YottaYotta Notta Corpse Yet

YottaYotta Inc. is digging in its Canadian heels and refusing to give up without a fight. Earlier this month the company -- which has developed a gigantic, distributed SAN storage system -- hired a new CEO, Bart Shigemura, who's charged with building up a company that has not seen alotta good fortune lately.

In February, YottaYotta forced out president and CEO Steve Mattioli and shut down its Kirkland, Wash., office, relocating the company's headquarters to Edmonton, Alberta (see YottaYotta's Gotta Problem).

The news gets worse before it gets better: One of Shigemura's first actions as incoming CEO was to cut around 30 percent of YottaYotta's remaining staff to slow the burn rate; the company currently has 85 employees. Those layoffs will give it much more breathing room, Shigemura tells Byte and Switch.

"After the layoff, we expanded our runway for another year," he says. "When I got here, we were staring down the barrel of a four- to five-month runway." [Ed. note: Uh... do runways have barrels?] YottaYotta now has enough money in the bank to last until June 2004, Shigemura claims, though he wouldn't reveal the amount. The company is now working with its investors to fund an inside round to carry it to break-even on a cash-flow basis, he says.

Founded in January 2000, YottaYotta has received around $50 million to date from Banc of America Securities LLC, The Grosvenor Funds, Optical Capital Group, and Morgan Keegan & Company Inc. (see Does YottaYotta Gotta Lotta Cash?).Shigemura, who commutes to Edmonton from his home in Silicon Valley, was previously chairman of Alidian Networks, an optical edge equipment company that shut its doors late last year after several rounds of layoffs (see Headcount: We're Baaaack!).

"I joined [YottaYotta] because I think the company has a huge and great market opportunity," Shigemura says. "The company has a talented team of very hard-working people, and the product itself -- it's more than just a SAN. It solves some significant storage problems like cache coherency."

Previously, he was VP of marketing in the data networking group at Lucent Technologies Inc. (NYSE: LU), which he joined via Lucent's acquisition of Yurie Systems. Shigemura is also on the board of directors of core optical switch vendor Tellium Inc. (Nasdaq: TELM).

Can Shigemura yank YottaYotta off the one-way track to oblivion? The fact is, he wasn't able to save Alidian. And two former YottaYotta employees we spoke with are skeptical that anyone can save it now.

"They have little money, no product, and no customer spending," says one former YottaYotter, who left the company last fall. "Things just don't add up in their favor."Says the other, "I think the VCs would rather spend all their money and try to get something back. They know they're losing everything anyway."

Shigemura concedes that YottaYotta faces a very challenging road, and he admits that the product isn't quite finished yet: "Basically what we're trying to do is complete the feature functionality on the current product." Among other things, the system's management interface still needs work, and YottaYotta is also working to scale up from the current 12-blade system to 24- and 36-blade models (each blade has four 2-Gbit/s Fibre Channel ports).

But he says the company is gearing up to more aggressively market the system to large enterprise users that require its ability to automatically replicate data among multiple geographically distributed sites. YottaYotta still claims to have two paying customers -- Capital Health Authority, a 28-hospital network based in Edmonton, and Internet2, a 200-university initiative developing a high-speed, next-generation Internet network -- and Shigemura insists there are more in the pipeline that he can't name yet (see YottaYotta Gotta Customer).

"I'm from the old school where you don't announce a customer until after they've installed the product and had a chance to use it, instead of saying, 'Hey, we sold something to XYZ Corp.' "

At this point, however, we'd suggest YottaYotta throw caution to the wind and try that latter tactic, if at all possible.Todd Spangler, US Editor, Byte and Switch