current revenue.

The size of the real estate market, and the fragmented nature of its players, has been a major draw for investors, said Snider, a former Bain Co. analyst.

“In my time at Bain looking at businesses, it was rare to find an industry as large as residential real estate brokerage where you have a very fragmented competitive landscape where no one brokerage is top three in three of the biggest markets and where even the largest incumbent doesn’t leverage one unified system brand or platform to drive major competitive differentiation,” he said. “That narrative is attractive to investors across sectors.”

His argument is that the largest incumbent in the national market, Realogy, is a company with a series of separate brands – including Coldwell Banker, the Corcoran Group and Sotheby’s International Realty — and so cannot market itself cohesively at scale. It’s the same argument for consolidation that’s been made at multibrand behemoths such as Procter Gamble and Unilever. On the flip side, some advertising and branding analysts have argued that the future will be ruled by a bevy of smaller brands, not just a few giant ones.

Even Douglas Elliman, which has one unified national brand, does not trade publicly under that name. Rather, it trades under the name of its parent company Vector Group. By not having its own ticker, Snider thinks it’s missing out on a valuable branding opportunity.

“An attractive set of consumers if you’re selling real estate are the people who watch CNBC and Bloomberg,” he said, “and there’s little name recognition there. A true consumer-facing brand gets the notoriety of being outside the exchanges when it goes public and the attention that goes with that.”

But others made the case that Realogy, which has a market cap of $4.66 billion, has the largest market share in the country precisely because its brands target diverse parts of the market. Last year, the company sold more than 350,000 homes across the country, generating revenue of $5.8 billion. Net income rose 6 percent year-over-year to $213 million.

“Realogy does the most transactions in the country,” said Jason Deleeuw, an analyst at Piper Jaffray who covers the stock. “Their brands on the low, middle and high end across the nation have helped them achieve their leading market share.” The company’s Achilles’ heel, he said, has been the softening luxury market as well as agent poaching by rivals — including Compass.

Compass has been able to woo brokers — and sell investors — on its promise to outperform its competitors by making agents much more productive. It cites figures showing that agents who join from another firm saw up to a 32 percent increase in business in their first full year at the company.

“This is the entire growth engine of our business, the thing that we are universally obsessed with is this number — 32 percent,” said Rob Lehman, Compass’ chief revenue officer.

Its competitors, however, have scoffed at those numbers.

Many in the industry caution that Compass could face headwinds if the market takes a hit and investors get spooked. But Snider claims that Compass is strong enough to withstand any issues, since the company has zero debt.

“Realogy and even smaller companies in the sector will leverage debt to grow — all of our growth has come from equity,” he said. “Because we’re able to convince our investors that the value of our equity is higher and higher, it’s meant that we have an ability to grow without risk. Even if the market goes down considerably, we have huge cash reserves.”

But if Compass wants to keep tapping public or private investors for cash, it has to get better at telling the story of what separates it from its competitors, sources said.

“When you have these firms that are kind of tech companies but they don’t look that much different from old-school firms, it’s hard,” O’Donnell, the venture capitalist, said. “The more mature they get, the more they have to prove that their model is considerably better than that of a traditional company. At some point, that comes home to roost.”

“Is there something definitively different about their processes, their IP or how they’re attracting customers?” O’Donnell added. “Are they really making more per agent than the older firms?”

In a blog post about Redfin’s IPO, management analyst Rob Hahn said Redfin has an advantage over Compass when it comes to narrative.

“Redfin spends millions building its website, generating traffic and leads, to send to employee agents,” he wrote. “Compass spends millions bringing top-notch superstar elite agents into their company.”

“Today’s large, established mainstream brokerages know how to compete against Compass,” Hahn added, “because Compass is playing the same recruiting and retention game they are. They have no idea how to compete against Redfin, because Redfin isn’t playing that game.”

Coding productivity

Compass’ business model has changed substantially since it launched in 2013 — it originally wanted to pay agents on salary and divide the market by territories. But two things have remained consistent: its aggressive recruitment and its technology evangelism.

While many of Compass’ competitors claim its technology is far from groundbreaking, Gavet said all its offerings are based in hard research. Compass evaluates each new tool by soliciting feedback from agents and measuring the adoption rate of new products. To be considered successful, a tool should be used by more than half of the firm’s agents, she said.

“We’re not here to create shiny tools,” she said. “Shiny is great, but shiny is not bringing in money. We’re very much a for-profit business so whenever we make an investment in a tool, whenever we hire another engineer, we always link it to, ‘OK, how is that tool going to help the agent?’”

Some recent efforts include real-time market reports and Collections, a Pinterest-like platform that lets agents curate listings and share them with agents. Gavet said 70 percent of Compass agents use Collections weekly.

Compass wants to eventually have an end-to-end system that integrates the entire real estate transaction, from lead to closing.

“That is a herculean effort,” Reffkin said. “Right now, there are 270 software providers that are doing a big piece of this big puzzle and I think there’s an opportunity to build an entire platform in one place.”

Gavet believes it can scale up those efforts without breaking the bank.

“It’s not investment in a vacuum,” she said. “Once you’ve created a tool for one agent, it works for 1,500 agents, 3,000 agents, 10,000 agents. We can multiply the number of agents without having to recreate the tool.”

Payday

With the public markets for tech firms lukewarm, some industry insiders now think Compass may have to keep raising equity to fuel its growth.

In 2016, IPO deal volume was down 36 percent to 112 IPOs, and the amount of capital raised sank 37 percent to $21.3 billion, according to Ernst Young research. And this year hasn’t been an active one for real estate IPOs, which peaked in 2013 when 21 companies raised over $6 billion in initial public offerings, according to Greenwich, Connecticut-based Renaissance Capital, which provides pre-IPO research.

The one IPO making headlines, that of Seattle-based Redfin, may do Compass more harm than good, since the company has had to publicly disclose its losses. It too had been spending heavily on technology and recruitment.

Last month, in documents related to its IPO, Redfin said it hasn’t turned a profit since it launched in 2004. “As of March 31, 2017, we had an accumulated deficit of $613.3 million,” the company disclosed. “We expect to continue to make future investments in developing and expanding our business, including technology, recruitment and training, marketing, and pursuing strategic opportunities. These investments may not result in increased revenue or growth in our business.”

Snider said Compass will not have to rely on the public markets, since venture capitalists, despite a pullback in investments across several sectors, still fancy real estate.

“I think it’s clear that there’s a lot of investor excitement — more than there has been in the last five years — about real estate as a sector for investment, with valuations that are reflective of either pure-play tech or tech-enabled businesses,” he said, noting that several prominent New York real estate families, including the LeFraks, Rudins and Wilpons are eying new opportunities in the real estate technology sector. LeFrak is already an investor in Compass.

Snider also noted that Airbnb’s latest funding round gave the company a $31 billion valuation, while WeWork is valued north of $20 billion after the co-working startup raised a $760 million Series G round this month, on the heels of an investment by Japanese banking giant Softbank in March. The implication is that “there’s a lot of room to run,” he said, “especially when you’ve got sources of capital like SoftBank with $100 billion funds.”

LegalTech Firm Introduces Native Token, Launches Sale

Agrello, a legal technology platform combining agent and blockchain technology, launched a token sale July 16 for its native token called ‘DELTA’ which will be traded under ‘DELT’. The token scale, scheduled to go until August, has a 10,000 bitcoin limit. According to inside sources, the project might already be more than one-third of the way to reaching its goal.

“DELTA tokens will be required to employ the Agrello platform and to perform various actions in the system, such as the deployment of new agreements or the usage of blockchain and contract repository resources,” wrote the project in its blog.

Two days ahead of the opening, the team held an AMA in which for over two hours the team discussed the implications of blockchain for the legal industry. CCN was there in order to catch some of the most compelling parts of the talk ahead of the token sale, which was covered by Hacked late last week.

“The idea behind Agrello is to take the tedious work away from users, and let users and organizations collaborate in a peer-to-peer fashion, and allow them to focus on more decision making and creative work,” said Agrello Chief Scientist Alex Norta in the AMA. “And really all the repetitive, annoying work is offloaded to the smart contract and agents…Value and information transfer logistics can very quickly explode in terms of cost and time needed. So, if you lock that off into a smart contract, you are definitely saving a lot.”

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The Chief Scientist explained how Agrello – which doesn’t have much competition in the blockchain-based legal tech sector – has built definitions, exceptions, management and compensation procedures into smart contracts. “And the idea then is really you have agents on top to engage in dispute resolution and negotiate and engage in a socio-technical way with humans involved in final decisions, if that is wished, to basically resolve conflicts,” Mr. Norta explained.

When misbehavior happens in the Agrello system there is a voting mechanism built in to deal with it. “Maybe agent gets voted out and replaced or maybe context just changed,” says Mr. Norta, who has spent 16 years researching digital contracting. “And because of contextual change it’s necessary to change an obligation. So, this gives quite a bit of complexity management and flexibility to the approach.”

Although Agrello has gained attention due to its incorporation of agents around blockchain technology, it’s not exactly AI, and the team made this clear over the two hour discussion. “These are actually software-programmed agents, and the idea is there is this declaration,” says Chief Executive Officer Hando Rand. “…The agents are programmed to understand those obligations, understand the lifecycle of contract execution, and they know how to go forward based on obligations.” Mr. Norta detailed the technicals behind the agents employed by Agrello.

“…We use these BDI agents to support users during the setup phase, during the enactment phase and for conflict resolution,” he said. “But, for somebody who is fully into artificial intelligence, they might rather consider this machine learning or deep learning.”

Basically, instead of I, Robot styled AI, Agrello offers pattern recognition in large data sets. “If Agrello is used over a period of time, a lot of data gets accumulated from customers and so forth about the collaborations, our forms provided, what conflict resolutions are carried out and all that,” says Mr. Norta.

A lifecycle management layer allows Agrello to govern its ecosystem of smart contracts. “[I]f a contract needs to be adjusted, in a consensual way, then this lifecycle management layer caters for the setup, the negotiation phase, the rollout, enactment, exception handlings and compensations management and determination,” describes Mr. Norta. “That way, we realize governance for smart contracts, which is very vital.”

Mr. Rand added: “With this technology, it is possible to process a lot of logistics through our technology, which gives information about contract execution and dates for resolution,” he explained. “And it’s possible to integrate this with devices for automated execution and so on.”

Featured image from Shutterstock.

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If we could just get a word in Edgewise… New kid says it can do data …

Edgewise Networks launched on Wednesday with a project to reengineer the firewall and make it suitable for cloud-based environments by moving beyond traditional address-centric controls.

The US startup’s so-called Trusted Application Networking technology is designed to block the spread of network-borne threats by allowing only legit applications to communicate over approved network paths. This defense mechanism – which is aimed at data centers and cloud environments rather than enterprise LANs and WANs – looks beyond network addresses, instead validating the identity of applications, users, and hosts.

The name of the game is to safeguard critical cloud and data center apps rather worry about controlling the flow of network traffic by port and destination, the traditional role of the firewall. Edgewise Network claims it uses machine learning to model application communication patterns and generate protection policies for a business.

Chief exec Peter Smith told El Reg: “Edgewise Networks does not do deep packet inspection. We’re looking past the packet to identify software and connections.”

It’s hoped this will stop software nasties, such as the SMBv1-exploiting NotPetya, from spreading across networks. The technology is delivered as a cloud-based service, with a software agent running on end points.

Chief technology officer Harry Sverdlove said that while traditional firewalls can be compared to a phone switchboard that blocks calls depending on the caller ID, and that app-aware firewalls are like telephone equipment that can identifying a voice call is in progress and its language, Edgewise’s system validates the person or party making the phone call. In data centers, these parties will be various enterprise software applications chatting among themselves.

Other vendors are grappling with next-generation firewall defenses in data centers. Other notable initiatives along these lines include an alliance to integrate Fortinet’s intrusion prevention and management capabilities into Microsoft Azure Security Center to better protect cloud workloads against malware and miscreants. That deal is more about intrusion detection – aka high-tech burglar alarms – than reimagining the firewall, as such.

Edgewise’s technology competes with micro-segmentation products from the likes of vArmour, but goes beyond them in its capabilities, the startup told El Reg.

Segmentation, micro-segmentation, and VLANs are based on addresses, ports, and protocols, and in some cases on pulling open the packets and looking at the content of the traffic. But these constructs are fundamentally limiting, especially in dynamic environments like cloud and data centers. Edgewise policies are based on the actual applications or services communicating, the actual users running those applications, and the hosts or containers on which they are running.

They are not dependent on the network addresses or the content of their conversation, making it far more secure (harder for a malicious actor to spoof valid communication or hijack user sessions) and far more agile, so the policies work regardless of where they are deployed (e.g. private network, hybrid cloud, public cloud).

Edgewise’s tech is pitched at, among others, retailers, financial service firms, and cloud providers. One infosec pundit described the protections as a “properly implemented default deny.”

Clive Longbottom, the founder of analyst house Quocirca, agreed that standard firewalls are unsuited to operation in cloud environments while suggesting that Edgewise will have challenges of its own to contend with.

Longbottom told El Reg: “The big problem is that these days there are no defined edges to a network. Therefore, you have to create them.

“The use of defined paths means that those edges – in reality, contact points – can be created and any traffic to do with a task routed through these specific paths. Rules can then be applied; deep packet inspection can be carried out on a per path or stream basis. Standard firewalls cannot operate this way easily.”

Kurt Seifried, a senior software engineer at Red Hat product security and a contributor to the Cloud Security Alliance, added: “We’ve known we need smarter network controls for a while now.”

Edgewise Networks was founded by Smith, a cybersecurity entrepreneur, and Sverdlove, former CTO of Carbon Black (formerly Bit9). The biz has banked $7m from early investors including New England venture capital firm .406 Ventures and tech chief execs from the Boston area including Patrick Morley of Carbon Black, Omar Hussain of Imprivata, and Bob Brennan of Veracode. ®