Startup Starboard Storage Cuts Sales Staff, Hangs 'For Sale' Sign

Starboard Storage Systems, a startup developer of hybrid storage arrays featuring SSDs and spinning hard drives, has ceased selling products and laid off sales and marketing staff as it hopes to find a buyer, CRN has learned.

Starboard Storage executives Friday said the company is in talks with multiple storage vendors about the possibility of being acquired by one of them and confirmed reports from channel sources that the Broomfield, Colo.-based company has killed off the bulk of its sales and marketing activities while maintaining R & D in preparation for an eventual acquisition of the company.

Starboard, which sold exclusively through the channel, informed solution providers in a letter signed by President Tom Major and dated March 12 that it was "reducing our emphasis on new product sales," according to a document obtained by CRN.

"In connection with a new investment by our existing investor group, Starboard's board has decided to evaluate the interest of potential strategic acquirers of the company. In order to focus on this strategic opportunity, we will be reducing our emphasis on new product sales for the time being," Major wrote in the letter.

Starboard is headed by CEO Bill Chambers, who previously served as founder, president and CEO of LeftHand Networks, which was sold to Hewlett-Packard in 2008 for $360 million.

It competes in a crowded market that includes not only tier-one storage vendors like EMC, NetApp, Dell EqualLogic, and X-IO, but also other hybrid SSD-hard drive array vendors such as Tegile Systems, Tintri, Nimble Storage and NexGen Storage.

The company, which came out of stealth mode in February, 2012, works with approximately 50 solution providers in the U.S.

[Related: Starboard Exits Stealth Mode With Channel-Only Unified Storage ]

Major, who jointed Starboard two months ago and is also a LeftHand alumnus, told CRN in an interview Friday, that the company believes in the strength of its hybrid SSD-hard drive architecture, and that hybrid storage arrays will be the dominant architecture in enterprise and midsize business customers.

"We've been blessed with the reseller partners, and disappointed we can't take [the company] forward with them," Major said.

The company in May, 2012 received a $13-million Series B round of funding. The company's investors have since added to that amount, but Major was unable to say by how much.

The company's board of directors examined different possibilities for additional funding and decided an acquisition by a larger storage vendor would be the best option, Major said.

"Over the last few weeks, we have been working with our board in pursuit of another funding round," he said. "Given that, and the inquiries we have received from strategic players, the board decided to pursue talks with those strategic players."

As a result, Starboard is no longer actively seeking product sales, having pared its sales and marketing funds and cut staff, Major said. "But we do have a vice president of sales [Larry Petkus] handling inquiries from customers," he said. "And we are committed to supporting our existing customers."

"As you find new sales opportunities for the Starboard offering, I would ask that you engage [Petkus] for assistance," Major wrote in the letter to solution providers.

Starboard would not disclose how many employees had been cut.

NEXT: Trying To Differentiate Its Hybrid SSD-Hard Drive Tech

Starboard is now focusing on further development of its technology, and plans to deliver new code to existing customers in the second quarter, said Lee Johns, vice president of product management for the company.

Johns said Starboard has received inquiries about a possible acquisition from storage vendors looking to establish a presence in the hybrid SSD-hard disk array market.

He also noted that many of the recent flash storage announcements from companies such as EMC and NetApp are focused on acquisitions of or R & D in all-flash arrays, not hybrid arrays.

"We have a very innovative approach to pooling with hard drives and flash storage that is very much of interest to all those guys," he said.

Starboard's core technology is software that delivers a caching methodology that does not rely on traditional RAID, but instead offers read and write caches which are independently scalable, Johns said.

This is different from many of the hybrid SSD-hard drive vendors who really just add SSDs to a spinning-disk array without accounting for the separate features of each type of storage technology, Major said.

There is a lot of talk and confusion about hybrid storage arrays, and it is important for Starboard that it find the right partner to get its value and technology to market as quickly as possible, Johns said.

"For any company that understands how to build out a SAN-NAS architecture, we can offer hybrid flash technology which is being actively developed and which is battle-tested in the field as well," he said.

One solution provider which has sold several Starboard storage systems said it was too bad the company couldn't make it as a stand-alone company.

The solution provider, who requested anonymity, said the company had excellent products. "Their implementations of the SSD are simple and elegant," the solution provider said. "There's not a lot of complicated tiering or hot-spotting. And it's easy to change and upgrade the product."

Starboard knows how to simplify hybrid storage. "They subscribe to the 'KISS' principle of SSDs," the solution provider said. "It is almost like adding a turbocharger to SSDs. With some investment in software engineering, it could be a great product for any three-letter storage vendor."

KEVIN MCLAUGHLIN contributed to this story.

PUBLISHED MARCH 14, 2013