I was just reading an email blast from Jason Calcanis entitled “How Much Money Should a Startup Have in the Bank? Calcanis runs Mahalo, a startup that was focused on human powered search until it realized how hard it was going to be to move the needle against Google – so it became a provider of video-based learning tools instead, a business it stumbled on by accident.

The premise of Jason’s article was that a startup should have at least 18 months of runway (i.e. the amount of money you have in the bank divided by the amount of money you’re losing each month). Part of the reason for having this much runway is that if you screw up your business model, you can change direction, or pivot’ into another business.

The article talked about raising ‘dumb’ money and ‘smart’ money and advised entrepreneurs that it’s okay to take dumb money as long as the valuation is exceedingly high. I’m sure Jason’s VC’s were real thrilled when he revealed in his article that he raised twice as much as he needed for Mahalo and had a whopping 40 months of runway in 2007. He’s now down to the optimal 18-month window and “it’s all good.”

Then I read this week about Nasuni. Nasuni is a startup provider of cloud on-ramp services, which announced Data Protection, a new service “aimed at businesses that require access to their data 100 percent of the time with no risk of data loss and, in the case of disaster, the ability to recover data in minutes with the click of a button. The new service is backed by the most stringent service level agreement (SLA) ever offered in the storage industry: guaranteed 100 percent uptime.”

I’ve read this press release and the corresponding articles several times and I’m down to only two logical conclusions; either: 1) I’m clueless or 2) this announcement is complete nonsense.

My first issue is the statement about “no risk of data loss.” In my world that means RPO zero – i.e. no risk of losing data. I asked myself – is Nasuni, a company that specializes in developing cloud storage gateways all of a sudden in the data protection business. How can that be? That’s an incredibly complicated and expensive proposition and really doesn’t have anything to do with virtual NAS appliance gateways.

To really ensure RPO zero, you either have to architect a three data center type approach, which David Floyer describes here in detail, or you have to think in entirely new ways such as startup Axxana has done. From what I can tell, Nasuni hasn’t done either. It’s basically changing its business because what it’s been doing isn’t working and it’s spinning this as some type of full-blown data protection service—from what I can tell, it isn’t.

The evidence of this is in the SLA, my second big issue with this news. A CRN article covering the Nasuni announcement said the following:

Nasuni’s 100-percent uptime guarantee carries some stiff penalties the company could impose on itself. For instance, if a customer suffers a five-minute outage, or the customer’s service does not meet recovery time objectives of 15 minutes, the customer will get 10 free days of free service, which Rodriguez said is about 3000 times the penalty offered by other providers.

“My goal was to come up with the most draconian penalty for Nasuni if there is an outage,” he said.

My issue is the press release promises “no risk of data loss,” which is by far the most critical issue for customers and then delivers an SLA that offers a credit for downtime. I’m sorry but while this SLA may be 3,000 times more onerous for the vendor than Google and Amazon’s crappy SLA’s, it completely misses the mark. If you promise zero data loss and back it up with a credit for downtime you’re obfuscating something. It’s like a parking garage offering a 100% guarantee that your car won’t be stolen but if it is, they waive the parking fee– huh?

Here’s my gut feeling on what’s really going on (note – I haven’t researched this extensively so this is only my uninformed opinion). Nasuni’s business model wasn’t working. It realized that the value in enterprise storage is either in the storage that’s sold by the likes of EMC and NetApp, or the target cloud solution itself– e.g. Amazon. The more differentiated (e.g. enterpris-ready, strong SLAs, end-to-end that cloud solution is, the more likely your chances are of successfully competing with Amazon (e.g. CSC, Nirvanix, etc.).

As I wrote in a SiliconANGLE blog in April of this year:

The problem here is a cloud on-ramp is basically a feature. And while sometimes so-called feature companies can excel (3PAR, Data Domain) it’s more often the case that the successful ones actually have an architecture that works and is disruptive. Last week’s Cirtas “do over” should give standalone cloud on-ramp companies a wake up call. The company most at risk, and with a similar model to Cirtas, is Nasuni, which is a lower-end, SMB-grade gateway which like many new companies is experiencing growing pains of their own in some customer sites. Cirtas tried to focus on the enterprise and Nasuni tries to focus on the SMB space, but both are really under-developed products searching for a business model.”

And as I just wrote last week on a ServicesANGLE blog:

While there’s been a lot of action by VC’s funding the cloud gateway companies (e.g. StorSimple, TwinStrata, Nasuni, etc. the freeway onramps to the cloud—are short-term products. Tier one OEMs will increasingly incorporate cloud gateway functionality in their storage systems via high speed Ethernet connections embedded in their boxes – e.g. an EMC VNX or NetApp filer with a built-in gateway to the cloud. As such the market for a separate appliance to upload data into the cloud of your choice and store some data locally on it will be pressured.

The Services Angle

The bottom line is this is a go-to-market change for Nasuni, which will begin to de-emphasize its standalone gateway product. The company’s moves, while insignificant at the micro level, underscore that cloud storage is a big trend, dominated today by Amazon. For enterprise storage vendors to compete, they require a platform, strategy, channel and end-to-end visibility in the network, from on-premise through the public cloud. That’s why companies like EMC and NetApp, which are partnering with service providers such as CSC, Verizon and others, offering a homogenous VMware stack, have a good chance of bringing cloud-based storage models to the enterprise. Nirvanix as well, if it can expand its distribution channel, is uniquely positioned to offer both on-premise (private) and public cloud storage services because it has a platform and architecture to deliver.

The Nasuni premise that cloud storage needs to be simple, easy to manage, pay-by-the-drink with strong SLA’s for the enterprise is right on. The thing for buyers to understand is which suppliers are best positioned to deliver that capability it’s not the cloud on-ramp guys, it’s the platform players.

That’s my view anyway…But maybe I’m just clueless.