Scaling With VARs And OEMs: Nexenta CEO Evan Powell (Part 3)

Sramana: How did you fund Nexenta?

Evan Powell: We did take a little bit of funding, but it was convertible bridge notes to me, some folks at Stanford, and so forth. We really got out there as soon as possible and even though we were giving the product away we were started asking for payments by means of support. In fact, everyone at Nexenta gets April 28th off each year because that is the anniversary of the first purchase order. We really thought that the validation received from payment is a lot more valuable than just the open source feedback that we had received up to that point.

Sramana: You had 40,000 open source users for your storage system. Were you able to pinpoint what types of customers they were? Did they come from SMB or enterprise?

Evan Powell: We did segment that customer base. Our company has been able to take second mover advantage. We looked at how networked storage companies in the appliance storage space conducted business. We looked at their early buyers. We also paid attention to the RedHats and others in the open source world as well. We looked at where they got their first big customers.

There is a whole body of thought around how to build an open source business core. We assertively went out and tried to pick people’s brains from both the legacy world and the open source world and got their thoughts. We also looked at the user data we had. The first 40,000 users were getting access only to the kernel. They did not have access to any of the features that we had since built. We found that genomics labs at universities were a classic user. The Center for Genomics at Indiana University was one of our biggest, earliest users. The University of Michigan also had a similar user, as did Stanford. That is typical for open source projects, and they do give you a lot of feedback.

One thing that we kept in mind is that those users are not our future market. The typical enterprise does not have a lot of graduate assistance interested in hacking and tinkering. They want 99.999% access to information. We always kept that in mind. Early on, we were debating what our business model should be. If we listened to the early adopters in the open source community we would not have the model that we have. We have a straightforward model where we sell perpetual licenses. What is unique is that we do not sell hardware and we do not sell based on anything more than capacity use. We have a simple business model that is focused on software. Today we have more than 400 universities as customers.

This segment is part 3 in the series : Scaling With VARs And OEMs: Nexenta CEO Evan Powell
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