CEO refuses to confirm Primary Data shutdown reports

Primary Data CEO Lance Smith has refused to confirm published reports that the storage software startup has closed shop.

Reached Tuesday evening at his Primary Data office telephone number, Smith said, “There’s nothing I can comment on at this time.”

That suggests Smith may be trying to salvage the company, but he did not confirm that or anything else about a possible Primary Data shutdown.

Despite news of a Primary Data shutdown spreading across the storage industry, the startup’s website remains up and shows no sign of trouble.

Primary Data tried to tackle the problem of data management on premises and in the cloud with its DataSphere software. The company boasted a veteran executive team that included Apple co-founder Steve Wozniak as chief scientist and Fusion-io co-founders David Flynn and Rick White, as well as Smith, Fusion-io’s former president and chief operating officer. SanDisk acquired server-side flash pioneer Fusion-io for $1.1 billion in 2014.

The reported Primary Data shutdown comes barely five months after the startup picked up $20 million in funding and a $20 million line of credit. Primary Data had emerged from stealth in late 2013 with $50 million in financing led by Accel Partners. Other investors included Battery Ventures, Pelion Venture Partners, Lightspeed Venture Partners and Wing Capital Group. The startup also reportedly secured another $10 million in 2014.

TechCrunch reported this week that Primary Data was shutting down, citing unnamed sources who indicated the startup’s financial backers balked at a request to convert their preferred shares to common stock.

More news of a Primary Data shutdown surfaced in a story posted on CTech, a technology news site focusing on the Israeli tech scene. CTech, which is affiliated with the Israeli business newspaper Calcalist, published the following email that was reportedly sent to Primary Data’s remaining employees in Israel from Eric Iverson, whose LinkedIn profile lists his title as “senior director total rewards” at Primary Data:

“Primary Data is suspending operations and your last day is January 21. Unfortunately, our funding did not materialize in time to avoid termination of your employment. We know this is sudden but we need to release you now while we still have the funds to make a final pay to you for the days you have worked.”

Calcalist reached one of Primary Data’s board members by phone. According to Calcalist, the board member said, “With too much money, companies lose focus and their sense of urgency when it comes to getting paying customers and selling as a first priority.”

Primary Data’s site lists offices in Los Altos, California, Salt Lake City, Utah, and Tel Aviv, Israel. According to Calcalist, the Tel Aviv development center once employed approximately 50 people, many of whom came from the storage divisions of IBM and EMC in Israel. The company notified employees in the summer of 2016 that the Israeli site would be downsized, and by last week there were only five employees left, Calcalist reported.

Marc Staimer, president of Dragon Slayer Consulting, said Primary Data was one of only a handful of players that had “taken on the challenge” of content data management – a problem he said has become more difficult to solve because of the explosive growth of data, the different types of metadata and the many locations where organizations can store data. He said competitors such as Komprise and StrongBox are doing well sales-wise.

However, another software-defined storage startup, Formation Data Systems, suddenly closed in June 2017.

“Conceptually, I thought Primary Data was doing a good job, but you just don’t know unless you’re inside the company,” Staimer said. “I had gotten no whiff of anything negative in the last few months. There was nothing in the rumor mill, the blogosphere or the VC community that even hinted that they were in trouble.”

Whatever led to the reported Primary Data shutdown, it occurred so abruptly that an industry analyst said the startup had approached him just last week about doing a webinar.