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By | Chris Mellor 22nd December 2010 23:17

Storage startup Atrato shuts doors

Cash tank empty

Storage startup Atrato has closed down because it ran out of cash.

Atrato supplied Velocity storage systems based on SAID (Self-maintaining Array of Identical Disks) technology. These sealed canisters of 2.5-inch hard disk drives offered a 3-year maintenance free period – similar to Xiotech's ISE but sharing no technology roots – as well as high performance. The ideas of using 2.5-inch drives and sealed canisters were novel at the time.

The Broomfield, CO-based company – first known as Sherwood Information Systems – was founded by Eric Wendel, Dan McCormick, and Jonathan Hall, with McCormick and Hall coming from Xiotech when it was owned by Seagate. The company became Atrato in 2004, and by launch time, Wendel had left for another startup. McCormick was the CEO, with Hall looking after business development.

Eight months later, in November 2008, it appointed Steve Visconti as its CEO, with McCormick becoming board chairman. From then on, the company focussed on finding and selling into markets that needed its product, such as video surveillance and cable TV head-end functions.

At launch, Atrato had been funded to $18m, but by Match 2009, it was looking for another $15m for product and channel development. In April, when Atrato had around 15 customers, it added solid state drives (SSDs) to its Velocity 1000 arrays, with automated data movement between disk drive and SSD storage tiers.

A big problem at Atrato has been sales. The boxes simply didn't sell in large enough numbers. Kevin Cordell was running sales in September 2008. Less than a year later, Marty Sos was appointed to head up sales, with the task of developing OEM and reseller market channels. He was replaced just three months later by Jeff Edwards whose brief was to expand Atrato's partner and customer base worldwide.

Atrato also recruited Bill Mottram to be its marketing VP at the same time, with Visconti giving up that responsibility.

The new executives couldn't turn the company around on their own, and by June of this year, it was looking for new funding and what was called a rebirth. Up to a quarter of its staff were laid off, and the company's strategy changed so that Atrato focussed more on software than hardware. It also intended to promote OEM sales more.

We understand just 18 employees were left in July 2010.

At the end of September, Atrato joined the ng Connect Program to help drive the development of next-generation broadband services with other program members. This was a business development type activity and provided no immediate sales boost.

Mottram left in October 2010 and is now the managing partner at Veridictus Associates. Chief Technical Officer Sam Siewert also left this year and is now at Intel.

Atrato's website is dark. Telephone calls are received by voice mail. And the voice mailbox is full. No more messages are being accepted. Sources told us here at Vulture Central that Atrato is gone, baby, gone, having run out of cash. It seems that the OEM sales channel did not get enlarged, and the desired new funding did not arrive as existing and potential investors looked at the books and the company strategy, and then kept their cheque books closed.

The now ex-CEO Steve Visconti replied to an e-mail, saying: "Atrato [has] closed. An Investment group acquired the assets. Rumour is, as I understand it, [that] they are merging the technology with other IP they own and in the process of forming a company in conjunction with [another] strategic company of which I have no knowledge. I don't know any more than that."

Atrato's demise has been both recent and sudden. That will make for a horrendous Christmas for Atrato's employees.

It is a pity. The technology was ahead of its time with automated data movement between SSDs and 2.5-inch disk drives. Analytico president Tom Trainer said this about the shutdown: "It's unfortunate. Atrato was one of the new wave start-ups bringing innovation in storage to users demanding more." ®

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