Arik Hesseldahl

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Greylock Adds Former Data Domain CEO As A Partner

Hot on the heels of participating in the mammoth $950 million funding round of Groupon, venture capital firm Greylock Partners announced named Frank Slootman, the former CEO of Data Domain, now part of EMC, as a partner.

Slootman had helmed Data Domain from its founding in 2001 through its public offering in 2007 and sold it to EMC for $2.4 billion in 2009 following a bidding war with NetApp.

Data Domain’s claim to fame is a technology called deduplication that allowed hard drives to get competitive with tape systems for backup. When making daily backups if only 2 percent of your data has changed why back up the other 98 percent every day? The amount of data you have to manage quickly explodes, and the only way to manage it in a cost-effective manner was to use tape systems. Data Domain changed that. “We neutralized the cost advantage that tape had and tore down the tape storage business in the process,” Slootman told me.

Data Domain was one of the early targets in the string of enterprise storage deals that included the bidding war between Dell and Hewlett-Packard over 3Par, and another EMC deal for Isilon. After EMC closed its deal for Data Domain, Slootman stayed on for 18 months in order to help with the transition.

And though Greylock is best known for its investments in two giants of social networking LinkedIn and Facebook, Slootman said he’s joining to “bring more firepower” to its enterprise team. “There’s basically two activities in venture capital these days, enterprise and consumer,” he said. “There’s a lot of opportunities in data center storage and infrastructure technologies, networking, virtualization, enterprise apps. Basically stuff that gets sold to companies,” he said.

He says he’ll be on the lookout for companies that can repeat the what Data Domain did: Tear down an industry. “There’s only so much money in the world or in an industry. People are not going to spend net incremental money unless you can reduce their spending somewhere else,” he told me. “Your game is to move the money from point A to point B. You’re looking for wholesale replacement of things that people are already doing, but doing it better, cheaper or faster.”

Cloud computing presents an interesting opportunity he says. Unlike the pre-cloud days with applications were tied to specific hardware, cloud-based services tend to require that everything in the data center be standardized. Getting all that gear to run efficiently requires virtualization — essentially allowing one machine to act like many. Virtualization makes it easy and efficient to get services up and running without a lot of hassle, but also to shut things down easily when they’re not needed. “Big companies are looking for ways to pay by the drink. They want to be able to scale up and down.”

Greylock’s most recent enterprise investments was a $6.3 million stake in Proferi, a cloud based enterprise performance management firm that’s still in stealth mode. Andreessen Horowitz and Peoplesoft founder Dave Duffield also participated in that round. Others include Pure Storage, another company in stealth mode, and Cloudera. All three were led by Aneel Bhusri, who was an early investor in Data Domain and served as its chairman.

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The problem with the Billionaire Savior phase of the newspaper collapse has always been that billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo.

— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald