Mellanox: From the kitchen table to billion dollar turnover

Well-renowned for its dominance in the high performance computing (HPC) industry, Mellanox's fastest growing field of activity is causing waves in a much larger, and even more lucrative, market.

By EYTAN HALON
Updated: FEBRUARY 13, 2019 23:35
Mellanox Technologies vice president of marketing Kevin Deierling (photo credit: KOBI BACHAR)
Mellanox Technologies vice president of marketing Kevin Deierling
(photo credit: KOBI BACHAR)
Mellanox Technologies has come a long way since CEO Eyal Waldman held his first meeting with now-vice president of marketing Kevin Deierling, the company’s very first American employee, over a bowl of borscht in his home kitchen.
Twenty years later, the Yokne’am and Sunnyvale, California-based interconnect solutions firm has a global presence, exceeding $1 billion in annual revenue for the first time in 2018. The company’s rapid growth has reportedly fueled the interest of some of the world’s largest tech giants.
“I was around at the very beginning, when we got our first purchase order worth a few hundred dollars, so it’s amazing to see the company cross the billion dollar mark,” Deierling told The Jerusalem Post during a visit to Tel Aviv this week. “The exciting thing about crossing $1 billion is not just the number but the way we’ve done that, by really diversifying our revenue stream.”
Mellanox’s annual revenue leapt forward by an impressive 26% in 2018, fueled by approximately 70% year-on-year growth in its Ethernet switch business. The company projects first quarter revenue of $295 million to $305 million.
Well renowned for its dominance in the high performance computing (HPC) industry, Mellanox’s fastest growing field of activity is causing waves in a much larger, and even more lucrative market.
“Fundamentally, what’s driving the business is data. Whether people realize it or not, they are producing and consuming massive amounts data. While it used to be that most of the data was flowing from the consumer into the data center, today it’s coming from machines, cars, airplanes, refrigerators, and smartphones and other devices,” said Deierling. “The explosion of data – [and] being able to move and process all that data and generate meaningful business value from the data – is what Mellanox is all about.”
Mellanox works with many of the largest data centers in the world, including Facebook and Microsoft, to build high-speed data networks by providing an “end-to-end data fabric” of Ethernet adapters, switches and cabling.
Simply put, if you’re using the Internet today, then you are benefiting from Mellanox’s equipment and technology. Some 90% of the world’s “hyperscalers,” the world’s largest data-center operators, use the company’s services, Deierling said.
It’s therefore not surprising that Mellanox has reportedly been the target of takeover interest by some of the world’s biggest hi-tech firms. Intel, Microsoft and Xilinx are all said to be interested in the company.
While Deierling would not comment on the reports, he said it was natural that people were increasingly realizing that Mellanox was doing something “very interesting.”
“A lot of people are realizing the importance of this whole notion of building high-speed, intelligent networking that can deal with all this data in an efficient way,” Deierling said. “We can’t comment on the rumors, but it makes sense that people are interested in what we’re doing.”
Since its establishment in 1999, the company has been dual-headquartered in Israel and the United States. Today, it boasts operations from Israel’s South to its North, with offices in Yokne’am, Tel Aviv, Beersheba, Ra’anana and Tel Hai. Deierling believes that the combination of Israeli and American working cultures provides the company with an edge over some competitors.
“Israelis are often very mission-oriented and go-go-go, whereas in the US people tend to do a little more analysis before moving. That’s a good tension,” he said. “I’ve seen other companies in the US enter into ‘analysis paralysis,’ where they are analyzing forever. Sometimes when faced with two [options] to go left or right, the most important thing is that you either go left or right, and don’t try to do both at the same time.”
The company is clearly not afraid of taking an unorthodox approach on occasions, and is proud of its unique partnership with Palestinian hi-tech company ASAL Technologies.
Through ASAL, Mellanox currently employs about 100 workers in the West Bank city of Rawabi and another 20 in the Gaza Strip, and it intends to grow the partnership.
“Until you visit Israel, you don’t really understand how intertwined and difficult the conflict is to solve. We believe the best way to solve it is through people interacting and through business,” said Deierling. “There are well-trained and talented people there, and Mellanox needs those people. And it serves another purpose, which is that if you have something to work for and build together, it can solve a lot of other issues.”