March 31, 2014

Worcester Telegram

Hopkinton's EMC taking hits from Waltham startup

Ash Ashutosh, founder and chief executive officer of Actifio, a Waltham startup that saves companies money on data storage, said 22 percent of its revenue is coming from EMC's hide. 

In a classic David-and-Goliath tale, EMC is the giant dedicated to encouraging companies to buy its expensive gear to store their data. As the volumes of corporate data keep growing, thanks to social networking and ecommerce, so is the cost of storing and retrieving that data. Adding to that cost is the fact that companies make many copies of their data — for backup and recovery, testing of new computer systems, or development of new applications — and store those copies on separate devices. 

Actifio reduces in a big way the cost of storing those copies by letting companies use their data in all these different ways through a single "golden copy." This golden copy also slashes the time it takes to retrieve old data. 

From a technological perspective, it is entirely possible that companies like EMC and IBM could have developed a product that helps companies in these ways. But such products would cut into their revenue as customers bought the cheaper product to save money and time. 

As the David in this story, Actifio has taken advantage of the gap between the interests of customers and EMC management that does not want to take the chance that its revenues would tumble if it introduced a product like Actifio's. 

EMC has been responding to this threat in a way that has not been overwhelmingly effective. It acknowledges the importance of Actifio's market, dubbed Copy Data Management, through public statements and white papers. EMC has not provided any actual products that deliver a similar benefit to customers, but hopes to blunt Actifio's growth by offering the promise that it may eventually introduce such products. As a startup, Actifio has suffered its own set of disadvantages. That's because many big companies are reluctant to bet on a startup that could go out of business. After all, startups generally are unprofitable and if big companies can scare away potential customers, the threat from the upstarts will fade to black. 

But Actifio has lobbed another stone at the head of EMC. On March 23, Actifio announced that it had raised $100 million in new financing led by hedge fund Tiger Global Management, along with venture capitalists Andreessen Horowitz and Greylock Partners, that valued the company at $1 billion. 

Although revenues are in the $50 million to $100 million range and it is losing money, Actifio's growth has been impressive. Revenues were up 182 percent in 2013 and it has over 300 business customers such as Time Warner Cable, Netflix, IBM and Unilever in 31 countries who pay an average of $349,000 for a three-year contract to license its software. 

Actifio has big ambitions. Mr. Ashutosh said, "Our market is $46 billion, according to IDC. Our product knocks out companies' cost for copy data management by a factor of 18 to 20. By reducing the number of copies of data, we deliver a huge cost reduction — 18fold for big companies and two- to fivefold for midsized companies. We have a long way to go before we achieve 80 percent market share. Our goal is to get 100 percent of the market." 

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