In his book, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, Clay Christensen authored one of the most influential thought pieces to impact the technology community. His core thesis was the successive generations of technology coming from the low-end market niches disrupt mainstream market leader as they attack incumbent products by improving the low-end technology to subsume the price/performance of the mainstream products.
Interestingly, he chose an example in the storage world to exemplify his thesis. In 1981, the old 8 inch drives (used in mini computers) were "vastly superior" to the new 5.25 inch drives (used in desktop computers). However, 8 inch drives were not affordable for the new desktop machines. The simple 5.25 inch drive, assembled from technologically inferior "off-the-shelf" components, was an "innovation" only in the sense that it was new. However, as this market grew and the drives improved, the companies that manufactured them eventually triumphed while many of the existing manufacturers of eight inch drives fell behind.
This theme of consumer technologies disrupting mainstream markets is one that we see recurring over and over again in the markets we follow. Most recently, it is often termed as the “consumerization” of the enterprise. We see companies like Dropbox permeating enterprises because of the incredible usability. We see Yammer create a Twitter/Facebook-inspired collaboration solution for enterprises. We see the iPhone leaving RIM and Blackberry in the dust.
It took us at Index about 15 minutes to recognize this pattern and the significance of the opportunity that Pure Storage was pursing in the storage market space. In today’s market space, the consumer technology that is going through massive price/performance improvements are solid state drives (SSDs). SSDs using flash memory have been used in wide ranges of consumer devices – iOS and Android devices, Macs and PCs and a huge range of other consumer electronic products. The explosion in popularity of these products has caused the pricing for flash memory to drop dramatically in recent years.
Source: Forward Insights
Of course, flash memory has huge advantages. It’s faster, uses less power, and space than traditional disk drives. That means that all things being equal, flash is a great choice for both consumer and enterprise use cases. The one advantage that disk drives have had is that even with all these price reductions, it is still much cheaper than flash drives on a raw $/GB basis.
That’s where Pure’s secret sauce comes in. The storage industry has used software techniques like compression and de-duplication in the past. But, Pure has designed them from the ground up for consumer grade flash (MLC). Flash memory also has some very unique characteristics – reads are very fast and writes are a bit more complex. By designing to the characteristics of flash memory from day one, Pure’s engineering team has build a product that achieves price points equivalent to those seen from disk drives.
So, the choice becomes quite apparent. Pure offers competitive price points with substantially better performance for wide range of workloads. In addition to which, the software-focused architecture allows for a rich roadmap of storage services to be added seamlessly. From a business perspective, it was clear to us that Pure had the opportunity far more than just compete in the “high performance” storage market, but had the ability to disrupt the multi-billion dollar mainstream storage market.
All of this is possible only because of stellar team that’s come together at Pure. We’d been tracking Scott Dietzen for sometime and as we got the chance to meet the rest of his team, our excited continued to ratchet up. Scott’s a software guy (note… leading a storage company) with great successes at Zimbra and BEA under his belt. John Colgrove (“Coz”) was a founding engineer at Veritas where he later became Symantec’s Chief Technology Officer for the company's Data Center Management Group. Coz was the primary architect for the hugely successful Veritas Volume Manager (VxVM) and File System (VxFS). John Hayes, Bob Wood, Matt Burr, Matt Kixmoeller…. the team is just world class.
And of course, we are delighted to join a terrific group of investors: Aneel Bhusri, Satish Dharmaraj, Mike Speiser, Mark Leslie and others. All of whom we have worked with and huge respect for.
It’s not often that you see an opportunity to change a massive market with a well-entrenched set of incumbents. Technologies transitions have to be in play, the timing has to be right. We are in the early innings of this game for Pure Storage and there is a long road ahead, but we are very excited to be on board for this journey.
 Christensen, Clayton M. (1997), The innovator's dilemma: when new technologies cause great firms to fail, Boston, Massachusetts, USA: Harvard Business School Press,ISBN 978-0-87584-585-2, p. 3-28