UW computer science professor Ed Lazowska interviews F5 Networks CEO John McAdam

F5 Networks has been operating in the Seattle area for more than 15 years, quietly building one of the biggest success stories of the tech community. But even though it boasts a market value of $9.25 billion and employs 2,800 worldwide, few people — even those in its home town — really know what F5 is all about. Heck, most folks didn’t even know that its name is actually taken from the hit movie “Twister.”

F5 is raising its profile. And that’s one of the reasons why CEO John McAdam, a Scotsman who joined F5 in 2000, took to the stage today at the annual Technology Alliance luncheon to share some of the company’s history, future prospects and why he loves operating in Seattle (and Spokane).

University of Washington computer science professor Ed Lazowska, who moderated the discussion, described F5 as a “hidden gem” and started the talk with this very blunt question: “What on Earth is that that you folks do at F5?”

The fact is that most people indirectly have encountered F5’s products, for example when they purchased an airline ticket, traded a stock, sent a text message or visited a social networking site. F5’s technology is core infrastructure within data centers, optimizing the delivery of online applications.

That’s a hot area, especially with the rise of cloud computing and virtualization. And F5 has successfully grabbed market share from its primary rival, Cisco Systems, over the years. How did F5 make inroads?

McAdam said that striking partnerships with other industry giants — namely Microsoft, HP, Dell and IBM — helped it achieve success.

But McAdam also said that its investment in 2002 in traffic management operating system, also known as TMOS, helped establish the company as an innovation leader in the data center.

McAdam’s own business style also has played a role in the company’s success.

“I think most people in our company know this: I am absolutely a proponent of ‘only the paranoid survives,”’ said McAdam, taking a line from Intel CEO Andy Grove. “We have the luxury of a pretty high market cap and a pretty high stock price … and the beauty of that, as long as we execute, is that it allows us to become a bigger and bigger independent company. Frankly, that’s our biggest defense against an acquisition.”

Like many tech companies, McAdam sees his biggest challenge as recruiting. But he’s glad to be in Seattle when it comes to talent, pointing out that two of the company’s top engineering execs hail from the University of Washington and Washington State University. Though he joked that he was born in the rain of Scotland, McAdam called Seattle a special place.

“I truly believe there are some differentiators. There is a collaboration-type focus within the culture of the community, and I think there is a stronger loyalty in terms of employees. We have over 100 people in San Jose as well. However, the Bay Area is very competitive in terms of people moving around. In our organization, if you look at development group in Seattle, the attrition rate is extremely lower. There’s a great skill set here. But having said that, we’ve had to import in R&D 40 percent of our hires.”

Asked what government could do to help support the tech ecosystem, McAdam echoed earlier remarks by Technology Alliance Jeremy Jaech about the importance of supporting education.

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