Emerging tech distie Ethos bets on unicorns for success

Niche distributor attracting attention from giant resellers as it looks to specialise its way to success

Emerging technologies distributor Ethos Technology is betting on a small number of niche "unicorns" it hopes will fuel its growth, against a backdrop of rapid consolidation in the industry.

Ethos was launched a year ago with the aim of bringing cutting-edge technology from Silicon Valley to the UK at the same time as it launches in the US, looking to help the UK channel keep up with its American counterparts. It aims to turn over £6m this financial year - a figure it forecasts will double in the next.

Although 90 per cent of its business still comes from up-and-coming US vendors - such as storage firm Cohesity and software-defined storage player Hedvig - it has now taken on Israeli cloud infrastructure vendor Stratoscale and Swedish software-defined outfit Compuverde, among others.

An office on the east coast of the US is on the cards in the coming months, as well as one in Australia, in order to answer demand in the regions which is currently being manged from the UK.

"We genuinely believe we've got at least two unicorns within our portfolio at the moment."

Ethos' co-foudner Omar Galbraith told CRN that he thinks the niche nature of the business will stand it in good stead for the future.

"I know a lot of the big guys won't look at some of the technologies we are focusing on at the moment," he said. "It gives us a niche play. If you look at the distribution market over the last few years, there have been a number of players who have come in and are doing really well. BigTec are doing fantastically well - they took on Nutanix. What we call it in the industry is their unicorn - they've got a great product which took off. We genuinely believe we've got at least two of those unicorns within our portfolio at the moment."

Galbraith said that some of the UK channel's biggest resellers are working with Ethos at the moment, which he views as a testament to its offering.

One risk he admitted the company has is that some of the niche vendors it invests significant amounts of time and money into may be acquired by industry giants. But he said this has been factored into the business model, and that contracts include a clause that if that should happen, Ethos retains the rights to distribute as before.

"We've had about 20 manufacturers get in touch with us in the last few months and some of them have amazing technology, but the guys behind them have a history of building businesses and selling them," he said. "That's the reason we've not taken some of these vendors on. It's too high a risk."

Carl West (pictured), supply chain director at GfK, agreed that being a niche player can give a distributor the edge.

"You've got to go large or go niche," he said. "You've got the large broadliners which are multinationals getting bigger and bigger, going into more and more technologies and more and more territories.

"You have the squeezed middle which is really on a knife edge at the moment because they have neither the economies of scale of the big distributors nor do they necessarily have the niche and the premium of value of the smaller, focused distributors. I have very much been saying there is a paradigm shift.

"There are those in the middle under threat - they are neither big, nor niche. There is an opportunity in this area in the niche end. They are about value - informed sales and services pre- and post-sales and these are areas where you need specialist expertise.

"It's not necessarily a question of turnover. There is room in the UK market - as long as they continue that strength of niche, they will continue to have an opportunity for the future."