Four years ago this month, technology giant EMC announced the $2.25 billion acquisition of Isilon Systems, a homegrown Seattle company that helped bolster the region’s standing as a center of data storage innovation.
Isilon Systems’ legacy today is in EMC’s continuing large presence in Seattle; two well-funded startup companies, Qumulo and Igneous Systems, working on next-generation enterprise storage and data center architectures, respectively; and former Isilon employees who have found their way to other entrepreneurial companies in town.
And then there’s Sujal Patel, the Isilon co-founder who, after leaving EMC in late 2012, has remained plugged in to the local tech community, spending his work time investing, advising, and directing several Northwest startups, including ExtraHop Networks and Elemental Technologies. Now he’s gearing up for another venture of his own.
Patel—who will share his insights on building innovative companies in a conversation with ExtraHop co-founder and CEO Jesse Rothstein at Xconomy’s Xchange event in Seattle Nov. 18—says he’s lately been tapering off his investing activities to spend more time vetting new business ideas. He tells Xconomy that he’s focused on “getting a startup idea off the ground in the future—not necessarily in the near future, but in the future.”
“I’m being patient and trying to think through ideas that really could be significant disruptors in the industry—whatever industry I decide to plop myself back into,” Patel says.
What’s capturing his interest?
“In the enterprise space where I come from, big data, analytics, continued migration to the cloud—all of these are big trends that are really transforming a lot of traditional application and infrastructure companies,” Patel says. “One of the better of the ideas I’m vetting now is actually directly in that space, and I do look in those spaces for opportunity.”
Patel considers the EMC acquisition a success on several fronts. Rather than losing a strong, local technology player, Seattle has gained another major outpost of a tech industry giant.
“I think any fears that people had absolutely have been unfounded,” Patel says of the acquisition.
EMC, based in Hopkinton, MA, is very good at acquiring, integrating, and scaling the companies it acquires, Patel says. (Some background on that here.)
“EMC did what they said they were going to do,” Patel says. “They invested dramatically in the Isilon business. They invested dramatically in the size of our staff and the support staff around it. The company set out to grow that business to over a $1 billion business, which they did.”
Moreover, when it was time for Patel to move on, EMC appointed former Isilon CFO Bill Richter to run the division. “They didn’t do what most big tech conglomerates from out of town do, which is plant somebody from headquarters out there to look it over,” Patel says. “That is a testament to EMC’s understanding of how these West Coast tech companies operate, and making sure that they did a good job to keep the organization inside the company going and growing, and really protecting the value of that asset that they purchased.” (Richter left the post earlier this year. Chirantan “CJ” Desai is now president of EMC’s Emerging Technologies Division.)
EMC would not say how many employees it has in the Seattle area, but its office, in the Pioneer Square neighborhood, clearly has grown. In late 2011, EMC announced plans for 200 new jobs in Seattle, on top of the more than 430 Isilon employees here at that time. EMC’s presence in Seattle includes Isilon and its software-defined storage products, such as its Elastic Cloud Storage Appliance. Also, the Mozy online backup service it acquired in 2007 is also represented here. EMC has about 65,000 workers worldwide, including VMware and Pivotal.
Meanwhile, two companies founded by former Isilon employees have emerged in Seattle over the last two years with large early-stage funding rounds and plans—however well-concealed—to continue pushing ahead in enterprise data storage and data centers in the era of cloud computing.
Qumulo, co-founded by Peter Godman, Aaron Passey, and Neal Fachan, announced a $24.5 million Series A investment two years ago from Highland Capital Partners, Madrona Venture Group, and Valhalla Partners. The company does not lack for ambition: “Our mission is to be the company that the world trusts to store, manage, and curate its data, forever,” it says on its website, which offers little else in the way of specifics.
Igneous Systems announced a $23.6 million Series A investment this spring from New Enterprise Associates, Madrona, Redpoint Ventures, and Patel. Founders Kiran Bhageshpur and Jeff Hughes were formerly with Isilon, while Byron Rakitzis was an early employee of NetApp, a flash storage leader (and Isilon competitor). Igneous says even less about what it’s up to, beyond an intentionally vague plan “to bring a modern approach to the data center.”
Patel, a RealNetworks engineer before co-founding Isilon in 2001, was not in the least bit surprised to see his former colleagues hang out their own shingles.
“Entrepreneurial companies attract entrepreneurial people, and whenever you have success like Isilon, you start to see those people peel off,” he says. “They either go and start companies or they jump into [other] entrepreneurial companies. A huge number of people who were associated with Isilon have done one of those two things.”
Companies like Qumulo and Igneous are competing in a marketplace that’s being transformed thanks to cloud computing, creating a new wave of opportunity. Seattle, Patel notes, is well-positioned thanks to the presence of two of the largest public cloud providers in Amazon and Microsoft, and the accumulated talent in companies like EMC/Isilon.
Cloud computing is allowing enterprises to spread all manner of computing tasks—not least of which is storage—from traditional on-premise infrastructure “to this new, flexible off-premise utility that’s called the cloud,” Patel says. “A lot of things have to be rethought to work in that world effectively.”
The new flexible, scalable models for consuming and paying for cloud infrastructure is also compelling to large businesses, he says.
“Over the course of the last 20 years, there’s been no shortage of innovation that has led to significant value creation,” Patel says. “There’s always opportunity in the storage industry. Both of these companies—Igneous and Qumulo—seem to have each staked out an interesting and unique place in the market.”
