By Andrew Park If anyone has what it takes to tough it out in a tech startup during a downturn, it's Darren Thomas, CEO of Zambeel. A sixth-generation military man whose father was a naval commander and ancestors fought in the Civil War, Thomas spent seven years in the Air Force before starting an engineering career. Captain Thomas' job: flying F-4 Phantom fighter jets.
This may be the toughest job he'll ever love. A year ago, the 50-year-old was tapped to bring 18-month-old Zambeel's data-storage technology to market. The Fremont (Calif.) outfit has developed a so-called network-attached storage (NAS) system comprising disk drives, speedy processors, and software that admirers claim outperforms the heaviest-duty gear the storage industry has to offer. But Thomas, who spent 15 years helping build Compaq into a storage powerhouse, is facing a tough market.
Cash-strapped tech managers have lost their appetite for expensive storage systems, forcing down prices and profit margins. Market leader EMC saw pricing of its high-end gear fall 60% last year, while total industry sales fell 18%, to $17.8 billion, according to market researcher IDC. Worse for Zambeel, corporate customers have become skittish about betting on startups.
ADAPTABILITY. Good thing Zambeel has been generating some buzz. In March, it debuted its first product to wide praise at the annual PC Forum tech confab. Zambeel completed a second round of venture funding in November, bringing its total backing to $65 million.
With enough funding to keep Zambeel afloat through yearend, Thomas has been able to lure talented veterans from Dell, IBM, and LSI Logic to join his management team. Zabeel now has 120 employees. Says early backer Vinod Khosla, a general partner at Kleiner, Perkins, Caufield & Byers: "Thomas has organized it into a professional-looking company."
With Zambeel set to begin shipping its storage system in June, Thomas' management team is about to be put to the test. The product's appeal is its ability to adapt to changing storage needs. The key is sophisticated software designed by company founder Waheed Qureshi, a computer scientist who previously designed data-management software at eXcelon, and three fellow engineers. Users can program the system to create secure storage space for different departments within a company and assign faster access to high-priority jobs.
When needs change, the system can be reprogrammed on the fly. To ensure that performance doesn't slow down as more users log on, processors can be added to the cluster of computers that zip data in and out of the disk drives.
JUMP ON THE COMPETITION. That sets Zambeel apart from traditional NAS systems, which encounter speed bumps as more data traffic hits the network. And the company's storage system can be configured to hold 220 terabytes of data in one unit, vs. just 12 terabytes for the biggest NAS unit from storage giant Network Appliance.
"They have the right architecture," says Roger W. Cox, an analyst at market researcher Gartner. Adds Mark Lewis, general manager of Compaq's enterprise storage business and an old friend of Thomas: "Have they chosen a good market? Yeah, we think they have." Compaq is developing a competing product, he adds, declining to provide details. Analysts expect EMC and Network Appliance to have similar products in the next year or two.
Thomas is no stranger to the David and Goliath challenge ahead. At Compaq, he got in on the ground floor of the company's nascent storage business as head of engineering in 1990. After Compaq bought Digital Equipment in 1998, Thomas was handed the unenviable job of melding the two companies' storage assets and bridging the cultural gap dividing the teams.
He quickly moved to Colorado Springs, home base for DEC's storage division. Nervous Digital employees skeptical of taking orders from a Compaq veteran thought he had come to shut the business down, and at one early meeting, he was told: "Darren, we just don't trust you."
HONCHO IN A HURRY. Thomas' relocation soon became a symbol of how committed he was to making the merger work. He earned a reputation at Compaq as a tough, decisive leader guided by results rather than emotion. "Darren is definitely not a consensus-type manager," Lewis says. But he got the results he wanted. After two years, Compaq jumped from seventh place to second in storage revenue behind EMC, and the merged outfits gleamed as one of the few successes of the difficult Compaq-Digital marriage.
Thomas has a penchant for battles. Lewis says that he and Thomas spent weekends on the ski slopes or camping with their families in the mountains. Once, after watching Lewis fly over a jump on his motorcycle, Thomas drew a line in the sand where his buddy had landed. Then he mounted his own machine and breezed over it. Soon, they were dueling to see who could out-jump the other -- until Lewis landed on his front wheel, and they began worrying what their boss might think if he knew two senior executives were risking their lives scrapping in the dirt.
Thomas will need every bit of that relentless drive to make Zambeel a success. Although five unidentified companies are testing the system, with a price tag north of $100,000, it doesn't come cheap. For now, Zambeel is looking to computer animators, chip designers, scientists, and other potential customers for whom massive, quickly accessible storage is a must, regardless of the cost.
THE RIGHT STUFF? Thomas is also outlining a sales pitch for cost-conscious buyers. He thinks the system can cut typical data-management costs in half by consolidating storage space that now goes unused, reducing the downtime that comes with expansion, and eliminating chores such as shifting data off drives that get filled up. "They're clearly a front-runner," says Steve Duplessie, an analyst with the Enterprise Storage Group in Milford, Mass., who has previewed the product and spoken with customers testing it. "Everybody else has it on PowerPoint."
Still, in the high-tech world, leaders don't always finish first. If Thomas hopes to capitalize on his company's cutting-edge product, the former fighter pilot will need to keep Zambeel flying close to the edge of the envelope. Park covers technology from Dallas