Zambeel Znuffed Out

The deathwatch appears to be over for Zambeel Inc., the high-end NAS player that burned through more than $66 million in funding but ultimately was able to sell just one of its systems.

The Fremont, Calif., startup has finally shut its doors after a protracted death spiral and several rounds of layoffs, sources tell Byte and Switch. We tried to call Zambeel, but its phones have been disconnected (and its Website isn't working). (See SAN Startups on the Block, Zambeel COO Skedaddles, and 30 Zambeelians Get Pink Slips.)

The company, founded in September 1999, was backed by several top-flight VCs, including Kleiner Perkins Caufield & Byers and New Enterprise Associates (NEA). Others included Amerindo Investment Advisors Inc., Aurora Technology Fund LLC, Integral Capital Partners, Juniper Networks Inc. (Nasdaq: JNPR), Merrill Lynch & Co. Inc., and Morgan Keegan & Company Inc. (see Zambeel Lands $52.6M).

Zambeel board members Dick Kramlich, general partner at NEA, and Bernie Lacroute, partner at Kleiner Perkins Caufield & Byers, did not respond to requests for additional information.

The company, which referred to its employees as "Zambeelians," apparently landed just one paying customer for its Aztera NAS box: the National Energy Research Scientific Computing Center (NERSC) at Lawrence Berkeley National Laboratories. A NERSC representative confirms that a small Zambeel box configured with 3 or 4 Tbytes -- which the lab actually did pay for -- is still running as part of its Parallel Distributed System Facility (PDSF) Linux-based cluster (see Research Lab Picks Zambeel).Meanwhile, the University of Wisconsin-Madison beta-tested the system but never actually bought one. "The unit left at the end of the beta test," says Tim Czerwonka, an IT administrator at the university. He says the university didn't buy the Zambeel system because the box supported only the Network File System (NFS) protocol, whereas its network runs the Andrew File System (AFS), a distributed file system.

Why wasn't Zambeel able to get more traction? For one thing, the startup launched its product in mid 2002 amid an absolutely terrible IT spending climate. But an industry source points out that Zambeel's system didn't support the Common Internet File System (CIFS) protocol, meaning it wouldn't work with Windows servers (see Zambeel Slams Windows Shut).

"If you're a startup, you can't take anything off the table -- it has to work with the existing infrastructure," he says. "Zambeel took CIFS off the table."

Zambeel was headed by ex-Compaq executive Darren Thomas, who joined Zambeel in June 2001 as its president and CEO. Thomas is a brash former U.S. Air Force pilot -- a credential touted by Zambeel's PR team -- who left Compaq to try to cash in on the storage bubble. Previously he was VP of advanced technology and business development for Compaq's enterprise storage group, which Thomas claimed he "built to a multibillion-dollar leader" (see Khosla's Back, Backing Stealth Startup).

But this might not be the last we hear from Zambeel. A source familiar with the company says Zambeel is expected to file for bankruptcy, after which its investors will attempt to salvage the technology it developed."They will restart as a software company, using some attempt to avoid losing the investment credits from some KPCB investors by having the new company 'buy' the intellectual property from [Zambeel] using its new preferred stock... or something like that," says our source.

Zambeel's name was taken from an Indian fairy tale about a prince whose magical bag -- called a zambeel -- produced anything he needed at any given time. Unhappily, for the storage company of the same name, no such sack of infinite treasures actually existed.

Todd Spangler, US Editor, Byte and Switch