For Gal Naor, CEO and founder of storage solutions start-up Storewize Inc., the news that his company has taken the bronze medal in the "Globes" list of ten most promising start-ups comes on the eve of his relocation to the US. "We have some really big deals in the US and we're hiring a lot of people," he explains.
Storewize is a fairly young company. Naor and his partner Yoni Amit founded it in 2004, after they felt they had managed to find solution to an issue that has been troubling the storage giants since the 1970s. They developed a program that enables the real time compression of data even before it has been moved to storage systems. Data compression in storage systems has been enjoying a revival in recent years, against the backdrop of the large quantities of enterprise data, the upgrade in communications infrastructures, and the need to save on space and power. Naor and Amit hope to benefit from these trends.
The company was started in Singapore, where Naor and Amit worked at the beginning of the decade on behalf of ECtel Ltd. (Nasdaq: ECTX). "Yoni worked on the technology side and I worked on the sales and marketing," says Naor. "The company had a customer where the rate of increase in the amount of data it was accruing then was abnormal. It was a huge customer, and every quarter we would make a forecast for the next two years and then beat it." Naor notes that the rate of increase in the customer's storage was 200-300% a year, which matches figures from research companies Gartner and IDC on the rate of the increase in information worldwide.
"We deduced from this growth that a company which buys a software product that is dependent on databases cannot allow the storage systems to pass a certain level of expenditure, otherwise it will simply harm the project," says Naor. "Storewize can compress a database by more than 90% of its original size. This means that if the customer had to spend $10 million on storage systems, with us he needs to spend just $1 million." Data compression is nothing new. Storewize merely carries out the compression at an earlier stage than that available on the market at present.
Storewize has raised $19 million to date. In June, it closed its second financing round, raising $9 million and adding two new investors, venture capital fund Sequoia Capital, and Tokyo Electron Device Ltd., which distributes its products in Japan. It also has two high-profile private investors, Igal Ahuvi and Poju Zabludowicz, as well as a group of Dutch private equity investors, some of them with expertise in information storage.
The road to fame began in Yahud, where the company's offices are, but it will now continue in San Jose, California. The company's management is moving to the US, following which its focus will switch from R&D, which will remain in Israel, to sales. Storewize now employs 60 people, a quarter of them in Israel, and it intends to recruit more employees in the US. "By the end of 2008, half of the employees will be based in the US, and half in Israel," says Naor.
Globes: What next?
Naor: "We have an orderly road map for the next 24 months technology-wise, and we're planning our manpower recruitment according to this as well. In six months, we will launch a new product which will provide a total solution to the entire storage field."
Naor is refers here to the company's plan to begin offering Storage Area Network (SAN) solutions as well, where the big money is.
A little technology: Storwize's device, the STN-6000, connects on one side to LAN enterprise networks and to Network Attached Storage (NAS) enterprise solutions on the other. NAS and SAN solutions differ in the manner of their physical connection and file access. With SAN solutions, the access to storage components (i.e. disks), is relatively quick and simple (usually through optic cables), and these are displayed in the operating system as part of the enterprise's internal network. This segment of the storage market, which Storewize is targeting, is worth $3 billion. The option of entering the SAN market which Naor referred to is worth, according to him, a further $15 billion.
The green trend, which over the last year has also found its way into the hardware industry, has intensified interest in Storewize. IT giants have become accustomed to viewing the sale of hardware from the perspective of offering savings in energy and space. They have good reason for doing so, since electricity costs for cooling computer systems are often higher than the cost of buying the equipment.
The storage market is now worth almost $20 billion, and is growing by a substantial amount every year, even though hardware prices are falling. "The more the customers buy, the more they waste on floor space and power, which means they need us more," Naor explains. Storewize is penetrating the market through distributors and marketers, such as Tokyo Electron in Japan, which controls half the Japanese storage market, and 30 others worldwide.
What about raising more capital or holding an offering?
"We're considering everything. We have a very fast rate of growth and we believe we can reach a very high value within a short space of time. We're weighing up all options."
Published by Globes [online], Israel business news - www.globes.co.il - on October 24, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007