back to article Underfunded HCI startup Maxta hits the buffers as VC cash runs out

Hyper-converged infrastructure startup Maxta is closing its doors – after being unable to obtain funding and make progress in the face of a solidifying HCI market. We have heard from four sources that Silicon Valley-based Maxta is closing down this week. One source said 65 people were given their final pay checks, and told …

  1. Nate Amsden Silver badge

    $35 million in funding

    So, just about $465 million short of what might of been needed..(seeing the crazy unicorn investments flying around recently..)

    1. imanidiot Silver badge
      Headmaster

      Re: $35 million in funding

      might HAVE been needed...

  2. Anonymous Coward
    Anonymous Coward

    Maxta demise started at the top

    Ever startup has challenges with VC industry stats estimating that roughly 75% of startups fail. The ones that stand out and succeed have a combination of strong leadership, product innovation (solves a problem or offers a new approach), scalable business model, market timing, ability to generate buzz plus a little bit of pure luck. However the most important element in all this is Leadership. For any startup to have a shot at success starts at the top. In Maxta's case, leadership was the #1 problem as a result of lack of trust, poor planning, non-existent culture and ineffective sales leadership. When you don't have a strategy or GTM plan you burn cash and waste time. Maxta had a great opportunity that was squandered.

    1. acperry1315

      Re: Maxta demise started at the top

      What is the purpose of your comment? You clearly have some sort of grievance with the company. For someone who worked at Maxta for 3+ years, I worked with a great team of people, top to bottom. The strategy and execution were spot on. We pioneered the HCI market as 100% software and built a global meet in the channel distribution model with excellent partners all over the world. Our pricing model was the easiest in the storage industry. Customers love the way that we support and treat them. We always lacked the funds needed to compete with companies who have raised 10-50 times the amount we raised. The article was spot on.

      1. Anonymous Coward
        Anonymous Coward

        Re: Maxta demise started at the top

        Sounds like you were a part of the company leadership. As someone with direct experience engaging with Maxta and indirect exposure with colleagues exposed to Maxta, it’s not a grievance, its more like shock and amazement how the top leaders treated their employees. Their arrogance was incredible. You are right about the article being spot on - Maxta failed. If the strategy and execution were spot on and an HCI 'pioneer' then clearly there was not enough value, customers or revenue to warrant an acquisition or even a fire sale. Perhaps be humble to see the mistakes, have the courage to admit them and wise enough to correct them or else failure will happen again impacting more careers.That is why Maxta failed.

      2. Anonymous Coward
        Anonymous Coward

        Re: Maxta demise started at the top

        @acperry1315

        The commenter to which you are replying was spot on. Maxta's death warrant was signed by Yoram. Yoram was way - way - too controlling. He was one of those people where every single decision, no matter how minor had to pass through him. He didn't trust anyone, and he had to exert rigid control over everything to ensure his vision, even though it had been repeatedly pointed out to him - for years now - that his vision was never going to work.

        Maxta thought too highly of itself. The prime example was Yoram's assistance on equating "cloud" with "virtualization + storage analytics". Let me be 100% clear on this fact: Maxta did not sell a goddamned thing related to anything cloud.

        Maxta sold an HCI virtual appliance that produced some modestly decent analytics, and then packed up and declared the job done. They made a mostly decent HCI offering, but they relied on trying to stretch and distort the truth to make themselves look more capable, competitive, and feature rich than they were.

        Worse, Maxta priced themselves too high for the paucity of features they had, and they were constantly chasing the "enterprise", when they simply didn't have the funding, the featureset, or the keystone customers to break in to the enterprise.

        Maxta basically spent a decade believing that they were more awesome, important, and deserving than they actually were. They never could get over the "deserving" part, and railed against their misfortunes instead of adding some goddamned functionality.

        Now I don't know that 100% of that gets laid at Yoram's feet. I don't know how much pressure he was under from investors to chase the shiny enterprise bauble, but I do know that he did it at the expense of markets he could have actually owned. He should have flooded the market with low cost HCI. He should have given away shitloads of licences to the community. He should have created a tsunami NFR codes that made Maxta the heart and soul of prosumer and SMB storage, and become the "default" on-premises storage for that segment, working his way up from the bottom. He should have become the "default" for SMB and midmarket storage, much in the way that both Dropbox and Synology have.

        He could have owned these markets, parlaying bulk adoption into interest by larger customers. Instead, Yoram believed - quite strongly - that Maxta was more deserving than that. That they deserved to be a Nutanix.

        And I don't hold that against him, honestly. Maxta was his baby, and nobody likes being told that their baby is "just average". But that, right there, was Maxta's problem: the person in charge was emotionally attached to the product being sold. He was biased, and couldn't make the hard decisions.

        There absolutely were great people who worked at Maxta. Friendly people. People I hope sincerely to work with in the future.

        But let's be honest with ourselves here: Maxta's failures were not about technology, or investment, or luck. They were about the emotional attachment of the leadership to the product of their own hard work, and the resulting unwillingness to pivot, take risks, or aim for easier markets.

        Only so many vendors can sell into the enterprise. Enterprise customers spend a lot of money for a single account, and so the attraction makes sense...but it's a small slice of the overall pie, and one that absolutely everyone wants.

        You don't get into the enterprise unless you can prove your support chops. If critical vendors (Oracle, Epic, etc.) don't support their software running on your infrastructure, you're pretty much fucked. Companies like VMware get around this with support policies that state "we'll support that software for you, soup to nuts," and they have to sink astonishing amounts of money into doing so. This is how Nutanix became top dog: support promises, and hiring a bunch of credentialed people to back up their support claims.

        That's it. That's how Nutanix won.

        There's nothing special about Nutanix's HCI. AHV uptake has been the square root of negative pickle. Their VMware HCI virtual appliance is craptastic, gobbles resources, and their sales teams are so dishonest that "Nutanix" has become synonymous with "political partisan-class outright, bald-faced lies".

        Yet they won.

        They did this because they recognized the critical importance of tickbox compliance and very public gestures of support. This made it possible for Nutanix to be seriously considered for enterprise usage. Simply getting in the door for a POC is a huge challenge for most startups, and Nutanix knew exactly how to get to that POC. Once there, they could play a numbers game. Some % of customers would buy their outrageous bullshit, and, once the keystone (and heavily discounted) customers were in place, Nutanix was off to the races.

        The instant Nutanix established itself as a serious consideration for enterprise customers, it was over for the entire rest of the HCI market. Simplivity suffered decision concentration syndrome, just as Maxta did. Atlantis tried way to hard to be a niche superpower. Pivot3 charged way too much for the performance they could deliver, and never understood the importance of the support thing.

        Only Scale understood their place. They created a cult following around their support, but stayed out of the enterprise game. Instead of competing with Nutanix and VMware for every VCDX, CCIE, and other highly credentialed body they could find, they simply provided amazing support to SMBs and the midmarket, and made a go of it. (They're now a point where they either start adding features at breakneck pace or die, but that's another story.)

        So yes, Maxta was a failure of leadership. They thought too highly of themsleves. They were unwilling to pick a means of differentiation, and then commit to it. They tried to be just like everyone else, and ended up with half-assed facsimiles of what others were offering, but nothing that stood out that they could call their own.

        Maxta didn't fail because they made a bad product. They failed because they thought they were one thing, when they were actually another. They couldn't find their niche.

        That's not damning. That's not ethically or morally bad. It's life. It's a learning experience. Those involved will be better at it next time.

        And for everyone who has been let go, and is now searching for a new gig: I wish each and every one of you good luck. I hope you find a great place to land, and I know you'll take the lessons learned from Maxta to your new positions, and do that much better next time.

        Personally, I liked the product, and I look forward to seeing what the next attempt looks like.

        1. boroie

          Re: Maxta demise started at the top

          Awesome response

        2. Anonymous Coward
          Anonymous Coward

          Re: Maxta demise started at the top

          To be fair IMO it's never an individual who should be at blame for failure in an organization. There are multiple factors that play a role some of the key factors are funding, visibility, brandname, OEM, channel partners which is key to enter the enterprise market.

          Unfortunately providing free licenses doesn't help for enterprise, opensource community provides everything needed for build HCI solution, nobody uses it. Nothing good comes for free, as it costs at every level to build the quality.

          Maxta always followed 'software only' philosophy which even Nutanix realized late in the game. But it also pays penalty in the form of hardware variations and support issues at hardware level.

          The product and happy customers at the end of the speaks of company. But there is always room for improvement for any organization, product which is iterative.

        3. kpar

          Re: Maxta demise started at the top

          Thank you for recognizing our product. Maxta engineering put its heart and soul into the product and nothing gave us more pride that seeing our product successfully sustain high throughput and handle hardware failure scenarios successfully. We took great care in making sure that Maxta was an enterprise grade HCI solution with built-in Data Protection, Load balancing, Data optimization and tolerant to HW failures.

          While we definitely have made mistakes and we are introspecting on them, it is unfair to assign failure of the company on a single person. Yoram(CEO) and the executive staff were constantly (re)evaluating strategies & market conditions and were never rigid in their approach.

          I have been through several pitches, never did I find Maxta talking about features which were not present in the product.

          We added multiple hypervisor support, which we believed to be our key differentiation and focused on core features. Yes we did not have the bells and whistles. I would have hoped people would recognize they could be easily added to the product given enough resources, given that the core product performed well.

          Again, thank you for taking time out to comment on Maxta.

          1. Anonymous Coward
            Anonymous Coward

            Re: Maxta demise started at the top

            Yoram(CEO) and the executive staff were constantly (re)evaluating strategies & market conditions and were never rigid in their approach.

            With apologies, this is the inverse of my experience. Year after year, I have never known Yoram to even entertain a discussion that ran counter to his beliefs about Maxta's place in the market, the shape of that market, demand, customer requests...etc. No matter how much evidence you put in front of him, or how well reasoned your arguments.

            If Yoram was "constantly reevaluating", then the conclusions he arrived at never really deviated much from day 1 right through to the end. Yoram had his ideas about how things were, and they were absolute. I suspect this is largely at the core of the issue: as far as I could tell, Yoram discarded any information, opinions, or hard data that didn't conform to his pre-existing beliefs.

            We all do it. Especially if something we love is at stake. Unfortunately, that was...unhelpful...here.

            1. kpar

              Re: Maxta demise started at the top

              Fair enough, I respect your experience, but that was not an opinion shared by a lot of Maxta employees. Lets agree to disagree and call it a day.

    2. kpar

      Re: Maxta demise started at the top

      I have been an employee at Maxta for 4+ years. While we have made mistakes, we have also poured our heart and soul in to the product and supporting the customers. Yoram and the executive staff were always available, transparent and reasonable. We have had a great time working together. We have developed lifelong friendships, supported our colleagues and stood by each other through thick and thin. I have found very supportive leaders, executives who never panicked and never over-reacted through escalations. While I am not qualified enough to answer on strategy, GTM or sales, I would disagree with your assessment of lack of trust and non-existent culture.

  3. John Smith 19 Gold badge
    Coat

    I always smell astroturfing when someone posts AC.

    Just saying.

    1. Anonymous Coward
      Anonymous Coward

      Re: I always smell astroturfing when someone posts AC.

      John Smith19, I tend to agree with your sentiment posting AC does not show transparency and confidence but I assume you didn’t work at or with the company?

      If you did, you would understand that the reason people are posting AC on here is because the CEO and SVP of Sales at Maxta are vindictive and untrustworthy and would stab you in the back without hesitation. I was a witness and it should be exposed.

      Maxta was the epitome of a toxic work environment. People were getting physically ill and depressed from the stress and everyday tension. Maxta ultimately is a case study in how NOT to lead, treat others and what profound hubris can do.

      Any normal business professional would agree that in ANY startup, your most important and precious asset are the people you hire to help grow and scale the company. Without their hard work, hours, effort and sacrifice startups don’t work. Maxta treated their people horribly and it was 100% because of the CEO and SVP of Sales lacked any emotional intelligence. ZERO. They burned investor capital without thinking strategically at all. They thought very highly of themselves yet lacked the credibility and experience of results to back it up. They should have both been replaced YEARS ago but they perfected the art of lying with plenty of lipstick for the pig.

      To recruit people, they flat out lied to new hires about how much funding they received. They lied about how many customers who had installed Maxta and lied about exciting prospects. They lied about their revenue and how it was reported. An inside sales manger admittedly posted numerous fake 5 star reviews on Glassdoor to increase the rating because they were getting crushed by it. People were miserable.

      To bring it home, there was no CFO, COO or VP of Finance. The CEO paid for events or marketing with his personal credit card and get this, the CEO was responsible for reviewing and approving all expense reports. Read that again…the CEO reviewed and approved every expense report. He would decline $10 parking charges, dispute toll charges and not pay people the full amount they submitted out of their own pocket. Many people were owed $1000's and not reimbursed for months. The worst part here is that so many people trusted them and yet they were lied to and led to the cliff every step of the way.

      Because of the leadership, 60+ families are scrambling to find a job and that sucks.

      1. Storagevetter

        Re: I always smell astroturfing when someone posts AC.

        As a senior sales guy for many years in the industry and a Maxta employee for many years, I disagree with many of your comments. I have had great pleasure of working with CEO and SVP. Whenever I needed them they were available for help. In my experience they were always trustworthy and open to ideas and suggestions. I don't recall that they ever lied about how much funding the company received or how many customers the company had or any financial metrics. Also I never had any issues with expense reports and I travel frequently. It is true that the company has a strict policy that many people in marketing didn't like but the company always paid for all justifiable expenses.

        Why don't you disclose your name even though most of the people in Maxta would recognize who you are and why you are posting those comments. It is clear that all those comments are related to your termination from the company. Actually most people in sales and even engineering butted heads with you.

      2. Anonymous Coward
        Anonymous Coward

        Re: I always smell astroturfing when someone posts AC.

        I respectfully disagree. Yoram, the CEO, is fiscally responsible and we stretched the dollar as long as it was possible. As a former employee who has worked for Maxta for 4+ years, I have not heard of a case where the employees felt sick due to office environment. Yes we were under no false impression that startups are easy, and Maxta was no different, but we never witnessed yelling and tensions during escalations, which I have personally experienced at other companies.

        The CEO and the executive team have been very open and have followed an open door policy. I have known the executives and the CEO to have helped many employees during their personally difficult times. Frankly I am shocked that you mentioned that they are untrustworthy. I honestly do not share that view and would work with them if an opportunity arises in the future.

        I have made many expenses such as meals, travel tickets etc for official purposes and have always reimbursed it the office. Never was any charge declined or rejected. I guess I was just being reasonable. I don't recall other employees complaining about their expenses being declined.

        Yes it is unfortunate that some of the former employees had to be let go, but as they say Success has many fathers, but failure is orphan. So I guess these comments were kinda expected

      3. Anonymous Coward
        Anonymous Coward

        Re: I always smell astroturfing when someone posts AC.

        Someone is getting really personal here to being opportunistic for badmouthing. I have worked for Maxta for long time and in my experience has great work culture and very talented team.

        CEO and leading team is great, very supportive and transparent. In my personal experience never false promises.

        They have a quality product for HCI market and customers highlight 'Maxta has best customer support'.

        Sales momentum was missing but was mostly due to limited funding, sales team was great.

        Regarding layoffs it was shocking and hard for the employees but management team was very sensitive to the situation and tried their best they can.

  4. W.S.Gosset Bronze badge

    Trim Page...

    ... sounds like a job for a printshop apprentice.

  5. This post has been deleted by a moderator

    1. Storagevetter

      Re: Maxta was a disaster for me

      The product didn't work? As a Maxta employee who has been covering a very large territory, I have nothing but satisfied customers. Everything me and my team tell customers is exactly how the software works and exactly what the customers are looking for. Furthermore, POC's show all the features and functionality of the product. When customers do need assistance, Yoram is always available for a call or even onsite visits. Honestly, I have no dissatisfied customers and all my customers like to work with Yoram as his technical knowledge and vision is off the charts.

      1. Trevor_Pott Gold badge

        Re: Maxta was a disaster for me

        I have to go with "I've never bought the whole 'Maxta didn't work' thing either". Maxta works fine for me, and the version I have has got to be at least two years old. We can get into lots of debates about performance, features, and all the messy, intricate details of why Maxta an heroed, but the software does the bug.

        There's enough valid poop to fling. No need to invent stuff.

        1. W.S.Gosset Bronze badge

          Autocorrect?

          > why Maxta an heroed

          Que?

    2. Anonymous Coward
      Anonymous Coward

      Re: Maxta was a disaster for me

      I am sorry for your bad experience with Maxta. Like previously mentioned, Maxta has a decent HCI product. It can easily be validated with many of our customers. Yes some of the Maxta staff is searching for new opportunities, but to blame and say Maxta had no product to sell is not right. Maxta engineering has delivered a stable and solid product and have always stood behind it in supporting our customers.

      I have not heard customers complaining about Yoram and I honestly hope this is not his last act as I would look forward to working with him again in the future if the opportunity arises.

      Btw, Kudos for kicking a company and the employees when they are down. Real class act.

      1. Anonymous Coward
        Anonymous Coward

        Re: Maxta was a disaster for me

        Oh, come now. We all know exactly who this is. This is the bloke who kicked up a fuss on Reddit. The thread is educational, and IIRC, boils down to "Maxta tried to help but this guy refused to cooperate, and was trying to do some seriously non-standard stuff".

        It's always the same guy. He has a serious vendetta.

        And you know what? Fair enough. We all have companies (or people at companies) we feel did us such serious damage that we want to kick them. For years. Decades, even. I'm as guilty as the rest.

        But in this case, I think it's time to let go. The company's dead.

        Down, boy. It's time to stop chasing the car. You've caught it, and now what will you do?

        1. Bobbobson999

          Re: Maxta was a disaster for me

          I have no idea what you're talking about and have never publicly complained about Maxta to anyone, buying the product was a massive mistake I made and I have no desire to share the details with anyone.

          Perhaps I purchased the product much earlier in its life than a lot of the people here, in fact, that almost certainly the case as there head could was only small at the time, they didn't even have a proper support structure, although that's not they told us during the purchase, we found that out later during a particularly bad failure of the system.

          Regardless of how the product progressed, the attitude of Yoram was the real issue. He was more than happy to charge us a lot of money for a non-working product and really didn't care about the problems Maxta misleading us caused at my end.

      2. Bobbobson999

        Re: Maxta was a disaster for me

        I remember when this product failed for us, bringing down our entire virtual estate, and we were unable to bring it back online and had to basically replace a 50TB filestore in 24 hours. Yoram said, "its fine, I am going to overnight ship you a Synology, you can use that for now", followed by "of course it (maxta) doesn't work, all software has bugs, look at windows".

        I remember having to explain to the board why we were losing tens of thousands in revenue and failed SLA payments and why I wanted more money to buy yet another storage product, and the one we had previously invested in was worthless, and the original investment was lost.

        Good times.

  6. kirans

    This is Kiran Sreenivasamurthy, I was responsible for product management at Maxta. There can be a lot of reasons for a company to fail. NO ONE wants something they put their heart and soul to fail. Most of the decisions made when you look back you think we should have done something different.

    Ofcourse when things fail there will be people who are unhappy about everything that happened.

    Commenting specifically on the product, all product mature over time and also the team learns where the product works best. There may be use cases where the product did not meet the user expectations. There are plenty of uses cases where the product worked and customers are happy and they have purchased additional clusters. Just last week we were discussing with a customer who was interested in purchasing 6 additional nodes for their data center.

    Additionally, Gartner when they did the latest magic quadrant 2018 which Maxta was also part of talked customers. If anyone want the reality about the product and customers talk to Gartner they will provide information on what they have heard. This way you will get a right and true picture for different parts (Product, sales, marketing) of the company strategy and execution.

    Let's all learn from our experience and make better products. Wish you all the very best.

    1. Trevor_Pott Gold badge

      Good luck, Kiran.

      1. kirans

        Thanks a lot Trevor. Next time I visit Canada let’s catch up. If you happen to be in the Bay Area give me a holler.

    2. Rob Commins

      Taking the high road - well done, Kiran!

      Rob

  7. Anonymous Coward
    Anonymous Coward

    Product works for me

    I used this product for a few years and it worked as advertised. Like all products it did have issues and when i reached out to the org or Yoram they were helpful in resolving the issues. This is my experience. It will be a shame to loose this as an alternative to appliance based products.

  8. Charles Sme

    Maxta is the best job i ´ve ever had

    It is a pity and a great waste of time to reply to someone who does not even have the courage to say who he is and he calls himself "Anonymous Coward". Retaking the point of value. before working on Maxta. I worked for Cisco, Lenovo and previously IBM and I have to recognize that working for such a talented team and contrary to the stupid comments I see here, the leadership of the team that gave me the opportunity to work here was unique and working with them made me this experience my best job ever. Returning to Maxta, the proposal of value and product were awesome, and relatively good, however, the market is really difficult. but at all times the leadership team was present to help us, that got us to sell Maxta in more than 30 clients in my region where the market is dominated by solutions like Nutanix, or VSAN, and those customers preferred Maxta because they saw The great virtues and added value to their business when implementing our solution. again, for me Maxta was the best work experience, union and leadership. unfortunately, sometimes major problems are encountered. but I'm sure it's not Maxta's last story,

    It seems that someone else has a personal problem with Yoram and takes advantage of this situation to make multi negative comments about Yoram. so sad for that kind of people.

    For me personally I will love to work with Yoram in the future on whatever project it will work on next

  9. vsmit

    It greatly saddens me about Maxta's closing but I do want to chime in that I have known and worked for Yoram for many years and he is very trustworthy and doesn't have a vindictive bone in his body. I don't know who posted that above but I have to comment that that is way off base on his character. On Maxta, I greatly enjoyed all the employees at Maxta and thought very highly of them and the leadership. It was a good group and I greatly enjoyed my time there.

  10. Anonymous Coward
    Anonymous Coward

    Maxta funding and management

    So many on here have clearly been misled and essentially invested in blind trust without thinking too hard about Maxta's market position and leadership behaviors.

    The product was sound, with solid code led by a great VP of Engineering and VP of Product who truly cared about their teams. Unfortunately the business, sales and marketing side of Maxta was mismanaged with people being misled.

    In the Spring of 2017, CEO and SVP of Sales announced to the entire company a $20-$25M THIRD round of funding at a new valuation of $200M.

    They would not disclose who the investors were. This would bring the total funding raised to $55-60M. This was not a secret conf call or private meeting, this was during an all hands meeting. When senior management was asked why it wasn’t announced by any of the media outlets like PR NewsWire, VentureWire, Crunchbase, etc the answer was…”we want to keep it stealth” and the subject was quickly taboo when people started asking when the money was going to be deposited. In other words, it was so stealth because it never happened. Or it did and then fell through and was never communicated back to the employees.

    For ANY Startup, capital investment is the lifeblood for operational survival, especially companies like Maxta who did not have any marquee customers keeping things afloat or significant revenue from sales. There simply weren't any enterprise customers or significant growth to justify any sizable investment at a higher valuation. The writing was on the wall for a long time. Maxta CEO should have stepped aside to become CTO and brought on an experienced CEO who could build a company. Yoram had no business running the company or people. The SVP was simply in over his head and consistently failing with a strategy that moved where the wind blew. It was an operational disaster. Say what you want to defend this behavior but look at the position you are in now and ask yourself how you got there?

    1. Anonymous Coward
      Anonymous Coward

      Re: Maxta funding and management

      Thesis of this post is based on fake data…. How about fact checking before posting factually incorrect information??

      Maxta HAD a third round of funding above $20M in the Spring of 2017 with a new investor and total funding raised was close to 60M!

      You are welcome to fact check with VP of Engineering and VP of Product that you seem to trust.

      1. Anonymous Coward
        Anonymous Coward

        Re: Maxta funding and management

        I am an employee and I just (re)confirmed, Maxta indeed had a series C funding round of over $22 million in May, 2017. The lead investor was Waterwood and all the existing investors participated in it.

        1. Anonymous Coward
          Anonymous Coward

          Re: Maxta funding and management

          Thanks for confirming. I do recall whoever posted earlier about when the circumstances of the 3rd round happening was secretive and simply not discussed how funds were going to be used to help us, etc. Yoram spent no money on marketing or promoting the company so the CMO was useless. They should have hired college interns to run marketing...would have been more effective and more affordable.

          The overall vibe as I recall was that top management, primarily the CEO and SVP of sales wanted to keep everything close to their chest and not get too exposed with how poorly things were going. There was not a good feeling of trust or excitement at all....I have no idea what the people on here are talking about. It's as if they were working for a different company.

          At least it's good to know we were not misled about the 3rd round...hopefully those investors got some money back....they were definitely misled with false revenue and growth being reported.

          time to move on.

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