Arcserve builds a global data-protection company from Eden Prairie

Data-protection firm Arcserve, sort of a Minnesota start-up — even with 25 years under its belt — has completed its first full year at its headquarters in Eden Prairie.

The 500-employee firm, which sells globally, posted $100 million in revenue last year and expects to employ up to 100 locally within a year.

Arcserve CEO Mike Crest was the sole Twin Cities employee back in 2014. He was then general manager of the company, which since 1996 had been a Long Island-based subsidiary of New York-based CA Technologies. He spent most of his working life aboard Delta Air Lines jets.

In 2014, Crest convinced CA management that a spinoff of Arcserve made sense.

"CA is a good company but we serve a different market," Crest said. "All we think about every day is data protection. And we knew that, ideally, we would be much better as a separate organization."

Crest teamed with Marlin Equity Partners, the California-based private equity investor in technology firms, to acquire Arcserve for about $170 million. Crest and Marlin bet they could turn Arcserve into a Minnesota-based, sole-focus growth company in an industry that's still fairly fragmented and that includes a couple of distracted big competitors.

And Arcserve management sees a company that can generate up to $500 million in revenue within five years, largely from domestic growth.

Arcserve is benefiting from positive trade press and customer endorsements of its latest version of "easy-to-use" unified data protection for the so-called cloud storage, virtual and physical equipment that provides "industry-proven backup, replication, high availability and true global de-duplication — all managed from a single pane of glass," according to a recent profile in "CIO Review," an industry publication.

It's flexible and precise. For example, the de-duplication feature means the e-mails are backed up, but only one copy of the attachment sent to 30 recipients is preserved, saving precious storage space as data volume in cyberspace doubles every 18 to 24 months.

Arcserve boasts 43,000 small-to-midsized customers. They range from a San Mateo, Calif., credit union to a $2.5 billion-revenue Irish dairy cooperative.

Customers buy Arcserve products through technology vendors, or "resellers" who package Arserve protective software.

At a time of numerous stories about cyber crime and costly outages, Arcserve has a hot product that solves complex, multiplatform security-and-backup issues with a simple solution for IT managers who can recover data quickly, avoiding what used to be hours to days of downtime, said Crest and Chief Marketing Officer Rick Parker, a veteran technology executive who joined Arcserve in late 2014.

"This is a $6 billion global industry growing 10 percent a year," said Crest, 47, an Alexandria native and Minnesota State University, Mankato business school graduate. "We see substantial organic-growth opportunities. We also will acquire. We want to be the dominant player."

There's been trauma in the data-security business lately that Arcserve brass say has benefited them with new business.

Symantec, an Arcserve competitor that is the largest seller of cyber security software, last year sold its Veritas data-storage business for $8 billion to the Carlyle Group. And huge Dell is buying EMC. Deals are distracting. Both have competitor units to Arcserve.

"Arcserve has some new things and is winning business from IT decisionmakers," said CEO Todd O'Bert of Twin Cities-based Productive Corp., one of hundreds of "resellers" that install Arcserve software and technology. "It's always been solid technology for midsize businesses, going back to when they provided tape-based backup. Now, everybody has a computer in their pockets and servers in the cloud and need data backup in real time. Arcserve has done a pretty good job of moving along that continuum with their technology."

Phil Soran, the veteran Twin Cities technology entrepreneur, has helped build two data-storage firms, Xiotech and Compellent, that were sold to larger organizations for hundreds of millions of dollars over the last 20 years. Soran advised Crest on his independence plans for Arcserve and encouraged him to relocate the firm here for the strong workforce and the region's growing significance in software and data storage.

"And Crest is benefiting some from the data-storage ecosystem in this town. There's good engineering talent around here."