Cloud Startup Funds Itself

Startup NephoScale came out of stealth mode last week and says it is gunning to take on the likes of Amazon Web Services, Rackspace Hosting and GoGrid. Audacious as that might sound, the Silicon Valley startup is a self-funded infrastructure-as-a-service cloud provider that is touting its scalability, a planned global presence and an API designed to provide simplified provisioning and management.

NephoScale spawned from founder and CEO Bruce Templeton's Silicon Valley Web Hosting. Using the cash flow from those operations, Templeton last year launched NephoScale and teamed with CTO and co-founder Telemachus Luu, who once helped launch GoGrid.

About 100 customers just completed an 8-month beta and Templeton says NephoScale is now open for business. About half are paying customers, the rest are those testing the service in exchange for feedback, Templeton said. The company has three key offerings: cloud servers, on-demand dedicated servers and cloud storage.

The cloud servers provide on-demand compute accessible from the company's graphical user interface or programmatically via its API, called CloudScript. Users can choose from a variety of Windows and Linux server images.

For those that want dedicated server resources, the company offers on-demand servers. Customers can configure RAM, the amount of cores and the type of CPU, among other things. "They are for people who want a physical dedicated server and the want to know exactly what they are getting from a spec standpoint," Templeton said.

The third offering is object-based cloud storage, which the company boasts uptime of 99.999 percent. It can scale up to hundreds of petabytes. "Our storage is a lot like [Amazon Web Services] S3, we replicate it three times, it has self healing, check sum analysis of the packets," he said.

NephoScale is still a small operation, it only employs 12 people. And while Templeton said his new company may not offer the breadth of services that Amazon provides, he believes he can compete with them for customers who want a more simplified approach to using cloud services.

"They might have more services but we have a more elegant way the system works together," he insists. For example, he believes NephoScale has a better approach to letting customers manage their servers. "Not all of our competitors have a single pane view for provisioning and managing their entire infrastructure," he said. They'll jump over to the cloud view, then they have to jump over to the pane for the cloud servers, or dedicated servers. We developed one single pane view for all of that."

Templeton told me there are companies of all sizes using NephoScale's services from well known enterprises to small startups. While he declined to attach a dollar amount to the funding of the company, he insists it is cash-positive from Silicon Valley Web Hostings' operations.

Is that enough to give comfort to a customer that is betting its business on NephoScale? "We can stay around for sure," he said. "Whether we grow to our expectations is another issue, but staying around is a non-issue, we can do that easily."

While Templeton says he has relationships with the venture capital community, he is going it alone, at least for now. "We're not funded by VCs we could be if we wanted to but we are doing quite well on our own," he said. "I have the money from the company's operations."

For now, NephoScale's data centers are in Silicon Valley. Templeton is looking to role out a data center in Asia this summer and Europe by year's end.

Posted by Jeffrey Schwartz on January 25, 2011