How can you tell when a company has crossed the chasm from piddly little startup to legitimate contender? When you hear stories of its imminent demise. The storage market is a soap opera with tons of subplots and backstabbing. Bad news seems to travel so much faster than good, and big guys who feel threatened use this news, often with no regard for the truth whatsoever, against their would-be foes.
This isn't a new phenomenon -- it's been going on since the days when EMC was a dinky little memory company. I remember going to an IT shop in Rhode Island to try and sell my Prime-compatible memory (64 MB for $80,000 if I recall properly) when the prospect said to me, "I understand that EMC is about to leave the memory business [Ed. note: It was all we had at the time] and that you can't make payroll." Huh? It turns out that his Prime sales rep filled his ears with this rubbish, and it was rubbish because EMC was a solid year from almost going out of business at that point, and a good two years from abandoning the memory business. I didn't get the deal and my prospect paid twice as much for the same stuff because of this "perception" of instability.
The most violent attack I've witnessed recently happened to BlueArc. A few weeks ago, I had approximately 25 calls about the company possibly closing its doors. I had all the usual calls from the industry media who love something juicy to offset what has to be the hardest job on the planet -- making storage interesting to the business press. I also had calls from competitors and finance people. It was so pervasive I'm surprised my mom didn't pipe in. In short order, the BlueArc death knell was in full swing and you could almost hear the pipers playing a dirge.
I was a bit surprised at first because I had just met with the men in Blue, and things sounded really good. But by the 14th phone call, even I began to question what I knew to be true.
I don't typically put much credence into the rumor circuit, but this one reeked of a conspiracy. I didn't think much of the whole thing until a prospect called me. She asked if I had heard that the company was about to shut down, and what I thought about it. She told me the company couldn't secure a funding round, investors were tired and we could expect a full shutdown within days. Now how would she know all that, I wondered. Perhaps, I thought, a competitor vying for the same piece of business embellished a story that benefited them in the contest. I don't know who it was, but I can pretty much guess that it came from one of the big guys because this was a very high-end shop, and the usual suspects had prominent installations at the account. I just hope it was the tale of a desperate salesperson, and not a corporate smear campaign.
So I thought I'd find out the facts, which are as follows. BlueArc completed its last round in the spring of 2005. The round was reopened to let another investor in this fall, and the round was oversubscribed (there was more money being offered than the company wanted or needed). Customer traction has never been better, and the firm is shipping tons of products into every known vertical and seems to be winning big deals against its very big competitors. Plus, employee headcount is up 10% over the last six months.
My point is this: When a salesperson, executive or the limo driver of the competition's CEO tells you how some company you're considering buying from is about to contract a fatal disease, it probably means you're on to something and should buy it. When you catch the aforementioned doomsayer in a lie, make them pay for it. Give your business to someone else.
I love a juicy rumor as much as the next guy, but trying to win business based on bald-faced lies because your product or service can't compete is a loser's maneuver.
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This column by Mr. Duplessie first appeared in Storage magazine's December 2005 issue.
About the author:
Steve Duplessie is the founder and senior analyst for Enterprise Strategy Group in Milford, Mass.