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Cirtas knows enterprise customers like to hug tin… goes with the flow to raise more cash

Cirtas
Image via Wikipedia

San Jose-based Cirtas emerged from stealth back in September 2010 with a $10 Million (€7.86 Million then) Series A funding round, their novel Bluejet hardware appliance, and the backing of Amazon.

Today they’re back, with a new CEO and another $22.5 Million (€16.6 Million) in the bank. The Series A investors — New Enterprise Associates, Lightspeed Venture Partners and, unusually, Amazon — are joined by Shasta Ventures and Bessemer Venture Partners for a Series B round that positions the company for some rapid growth.

Cirtas’ Bluejet Cloud Storage Controller is a hardware appliance, deployed in the data centres of medium and large enterprises to simplify the task of integrating existing on-premise Tier 2 and Tier 3 storage with disparate Cloud-based solutions such as Amazon’s S3, EMC Atmos, Iron Mountain and AT&T’s Synaptic Storage as a Service.

Talking ahead of today’s announcements, new CEO Gary Messiana suggested that Cirtas’ decision to deliver a hardware appliance rather than a software-based solution reflects their deep understanding of both their customers and the sales channel. Messiana is not the first to suggest that buyers of enterprise storage are a conservative bunch, and he’s certainly not criticising that conservatism; when business continuity depends upon the decisions you make and the systems you buy, you’re hardly going to take unnecessary risks, now are you? A piece of physical hardware that you can see, touch (and even hug) delivers an element of familiarity that appears to appeal to enterprise-class customers taking the first steps to leverage Cloud-based storage within their existing solutions portfolio. With Bluejet, Messiana suggests, control continues to reside inside the data centre. The Cloud provider(s) to which the appliance directs data are simply (dumb?) utilities upon which the enterprise may choose to draw in a manner abstracted by Cirtas’ technology. A hardware solution also suits the channel-based (rather than direct sales) model by which these companies tend to buy. As Messiana notes,

“[much of] the money changes hands in the channel… and [channel partners] know how to sell tin.”

Formerly an entrepreneur in residence at Series B participant Bessemer, Messiana talks persuasively about the clarity of proposition and go to market strategy that drew him to Cirtas. Drawing upon pre-Bessemer experiences as CEO of traffic optimising Netli (acquired by Akamai in 2007), Messiana argues that the shift off-premise makes expertise in moving data just as critical as the data storage skills of incumbents. Might Akamai, Limelight and their ilk make inroads into this market, at the expense of EMC, HDS, 3Par et al, I wonder?

In storage as in so much else, big incumbent enterprises are very different from smaller or younger companies. Whilst startups and SMEs might be quick to embrace entirely virtual solutions — often starting in the Cloud rather than migrating to it from elsewhere — the ‘multi-billion dollar corporations’ served by Cirtas will almost inevitably follow a very different path. Across Pharma, HR, manufacturing, publishing, insurance and finance, Messiana reports that customers with market caps of $500 Million – $10 Billion and more are flocking to the company.

So why take more VC money, so soon, and dilute the company? Messiana insists that “plenty” of the initial $10 Million is still in the bank, and that VCs were falling over one another in their enthusiasm to invest. The deal was apparently closed rapidly, with an aggressive valuation that sees “minimal dilution” whilst giving Messiana the cash to expand sales, support, and other areas of the company.

Cirtas would appear to be off to a good start, but it would be dangerous to be complacent. The company is not alone in seeing hardware as a way to encourage enterprises toward the Cloud, and there are plenty of software-based cloud storage gateways waiting for the opportunity to demonstrate their capabilities as those conservative CIOs become more willing to trust the Cloud. And then there’s Amazon. What might they do next?

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Paul Miller works at the interface between the worlds of Cloud Computing and the Semantic Web, providing the insights that enable you to exploit the next wave as we approach the World Wide Database.

He blogs at www.cloudofdata.com.