Sometimes the most seemingly boring startups are quietly working behind the scenes to shift an entire industry. For instance, take Nexenta Systems. It launched in 2005 to challenge EMC and NetApp’s proprietary approach to data storage, and now it’s on track to a public offering, closing a $21 million Series C earlier this year and today reports it has closed more new business so far this year than it did in all of 2011.
“Storage needed an independent player. We’re never going to be as cool as Google. But if you’re an engineer, you know we build the plumbing that keeps information safe,” says CEO Evan Powell.
Operating a remote datacenter requires serious storage, both physical and virtual, and EMC and NetApp, referred to by Powell as “legacy storage,” have dominated the mid-market. The biggest companies have the luxury of having their own computer scientists to solve the problem. But if a cloud hosting startup like that profiled by Trevor today, DigitalOcean, wants to compete with Amazon, it needs to find a less expensive data storage option.
“If you’re Amazon, Google, or Facebook you can write your own storage software. Amazon doesn’t have a drop of legacy storage in it,” says Powell. “If you’re Leaseweb [a hosting provider and Nexenta customer], there isn’t time to write your own.”
It’s not just that Nexenta beats EMC or NetApp on price, it’s that its software runs on any industry standard server, whereas EMC or NetApp lock buyers into building out storage using only their branded solutions. Ending the reign of a proprietary business model in storage is what Powell says gets him up in the morning and to Nexenta’s San Jose office of 260 employees.
Nexenta believes it can do what Intel and Microsoft did to the server market a decade ago, bring lower prices and competition to a proprietary industry and keep functionality the same. Sun Microsystems learned this lesson when it continued pushing its proprietary licensing of the UNIX operating system as open source Linux systems from Red Hat and others gobbled its customer base.
Boring, maybe, but Powell points to Big Data software company Splunk, which had a wildly successful IPO this year, as a role model for enterprise startups that can make a big profit by addressing the less sexy side of technology.
[Image courtesy Wikimedia]