Startup: 'Shut Up!'

Most storage networking startups hungrily pursue publicity. Confluence Networks, a company building a switch in one of the hottest sectors of the storage market, is taking the opposite tack and appears determined to stay out of the public eye.

Mark Davis, the company's new senior VP of marketing, emailed Byte and Switch today:

Thanks Mark. Don't mind if we do.

Confluence's Website says it is building: "...innovative, world-class networked storage solutions." Venture Economics, a Thompson Financial company, and a leading source of data on newly funded private companies, is more specific: It says Confluence Networks is building a multiprotocol, terabit switch with Sonet/SDH and wavelength switching capabilities.

A switch with these features is most likely to be used to connect storage devices within large data-centers over optical wide-area and metropolitan networks for backup and disaster recovery services -- a market expected to be worth billions of dollars within the next few years.Confluence appears to be building a product well ahead of anything the incumbent storage networking players, such as Brocade Communications Systems Inc. (Nasdaq: BRCD) and McData Corp. (Nasdaq: MCDT), have announced yet.

However,

Storage Computer Corp. (AMEX: SOS) might give this company a run for its money. Its already shipping a NAS appliance that plugs directly into an optical network. And Nortel Networks Corp. (NYSE/Toronto: NT) and EMC Corp. (NYSE: EMC) have together announced a strategy to attack this market as well. (see Nortel, EMC Team on Storage)

Confluence’s Website also says it intends to “dramatically simplify the management of storage area networks by creating a scalable, virtual storage pool.” Here it joins the club of startups building virtualization capabilities into their systems. There are at least ten. Research Byte and Switch has carried out on the VC community reveals that this particular sector of the market has already received more than $250 million in funding. (see Startup Funding Nears $2 Billion)

Redpoint Ventures made an early investment in Confluence of $795,000, and New Enterprise Associates (NEA) came on board in an expansion round of $7 million in January, 2001. Sources close to Confluence tell us Benchmark Capital and Quantum Technology Ventures

have also joined the fray, pumping up its funding to date to $15 million.

The company currently has 54 employees. Much of Confluence’s credibility comes from its management team, made up of both business and technical mavens.Nilesh Shah, founder, chairman, and CEO of Confluence, was joint founder of Yago Systems, a silicon-based switch router company which was bought by Cabletron Systems Inc. (NYSE: CS) for $210 million in 1998. Prior to Yago, he was a founder of Kalpana Systems, bought by Cisco Systems Inc. (Nasdaq: CSCO) for $200 million.

Kumar Gajjar, VP of software engineering, was previously the founder and CTO of SmartSAN Systems, which Gadzoox Networks Inc. (Nasdaq: ZOOX) bought for $23.5 million.

On the board of directors is Allen Beasley, general partner with Redpoint Ventures, and Robert T. Coneybeer, general partner, New Enterprise Associates. And, last but not least, Jayshree Ullal, group VP at Cisco, is acting as strategic advisor to the company.

While reluctant to talk about his own affairs, Davis (whose copy of "How to Win Friends and Influence People" is apparently gathering dust somewhere) had some choice words for other storage networking startups:

Time will tell.— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com