Spinnaker Cuts Its Crew

Next-gen NAS startup Spinnaker Networks Inc. has laid off 20 percent of its employees -- leaving it with a crew of about 80 -- in an effort to slow its burn rate, Byte and Switch has learned.

But company executives say the move was just "prudent fiscal management" to cut back in areas like engineering and operations as Spinnaker gears up for an aggressive sales push in the year ahead.

On Jan. 14 the company, which at the beginning of the year had 100 employees, handed pink slips to 20, with the cuts concentrated in its engineering group. [Ed. note: Interestingly, though, it apparently didn't have an all-hands-on-deck meeting.] A source familiar with the company says Spinnaker's board of directors demanded the cuts to reduce expenses.

Jeff Hornung, Spinnaker's VP of marketing and business development, confirms the layoffs but says "it wasn't that the board said, 'Thou shalt' -- it was the management team making some prudent fiscal management decisions." The company made a similar fiscal management decision in December 2001, when it laid off about a dozen engineers in shutting down the development its own ASICs for accelerating NAS traffic (see Spinnaker Sheds Staffers).

Trying to put a positive spin on the news, Hornung says the staff reductions also help "accelerate the staffing mix from inbound engineering to more outbound engineering... We're still recruiting sales, service, and support for the rest of the year."Spinnaker's current funding should last through the early part of 2004, according to Hornung, though he says it will reconsider whether to pursue additional funding in the middle of the year. Founded in December 1999, the Pittsburgh startup has raised $51.4 million in funding to date from Mellon Ventures Inc.; GIC Special Investments (GIC SI), the private equity investment arm of the government of Singapore; Menlo Ventures; and Norwest Venture Partners (see Spinnaker Sails In With $31M).

The company shipped its first product, SpinServer, in October 2002. Spinnaker says up to 512 of its servers can be clustered together in a single, global file system, providing (it claims) unmatched overall performance and scaleability of up to 11,000 TBytes behind a single file system (see Spinnaker Shoves Off and Spinnaker's Cluster Burns Rubber).

The latest round of layoffs comes as Spinnaker gets ready to ship the 2.0 release of its operating system software, which provides three main features: high availability, meaning any server in a cluster can fail and the others pick up the load; nondisruptive data movement among servers in a cluster; and asynchronous mirroring. Hornung says the beta of 2.0 will be wrapped up within the next two weeks.

Spinnaker isn't ready to talk about any new customers it's landed. But we circled back to one of its earliest beta testers, AccessData Corp., a Pittsburgh-based managed services provider to the financial industry, to see how things were going.

Joe Mayer, director of AccessData's technology center, is running a cluster of SpinServers loaded with a 400-Gbyte Oracle Corp. (Nasdaq: ORCL) database. Now, he's waiting to test out Spinnaker's high-availability feature. "I'm going to fail over the Oracle database, and I want to make sure it actually works," he says.All told, Spinnaker appears to be in much better shape than one of its would-be NAS competitors, Zambeel Inc., which is said to be running dangerously low on funding. Last month Karl Schubert, Zambeel's chief operating officer, resigned suddenly (see Zambeel COO Skedaddles and 30 Zambeelians Get Pink Slips