What does it take to build an SSD company into a sustainable enterprise? What does it take to make it profitable? What does it take to go public? Given that many of the SSD companies focused on the enterprise are private, it is awfully hard to get good data on the costs of entry.
As a participant in the SSD industry for the last decade, I have had the benefit of watching the ascent of Fusion-IO from a small start-up company to a marketing machine and can now observe along with the rest of you their attempt to go public.
Say what you will about Fusion-IO and their products, and believe me at various times I have said all of those things good and bad, they are a marketing machine. But to leave it at that would be a terrible injustice. David Flynn and his team launched a product that the rest of us did not see the need for. Don’t get me wrong, Cenatek and MicroMemory both had server-based PCI SSDs well before Fusion-IO, but Fusion-IO did two things that really set their product apart 1) they were the first PCI SSD company to really take advantage of the first generation of Flash suitable for enterprise customers; 2) they were unashamed about beating their way into the enterprise market even if they took what I consider a fire:ready:aim approach to marketing. I remember the early days of Fusion-IO marketing which was clearly aimed at companies using storage area networks. The ad went something like “the power of a SAN in your server”. Interesting concept, but the people who used storage area networks were pretty sure that a PCI card was not about to replace their SAN. I know, some people have done this but by and large I would suggest that what Fusion discovered and now markets to directly is the large set of customers that need server-based application acceleration. These scale-out applications include those run at customers like Facebook who improve application performance by adding servers. Historically, those servers would be laden with expensive high-density RAM. Fusion-IO brought them a product that was not cheap, but less expensive than RAM. The other sweet spot that Fusion discovered was that this market was very read-intensive and good therefore to use MLC Flash enabling the customers to get better density and better pricing.
I remember the first time I met David Flynn. I was participating in a SNIA Summer Symposium in early 2008. Until this point, my only real exposure to Fusion-IO had been from their marketing. When the topic in the room turned to Flash technology, David was quick to join the discussion and showed a grasp of Flash that clearly exceeded that of most of the people in the room. From that point, I knew that Fusion was much more than marketing.
At one point during my time at TMS I tried to assess what it was that made Fusion-IO go from yet another random company involved in SSD to a company that was always in the limelight (disproportionately to their revenues – another hallmark of good marketing). I used Google trends data to see if there was an inflection point for Fusion-IO and I found it. The inflection point was their hiring of Steve Wozniak. What a brilliant publicity move and one that I think continues to pay off for Fusion-IO. From the day his involvement with Fusion-IO was announced, the company took off in terms of web hits. I can’t tell you how much time, because it would be embarrassing, but I spent a lot of time trying to figure out how to create a similar event at TMS. I thought if we could hire “Elvis” we would have a chance.
The next brilliant tactical move by Fusion-IO was tying up the server OEMs. You see, one of the biggest challenges with selling products that go into another manufacturer’s servers is getting that server vendor to bless and support the solution. Fusion realized this problem early on and announced relationships with HP, IBM and Dell. Not to mention that Michael Dell was an investor. The big problem was solved with the announcements, the big server vendors had blessed Fusion-IO with credibility typically reserved for companies like Seagate and Intel. It is worth noting that these server vendors hate single sourced products leaving plenty of room for competitors to get the same blessings.
Plenty of things good and bad have happened along the way for Fusion-IO. They encountered many of the problems that fast-growing venture backed companies have. There were delayed product releases, there were quality problems, Fusion’s approach to business created a lot of enemies, they went through an impressive number of CEOs (though David Flynn remained the key guy all along) and sales teams, and there were missteps in channel marketing strategy but through it all they have shown impressive perseverance.
As Fusion’s revenues have grown in the last two years to match their marketing, they have added some really impressive depth to their team. Marius Tudor who largely led the sales & marketing efforts for industry pioneer BitMicro is involved. Another marketing genius, Gary Orenstein who led marketing at Gear 6 among other places has joined the team. This is not to imply that I don’t have deep respect for their Chief Marketing Officer Rick White, another gaming enthusiast like myself, but really, does he need this much help. Leaving behind some marketing talent for the rest of the industry would have been gracious.
For the SSD vendor community, whatever you think of Fusion-IO, their effort to go public is a major milestone for the industry. Have you ever tried to get private company valuations without comparables? Valuations become guesswork. Do you have a great SSD idea and need VCs to get excited about it? Fusion-IO successfully going public would help the rest of the private companies eying their own exit strategy (going public, staying private, being acquired). What does it take for an SSD company to go public? What revenue, what profitability, what gross-margins? We may soon find out. In this pursuit, I for one am rooting for Fusion-IO and in turn the industry.