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Building Fat Startups: Nasuni CEO Andres Rodriguez (Part 3)

Posted on Sunday, Feb 2nd 2014

Sramana Mitra: What year did you start Archivas?

Andres Rodriguez: Towards the end of 2001 and the beginning of 2002.

Sramana Mitra: Was it the same team that you had in Abuzz?

Andres Rodriguez: Some of the engineering team was the same, but a key ingredient was missing. This is happens often when you shift industries. With Archivas, I was moving from application layer of the stack down to the infrastructure layer of the stack. My team was exceptionally good at doing rapid amplification of distributed system layer. Now, we were going down to the storage layer, which requires a great deal of attention to quality and quality assurance.

People believe a lot in fancy PowerPoint and things like that. I sat down in a library for two weeks and basically drew out the system design and the business plan for Archivas. Then, I met the head of North Bridge Venture Partners. I showed him my notes and talked to him about the problem that I saw was going to happen. He immediately offered me to sit there in an office until I could finish the business plan. Three months later, he gave me $6 million.

That’s a great partnership between entrepreneurs and venture capitalists. When you have experience with the problem of the customers that you’re going to be selling, it opens the doors of the best investors. Any good investor knows that those are the two key ingredients, a proven entrepreneur that comes from a real customer experience problem.

Sramana Mitra: In the industry today, only serial entrepreneurs have the privilege of being able to get concepts financed. This has been true for a long time except in the dot com bubble days. What you’re saying is roughly true. There are little bits and pieces of exceptions here and there but generally, investors fund proven entrepreneurs who have insights into problem domains.

Andres Rodriguez: That is correct. The old venture model in the ‘80s was actually by the engineer entrepreneurs who were living in the research lab, especially from places like Lucent and IBM, where they started downsizing. A lot of people in these companies could see what was ahead and were ready to take the next leap. Back then, investors usually asked the question, “Is this an entrepreneur or is this a big company person who is never going to be able to survive?”

Today, it’s the other way around. You get a lot of people who are very bright and have engineering backgrounds, but they haven’t spent any time in the industry working on problems. I think investors are looking for the opposite. Investors are looking for real customer side company experience that has exposed you to the next big set of problems.

Sramana Mitra: Tell me more about what happened with the company then. You got $6 million in financing and you had a team. You had to bring in some more people to complement the team. How did the company evolve?

Andres Rodriguez: I was very lucky. I found out that we had a problem within the first year. We didn’t have a true technical leader for the team who understood how to build quality into the product because the product could never fail. These were systems that were going to go into NASA, NSA, and very large organizations that were going to depend on this system for storage. There’s nothing more critical to an organization than its storage systems, and our system just didn’t have the quality to do that. We had a lot of good design ideas. We had a lot of good engineers on the floor trying to get it to work, but every time we fixed something, something else would break. I took a chance and looked outside the group of people that I knew. I was lucky enough to have met my current co-founder for Nasuni, Rob Mason. He was one of the lead engineers at EMC, the premier storage company in the world. The challenge there for any entrepreneur is how do you make yourself attractive.

Sramana Mitra: The challenge is how you would convince someone really capable and credible to join your team.

Andres Rodriguez: Yes, someone who’s incredible to take this leap. There are some people in big companies you’re never going to be able to convince but I happened to meet him when he was trying to do a spin-out out of EMC. I knew he had entrepreneurial chops in him but he has since then gone back to EMC. I went back to Rob and asked him to join our company. I could tell he was tired that management was in the way of things, like all big companies are. Big companies become their own worst enemies because there’re so many layers and processes to do anything. I said, “If you come, the one thing I guarantee you is not enormous wealth. The one thing I promise you is complete autonomy. I will allow you to build a system the way you want it built. I will go out and sell it. When I’m selling this system, I will know you stand behind it and that’s all I need to know to sell it.”

I brought him in and he has changed our company. Over the next six months, we went from having a system that was essentially unusable to having the best-in-class object storage system out there. We sold a lot into the federal government and we also started selling to very large commercial accounts. Eventually, Hitachi bought the company. Within three rounds of funding, we raised a total of $26 million and we sold it for about $130 million to Hitachi Data Systems (HDS), one of EMC’s biggest competitors.

Sramana Mitra: What year did you finish this?

Andres Rodriguez: That was 2007.

This segment is part 3 in the series : Building Fat Startups: Nasuni CEO Andres Rodriguez
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