Cloud storage biz, one careful owner, six years on the clock... any takers?

Nirvanix keels over, careened by Channel consort, d'ye see?

Cloud storage startup Nirvanix has imploded, with Brit-based partner Aorta Cloud reacting fast in prepping a takeover to continue services for Nirvanix's customers.

All parties are hoping that this doesn't give customers the dreaded "cloud fear" and that Amazon, Google and Microsoft don't become the sole holy trinity of cloud storage.

Nirvanix's clients were told yesterday that data uploading would cease and their stored data had to be recovered by the end of the month.

Steve Ampleford, CEO of tech channel firm Aorta Cloud, which resells Nirvanix kit, said his firm was told yesterday by Nirvanix that a fourth funding round had failed to raise enough cash to keep the company going. Customers had to get all their data out by the end of September or, in effect, face losing it.

Cloud storage reputation

Ampleford said this could be a major blow to the trust that enterprises had been building in cloud storage services.

Liran Eshel, CEO of cloud storage gateway supplier CTERA Networks, said: "Nirvanix was trying to go for the high end of the enterprise market, but couldn't differentiate itself enough to justify its aspirations."

Nasuni CEO Andres Rodriguez said: "Today’s Nirvanix news shows that, unless you do your homework, cloud storage can still be a scary place. Our ongoing testing of public cloud storage providers show that, right now, there are only two that meet enterprise standards for reliability and performance: Amazon S3 and Microsoft Azure."

Nirvanix CEO history

Nirvanix got itself a new CEO, Debra Chrapaty in March this year. She parachuted down from being the exec chairperson of Nirvanix' board, with the then-interim CEO Dru Borden moving to take up the SVP for business and planning slot. At the time Chrapaty said Nirvanix was thinking about adding a data analytics string to its bow.

Borden had been the short-term replacement for Scott Genereux who was imported from being QLogic's worldwide sales and marketing veep to jump up into the Nirvanix CEO slot, alongside $10m in B-round funding. A $25m C-round in May last year took total funding to $70m, with Khosla Ventures leading the round, with participation from Valhalla Partners, Intel Capital, Mission Ventures and Windward Ventures.

Genereux left in December 2012 to go to Oracle, where he is now senior vice president for global hardware strategy, planning and product management.

The company said that Nirvanix's cloud storage is built from the ground up for business-critical enterprise data. According to the firm's marketing bumf, "customers such as Cerner Corporation, IBM, USC Digital Repository, National Geographic and Relativity Media, among thousands of others are using Nirvanix to archive, backup and collaborate on large content files across multiple diverse locations".

Business progress

In May 2012 Genereux said: "We booked more revenue in Q1 of 2012 than nearly all of 2011. Additionally, over the past year Nirvanix has secured more petabytes under management than the prior three years combined; deployed the largest private clouds in the world; and made significant market advances in the financial services, healthcare and media and entertainment sectors."

This trajectory seems to have slowed under the weight of competition and Nirvanix's costly need to build out a world-wide infrastructure.

The fact that Chrapaty was appointed CEO from within Nirvanix, instead of a seasoned CEO from outside being appointed, was – in hindsight – suggestive of trouble in filling the role. The elephantine presence in the background room is, of course, Amazon with its S3 and allied services, facing competition from Google and Microsoft's Azure. With these three slugging it out and EMC trying to offer Amazon-like service style and costs with its Project Nile Nirvanix was nixed, with nowhere to run.

A fourth funding round failed and Nirvanix's board and management had to pull the plug because they didn't have enough capitalisation. A source tells The Register that a sale was attempted to EMC but nothing came of it.

Aorta Cloud and its rescue deal

Aorta Cloud is a London-based Nirvanix channel partner and offers secure cloud storage. It is part of the Aorta Group. There is a sister company, Aorta Capital, and Aorta Cloud CEO Ampleford says the two are:

… currently structuring a package to take over and continue Nirvanix Inc following their recent challenges. Clearly, less than 12 hours after customers were informed, it is very early days. Nevertheless given that customers have to remove their data (in many cases with multiple petabytes) before the end of September we have to be swift.

Our current plan is to raise the funds to allow operations to continue in sustain mode (i.e. no new business) for a minimum of 2 months to allow a stabilisation period and for proper financing to be put in place. If nothing else this will allow a more gentle managed exit for customers, but the intention is obviously to take the good work, great people and great technology forward as a going concern.

If you are interested in supporting this package, either as a fellow finance house, an existing investor, customer or just an interested party, please do get in touch at [e-mail] and we'll be in touch very shortly. Clichéd but true: Nothing ventured, nothing gained.

Ampleford says Aorta Cloud has to work with Nirvanix's staff and have the support of existing customers in order to rescue the service from collapse. He has some preliminary funding that could be available that could help seed the effort.

Aorta Cloud service rescue status

Ampleford told El Reg:

We've had financial commitments well into seven figures. We're into double digits on the number of customers who've committed support to a workable solution. We have rung/chased/sought no-one; the only contacts have been inbound as a result of our open letter on AortaCloud's website.

We've engaged with Nirvanix's executive team who are keen to see if we can pull something together ... Currently the intention looks something like: change the legal structure whilst working alongside creditors' needs and the complexities of the supply chain and operations; 2-3 months reduced service whilst we reduce number of datacentres (probably to 3) and size the capacity required for whatever customer base remains (guessing 10-25 per cent at best); then take a strategic step forward to compete as a premium provider of enterprise cloud services.

Yet Ampleford says Aorta is not the acquiring party: "We are trying to work out a solution that works for customers - since we are one - and for Nirvanix as best we can, whilst being cognisant that a cash injection will be required. We seem to find ourselves in the 'honest broker' role - not quite sure how that happened!"

Nirvanix was founded in 2007 and has had a relatively short life, passing on in September 2013, never having been able to outgrow its infancy. Unless its service is rescued, enterprise data storage in the cloud will effectively become the exclusive domain of Amazon, Google and Microsoft, which would be a pity. ®