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Flash storage pioneer Violin Systems scaled down operations yet again, shutting down its San Jose headquarters and eliminating its California-based executive team and staff to cut expenses.
Company sources confirmed that CEO Mark Lewis left in August, along with about 15 Violin employees. The reductions followed early summer layoffs of an estimated 15 California-based workers. Todd Oseth, chief operating officer since April 2018, succeeded Lewis to become the third CEO in less than three years at Violin Systems. Violin Systems is now down to some 25 direct staffers after employing more than 400 in its heyday.
Violin closed its San Jose office in mid-to-late September and shifted headquarters to its less costly Colorado Springs research and development center. The company picked up the facility through its November 2018 acquisition of Axellio's X-IO Storage division, about 19 months after a private investment fund controlled by billionaire George Soros had rescued Violin from Chapter 11 bankruptcy protection.
Oseth and other executives who worked in Colorado now form the nucleus of Violin's leadership team, although the company has yet to update its website to reflect the changes. X-IO veteran Tim Cullen moved from VP of channels to VP of sales. Chief scientist Richard Lary, product management VP Bob Antoniazzi and software development VP Bill Wong kept the same titles they've had since joining Violin Systems with the X-IO acquisition.
Oseth said Violin's latest cost-cutting measures were the result of the board's determination that the company was spending money at a rate that "just was not going to be maintainable." He said the early summer layoffs were always part of the plan, to address duplicate positions following the X-IO acquisition. The focus of the latest cuts is operational efficiency and profitability, he said.
New flash storage array due in August
Violin will continue to sell and support its own branded arrays as well as X-IO's storage products. The company plans to release a new NVMe-based XIO G4 system early next year, according to Oseth. He said Violin is targeting August 2020 for a long-planned, newly architected "next-generation" storage array -- code named Tanqueray -- that will combine Violin and X-IO technologies and use standard hardware rather that more expensive custom components.
"The rate at which we're bringing out Tanqueray has slowed down quite a bit," Oseth said. "Many of our execs decided they wanted to have a faster rate of development, and our investors were not prepared to do that. So we ended up just slowing things down."
Oseth declined to discuss Violin's current financial condition, noting the company is now private. But he asserted that Violin Systems is "approaching profitability much sooner" as a result of the actions it has taken.
"All of these little VC-funded companies live in this false world. They just go back to their sugar daddies and ask for money all the time," Oseth said. "The reality is that, as a small business, we have to operate more like a real small business and concern ourselves with cash flow and not wait until you're a billion dollars before you start to worry about profitability."
Long-standing financial woes
Violin's latest reductions follow years of business challenges, including its bankruptcy. Founded in 2005, Violin Memory initially sold DRAM appliances but soon shifted its focus to flash storage and became the early leader in the all-flash array market. Violin's share sank as major vendors and other startups jumped into the hot technology space, and the company lagged in adding enterprise storage features.
Violin's initial public offering in 2013 quickly soured, and in late 2016, the company filed for Chapter 11 bankruptcy. Quantum Partners, a private investment fund controlled by Soros Fund Management, provided a lifeline in April 2017 when it bought the company, changed the name to Violin Systems, and elevated Ebrahim Abbasi from COO to CEO.
Abbasi had to leave the company the following March due to health issues, and Lewis took the helm. Lewis most recently had been CEO of Formation Data Systems, a startup that struggled to gain a foothold in the crowded software-defined storage market and ultimately folded. His 30-year-plus career in the storage industry also included executive positions at Digital Equipment, Compaq, Hewlett Packard and EMC.
When Lewis was EVP and CTO at EMC, Oseth worked for him as VP of infrastructure software. Oseth's past experience also includes numerous other leadership roles, including CEO of Intermap Technologies, CEO of Neterion, a six-week stint as CEO of FalconStor, CEO of SANZ and COO at McData, which was acquired by Brocade.
Violin Systems is hiring
Oseth claimed investors are happy with Violin's current program, and he expects the business to expand. He said Violin initially had about 20 employees in Colorado, now has 25, and plans to hire more in Colorado Springs, where salaries tend to be lower than in California's Bay Area.
Most of Violin's San Jose-based employees did not receive offers to relocate to Colorado or work remotely, Oseth confirmed. He said those who were offered jobs in Colorado wanted to keep the same salaries they made in California, so there was no "economic value to us." He said Lewis, a "big idea" type of leader, left by choice.
"When investment got tight, I think the fun factor for Mark went down," Oseth said.
Todd OsethCEO, Violin Systems
Other prominent Violin executives who had worked for major vendors wouldn't want to stick around on a "shoestring budget," Oseth said. "We're living off baling wire and bubble gum."
Because Violin outsources support and parts distribution, Oseth said the direct employee count doesn't reflect the full number of workers on the company's payroll. He said Violin has also outsourced development to countries such as India and Australia, but he plans to keep most of R&D in-house moving forward.
"I'm a big believer that smaller companies need to have tightknit communications, and it's very difficult for a small company to have people working around the world communicating as tightly as you have to in order to be successful," Oseth said.
Oseth said Violin has about 250 active customers that are on maintenance and continue to buy more storage. He estimated that 70% are X-IO customers and 30% are Violin customers, including large banks with applications requiring high performance.