Hot shot start-up Nebula shuts up shop, a sage warning to investors

3 Apr 2015

Nebula, the start-up that investors thought would change the face of cloud computing, ceased its operations earlier this week, after close to US$40m had been invested in the past four years.

Backed by the likes of Kleiner Perkins Caufield & Byers, SVB Capital and Highland Capital Partners, Nebula’s future looked bright when it came on the scene a few years ago, launching its product in 2013.

Started by Chris Kemp, who ran NASA’s open source OpenStack cloud project, the original plan was to help people transform their server areas into data centres, but it seems the company couldn’t compete with the likes of EMC, Cisco and HP.

Interestingly Matt Weinberger, a former employee of Nebula, points the finger of blame at the company’s inability to convey its message to potential customers.

‘You need a product that people understand and need’

“People didn’t really understand what Nebula was trying to sell, and many chose instead to go with competitors they understood,” he says.

“Just take it as an object lesson in how investor hype, press interest, slick marketing, and cool new technologies are no guarantee of success ­– you actually need a product that people understand and need.”

The OpenStack environment is in flux at the moment. As Forbes reports, Cloudscaling, Metcloud and Eucalyptus have each been gobbled up by EMC, Cisco and HP respectively – with Nebula’s exit claimed to be due to the market not ready for it.

“We are deeply disappointed that the market will likely take another several years to mature,” says the company. “As a venture backed start-up, we did not have the resources to wait.”

The ‘maturing’ concept is something that catches the eye. Indeed right across tech, unicorns are popping up thanks to Wall Street investors ingratiating themselves in the current tech environment.

Whether or not the entire industry is in a bubble is impossible to tell, although there are clearly segments which should command people’s attention.

The consolidation within the OpenStack environment stands out like a sore thumb as a warning to investors, making it harder to spot a little fish that will make it big.

Customers of Nebula will still be able to use the private clouds they have had installed, however support will no longer be offered.

“Everybody wants to be a unicorn, but nobody wants to be a lemon,” says Weinberger.

Storm clouds image via Shutterstock

Gordon Hunt was a journalist with Silicon Republic