Agami Systems

» see agamisystems.com as it lived, on the wayback machine

~ the last words ~

On 15 February 2008 Agami Systems announced a $45 million funding round led by Advanced Equities, with the Japanese trading house ITOCHU coming in new alongside the investors who had been there from the start. On 28 July 2008, a little over five months later, the company shut down. David Stiles, the chief executive, gave the news to the Sunnyvale staff at eleven in the morning, and by early afternoon they no longer had jobs.

Agami built network storage, which a company buys as a box and then fills with other people's files. Its AIS line served files and blocks from the same system at a time when most vendors made you choose, and it had added iSCSI support in 2007. The products were real and the customers existed. What it never found was enough of them, fast enough, to outrun a burn rate set by a hardware business competing against NetApp.

Enterprise storage is as far from my own computing life as a product category gets. The boxes have no users, only administrators, and a company like this can rise and die entirely inside purchasing departments without a single person outside the industry noticing it existed. What earns this one a page is the timing, and what the timing exposed.

There was no bankruptcy. The company went through a general assignment, which is the quieter Californian route for handing a failed business to someone who liquidates it, and the assets went to auction in the autumn.

~ the record ~

~ the first attempt ~

Agami was the second company built around this idea, and the first one is the better cautionary tale. Zambeel was founded in 1999 in Fremont, run by a former Compaq executive, and it raised money at a scale that only made sense in that particular window: a $52.6 million round in November 2001 that had Kleiner Perkins and NEA returning and Juniper Networks turning up as an investor. By the middle of 2002 it had gathered about $65 million.

Its product, Aztera, was an enormous clustered file system, more than 200 terabytes at the top end, with an entry configuration of 7.5 terabytes priced around $300,000. In April 2003 Zambeel closed, having burned roughly $66 million and sold, by the contemporary account, one system. Its investors then put up a further $12 million on the condition that the thing be restarted as a new company without the old debts, and that restart was Agami, founded that same April, carrying a different name for its first year before it took the one on the logo.

~ eleven in the morning ~

Kumar Sreekanti, who founded it, said afterwards that the company had simply run out of money and could not raise more. That statement sits awkwardly beside a $45 million round announced in February, and the man running NetApp at the time put the industry's reaction into one sentence, which was that you do not raise $45 million and then get shut down. Whether all of that money ever actually arrived has never been settled in public.

The documented part is that the end came fast enough to give the staff about two hours. Reporting afterwards put the headcount at somewhere between eighty and a hundred people across Sunnyvale and a team in Hyderabad, and roughly sixty of them said they were still owed pay.

~ the money trail ~

The last act is the part that annoyed people. Before the auction, Stiles bought the venture lender's share of Agami's debt for $1.8 million, which made him a secured creditor of the company he had been running. He then bid about $2.4 million for the assets and won them. The Register worked out his net cost at something nearer $600,000 once the creditor position was counted back, and called the arithmetic what it was.

He reopened as Scalable Storage Systems in the same offices on Innsbruck Drive, with around twenty-five of the former employees. The intellectual property that two companies and something like $150 million of investment had produced since 1999 changed hands for the price of a house, to the person who had been in charge when it stopped.

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