Building a Fat Startup with a Massive Patent Portfolio: Cleversafe Founder Chris Gladwin (Part 3)

Sramana: What came next?

Chris Gladwin: I started Cleversafe in 2004.

Sramana: What was the core idea driving Cleversafe?

Chris Gladwin: There were two aspects. First and foremost was the market. At that time, it appeared that the demand for data storage was going to grow rapidly and that has indeed been the case. It has been growing faster than Moore’s Law. I realized that there was going to be a demand for data storage, and more and more things that were capable of creating data would be used.

Looking at the technology that existed in the enterprise storage market, I did not see a technical approach that looked like it would work. There had not been a change at that time in the enterprise data storage area for around 25 years. During those 25 years, the systems had become a million times bigger. I knew they were going to grow even more. The methods that were used became slightly worse the larger a system got. Eventually, we hit a point where the legacy approaches just won’t work.

I had done a lot of networking and wireless products. If you look at the size of networking and wireless products, like Internet and telephony, you will see they are massive systems. They do two of the three things that storage systems do. They ingest massive amounts of information from multiple places at once, and they distribute massive amounts of information to multiple places. A storage system will do one additional function, which is persist the information. It will last for a period of time before it is distributed out.

If you look at the size of the Internet in terms of bits in and out, you will see that it is larger than any storage system by a billion or some huge multiplier. I knew the techniques that the Internet used could meet the upcoming market requirements and that was the fundamental thesis of Cleversafe. I wanted to take the techniques that had been used successfully for networking and telephony and apply them to the problem of massive storage.

Sramana: Was your target customer base enterprise customers?

Chris Gladwin: Yes. Cleversafe has systems that store data and work like networks. The systems get better as they get larger. The existing incumbent competitive systems are very good at small, but they get worse as they get bigger. Because our system works better when the system is bigger, that meant that we needed to target larger data storing organizations. We needed to target really big enterprise storage systems. We focus on the 10,000 organizations in the world that store a petabyte of data per year. Not long ago there was only 100 of them, now there are plenty more.

Sramana: Let’s go back to 2004 when you started the company and there were only 100 companies with storage systems at that scale. How did you fund your company to get to the point where you could reach those customers?

Chris Gladwin: I did the initial seed round of funding myself. The rule of thumb when I started the company was that to do a large storage system company, you would need 5 to 8 years and $250 million. We were able to do it for about $100 million mainly because software development is a lot more efficient than it used to be. Regardless, that is a lot of capital.

The other challenge is that you are going to have a large development team and you won’t see revenue for 5 years. We did experience the same timeframe. We started getting customers in year six. I knew early on that we needed a lot of capital. We needed a lot more than I could provide. I started fundraising from both institutional investors like VCs, but early on I did most of my fundraising from family offices and wealthy individuals. That group tends to have a longer time horizon. It’s pretty tough for a venture fund to invest when they know there is no revenue coming for 5 years.

This segment is part 3 in the series : Building a Fat Startup with a Massive Patent Portfolio: Cleversafe Founder Chris Gladwin
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