No VC: Nimbus Takes ’21st Century Approach’ to Building Business

Photograph by Stephen Foskett

Thomas Isakovich is taking an entirely different approach to building his second storage company.

This is the second in a five-part series called “No VC,” which highlights startups that have succeeded without venture capital, the lifeblood of Silicon Valley.

Thomas Isakovich started his first storage computing company, TrueSAN Networks, when he was 19. It was during the dot-com boom and venture capitalists were wildly betting on all things tech. Isakovich joined the party in 2001, taking more than $30 million from a group of investors even as the bubble was bursting.

Two years later, Isakovich was left with nothing. The investors, who had decision-making control, forced a sale of the company so they could get their money back amid a tumultuous market. The price wasn’t high enough for Isakovich to get a return.

Determined to avoid a similar fate, Isakovich took an entirely different approach to building his second storage company, Nimbus Data. He’s pulled in only about $2 million from angel investors — some who also helped TrueSAN get started — and hasn’t given a board seat to any outsiders. Six years after starting Nimbus, a provider of flash-memory storage, Isakovich is selling to more than 250 companies around the world, including EBay and Lockheed Martin. The South San Francisco-based company has 45 employees and could be ready for an initial public offering in 12 to 18 months, he said.

Isakovich, now 35, knew that large corporations faced a rapidly evolving problem: They were consuming and processing too much data for their old, clunky storage systems to manage. They didn’t need to buy more expensive, outdated spinning discs. Rather, they required efficiency that only intelligent software could offer.

Building a product from scratch on limited invested capital is a challenge for any tech company, which is why the venture industry exists. The task is even greater for a startup that’s trying to sell complicated systems to big enterprises, because the incumbents are massive and have long-standing relationships with corporate tech departments.

Without venture capitalists, Isakovich knew he needed to generate revenue, and fast. Using contacts he’d made while at TrueSAN, he forged licensing deals with IBM and Applied Micro Circuits that allowed these companies to use Nimbus’s early source code inside their products. Both were “seven-figure deals,” Isakovich said, bringing in millions of dollars to further develop the technology.

“There was a gaping hole in the market, and we were the main game in town,” said Isakovich, who started Nimbus while studying at Stanford University. “IBM needed it and needed it pretty urgently for the product they were working on.”

From there, he built out a team and an integrated product, with cheap off-the-shelf hardware and Nimbus’s customized software. Eventually he got into hardware development as well. Now, Nimbus is going head-to-head with NetApp, Hewlett-Packard and EMC, and frequently winning. According to Isakovich, the key is using technology to be capital efficient, in addition to creating a product that companies can’t live without.

“It’s a 21st century approach to building a business,” he said. “The old way was you have to hire 100 salespeople to hit $200 million in revenue.” Now, “deals can be done through the Web and GoToMeeting and all these other things like high-def video conferences and remote demos,” he said.

Isakovich said he hears from venture capitalists a few times a week, but most of the calls come from late-stage and public market investors trying to build a relationship for the future.

“The word has gotten around that we’re past the stage of traditional venture investors,” Isakovich said. “And we’re very much set in our ways of building this thing without outside financing.”

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