Arkivio Runs Out of Silver

Howard Silver, senior VP of engineering at storage resource management (SRM) startup Arkivio Inc. has resigned over "irreconcilable differences" with the company, as Arkivio struggles to pull in a third round of funding, Byte and Switch has learned.

Silver, previously VP and general manager of the appliance software division at Veritas Software Corp. (Nasdaq: VRTS), worked at Arkivio for a little over seven months. He headed up all aspects of development and engineering, as well as test and quality assurance. Silver, who left the company last Thursday, says he came to a "mutual decision" with the management team to quit, as he and they "were not marching to the same drum," he says. He has been replaced by Matt Foley, promoted internally to VP of engineering (see Veritas VP Defects to Arkivio).

Silver declined to give specific details on the differences of opinion that led to his departure except to say that "it takes more than technology" to make a startup work. He says he's currently looking for other opportunities in the storage industry [ed. note: as well as sleeping late on Mondays].

While Silvers departure doesn’t appear to be a big deal to him or Arkivio, it does reveal some interesting insights into the market reaction Arkivio is getting and where its headed.

Reading between the lines, it looks as if Arkivio is in immediate need of more cash. The company raised a second round of $9.5 million last March, but has pulled in none since and is supporting a team of 50 staffers with very little revenue coming in. Its current VCs include Jafco Ventures, Moore Capital Managements, and Voyager Capital (see Arkivio Pulls Down $9.5M)."They haven’t hit that magic number of customer reference accounts," Silver says. Arkivio has announced only one customer so far, Allegra Systems. According to Giovanni Paliska, Arkivio's president and CEO, the firm is about to unveil a second. "We have our first Fortune 500 company, in the financial sector, which will be a marquee account for us," he says (see Arkivio Lands Customer).

Still, two customers is a bit slim for a software company founded in December 2000. Meanwhile, the startups that are raising VC funding today are demonstrating sustained customer traction (see Startups Tap VC Reserves and LeftHand Snatches $20M).

Paliska was cagey about how much financing Arkivio is seeking or how soon it needs to close an additional round. He says the company has enough money right now, but when pushed on how long it would last, he says: "We have quite a bit more than a month left." [Ed. note: Eeeek!]

That said, the financial sector could conceivably turn into a lucrative niche for Arkivio. The Fortune 500 customer mentioned above is apparently using Arkivio’s Auto-Stor policy automation software in conjunction with its data retention policy. Auto-Stor has a tiered storage infrastructure and provides a method to set policies regarding which data should be stored where, according to how long it needs to be kept.

"The banks have rigorous new rules on retaining emails and other business documents, and our software can automate this retention process for them," says Paliska. He is referring to the cases last December when five top Wall Street brokerage firms were fined a total of $8.25 million for not preserving email communications as required under Securities and Exchange Commission (SEC) rules. Since then, storage retention policies have become an extremely sensitive issue for the financial community (see Storage Admins Fear Regs).It’s definitely a buzzing sector, but how much of this business Arkivio can tap remains to be seen.

In general, Silver believes automated provisioning -- rather than automated policy management -- holds more allure for storage administrators today. Automated provisioning handles the time-consuming task of creating connections between switches and logical unit numbers (LUNs) on storage devices to ease the process of provisioning capacity. It’s an area Gartner Inc. has singled out for major growth over the next three to five years.

Policy-based automation, on the other hand, sits a layer above this and concentrates on the type of data to be moved and where it should reside. "It misses a compelling pain point," says Silver. Paliska says Arkivio will eventually move to provisioning block-level storage but not until early 2004.

— Jo Maitland, Senior Editor, Byte and Switch