Headquarters: Eden Prairie
Founded: 2002
Revenues: $51.2 million (2007)
Employees: 250 (175 in Minnesota)
Ticker: CML (NYSE)
Web Site: compellent.com
What It Does: Data storage systems
Organizations now generate so much computer data that new words have been coined to describe its volume. Gigabytes. Terabytes. Petabytes. A great deal of that data has to be stored and backed up: customer and employee records, financial information, e-mail, and much more. Then there are the medical records and large digital images from MRIs and the like that also need to be backed up.
Phil Soran says that he and his cofounders want Eden Prairie–based Compellent Technologies to be the next $1 billion player in the data-storage industry. They’re off to a good start.
And not for the first time. Compellent is the second networked data-storage company launched by the Twin Cities team of Soran (Compellent’s CEO), John Guider (chief operating officer), and Larry Aszmann (chief technology officer). The first, Xiotech, was born in Soran’s basement in 1995. Five years later, Xiotech was acquired by California-based Seagate Technology for $360 million.
In 2002, the trio returned to the same basement to lay the groundwork for Compellent. Its product would be a storage area network (SAN), an arrangement that consolidates a number of large hard drives holding enormous quantities of information. As for how the system would be configured, and what the software that managed it should allow clients to do with the data, the partners spent two years posing those questions to the midsize companies that would make up their target market.
Why start a new storage company? Since the Compellent guys created the first company, technology had improved, data storage needs had grown, and midsize companies in particular needed better options.
Compellent’s first product, Storage Center, launched in 2004, offers unique efficiencies and many functions previously available only in far more expensive systems, the company says. The software manages information on a very “granular” level, making it easy to manage particular pieces of stored data. The system automatically routes inactive data (not looked at for 30 days) to forms of storage with slower connections, which are cheaper to maintain.
Storage Center uses industry-standard hardware, which makes it easily scalable as storage needs grow. Prices start at $25,000—extremely low by industry standards—though they can run up to more than $1 million. Sophisticated software lets the system store more data on fewer disk drives than competitive offerings. Storage Center also can reduce energy use and costs up to 93 percent less to run than traditional storage systems.
Compellent went public with an IPO last October and ended the year with $51.2 million in revenue, up 119 percent from 2006. The company reported first-quarter 2008 earnings of $18.3 million, more than double the previous year’s figure. With the usual disclaimers about forward-looking financial statements, it anticipates about $83 million in total sales this year.
Compellent sells exclusively through a network of more than 100 resellers based in 32 countries. Most of its 829 customers are still midsize organizations—Soran names Ohio State University and the Minnetonka-based Famous Dave’s restaurant chain as examples. But he says Compellent also is starting to target Fortune 100 companies, as the giants try to cut their storage costs.
So, yes, the Xiotech guys appear to have done it again. Their secret? “The three of us work as a team,” Soran says. “Forget titles. We each have different skill sets. If we [face] a strategic decision, we just talk until we agree on a strategy. That seems to work for us.”
