Leveraging Amazon To Build a Cloud Storage Business: Nelson Nahum, CEO of Zadara Storage (Part 2)

Sramana Mitra: What level of revenue did you get to before the LSI acquisition?

Nelson Nahum: I think we were in the $10 million range.

Sramana Mitra: How much did you sell for?

Nelson Nahum: It’s confidential. It was good for most of the people.

Sramana Mitra: So the bottomline is that you made some money off that transaction?

Nelson Nahum: Yes, definitely.

Sramana Mitra: So in 2006, your first company has exited and you’ve made some money. What happens next?

Nelson Nahum: I started working for LSI. I made some money but it was not a huge amount of money. It was the first time I worked on a US company and a big corporation. Previously, I was working for small companies. I became in charge of the software for the storage division that had 250 engineers.

Sramana Mitra: How long did that go on?

Nelson Nahum: About four years. At the beginning, we were making sure that integration worked well. This was integration in all aspects—not only the software integration but also people integration and making sure that everybody feels good about the acquisition. We became part of LSI and I spent four years there. Then in early 2011, there was a layoff that included most of my division. This is when I started looking for something new to do.

Robi Hartman, who is my co-founder in Zadara, was the Chairman of Storage. After the lay-off, he called me and said, “Why don’t we do something new?” I said, “We could do something new but we need money.” At the same time, I was already interviewing for other companies. The other engineers were also interviewing. They were good engineers and could get a job quickly. This took two to four weeks.

At some point, I told Robi, “I am getting to a point where I will soon get an offer. If until Tuesday, you don’t have the money, on Wednesday, I need to fly to Seattle and accept the offer.” Tuesday night, he called me and arranged $3 million from some of the firms that he had friends in. It was really good. He got $3 million with just an idea. This allowed us to start with 11 people.

Sramana Mitra: What were you doing to do?

Nelson Nahum: My whole life, I worked on storage. Obviously, there was also this storage team. All this took six weeks from the time I got the copies of the layoff until we started Zadara. The very next day after the layoff, I started something new. This was the first time I was fired in my life. It was actually shocking.

The next day at eight in the morning, I woke up early and started working. I was looking for things to do and learning new technologies. So I decided I wanted to learn a little bit of cloud. I had always been into the enterprise side of the business and keep hearing cloud. I created an Amazon account and started writing some code. At the end of the month, I got a bill from Amazon for $2.51. I said, “Wow! I was charged $2.51 for everything that I did.”

My next thought was if I have a full server up and running for $2.51, what happens if you can do enterprise storage with the capabilities of storage, or all the good things of enterprise storage, but in a pay-as-you-go model? That was the initial idea of Zadara – to have all the capabilities of enterprise storage and at the same time, the elasticity of pay-as-you-go cost of the cloud.

This segment is part 2 in the series : Leveraging Amazon To Build a Cloud Storage Business: Nelson Nahum, CEO of Zadara Storage
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