Flash Storage Startup Fusion-io Speeds Up Trading At Credit Suisse

Published on December 7, 2010
by Arik Hesseldahl

Keep a close eye on Fusion-io. Its flash-memory based storage technology is quietly winning lots of business in data centers around the world. I say quietly, because very often the companies using it don’t like to broadcast that fact to the world.

One who is willing is Credit Suisse, though it won’t say much. The $50 billion Swiss bank says it is adding Fusion-io’s memory – dubbed ioMemory – into its Advanced Execution Services trading platform.

So what does ioMemory do? It uses flash memory – not terribly unlike what’s used in USB drive – to basically re-write the rules of how companies with large database storage needs can work. Add an ioMemory card to a typical server with a five-figure price tag, and it can suddenly behave a lot more like a much larger and more expensive storage area network. The company is also known for its chief scientist, Apple co-founder Steve Wozniak.

Credit Suisse says in this case the ioMemory will be used to speed up algorithmic trading, which is using powerful, super-fast computers to analyze and movements in the prices of stocks, bonds and other securities, and determining when to buy and sell, based on a pre-programmed set of rules and conditions. It’s a business where, as The Wall Street Journal’s Donna Kardos Yeslavich wrote in October, milliseconds count, so banks and other financial institutions are constantly on the lookout anything that can speed the process up. (Eventually we’ll be saying femtoseconds count?)

A key bottleneck is the matter of recording trades made. This means getting the data related to the trade out of a computer’s active memory – that would be the DRAM chips similar to the what occasionally have to upgrade your PC – and permanently stored. DRAM is volatile memory, meaning that if it loses power, it loses whatever it’s storing at that moment. Flash is non-volatile, meaning it stores data permanently, even losing power, until it’s deleted. That makes it great for permanent storage that’s also a lot faster than a hard drive. The faster trades get logged, the more trades get done, the more money gets made. “It’s a matter of quickly putting the trade data in a place where it won’t get lost,” Fusion-io’s CEO David Flynn told me. “You have to make sure that your system won’t forget what’s been done, while at the same time doesn’t look track of what it’s doing.”

Credit Suisse didn’t make anyone available for an interview. Banks rarely go into even this level of public detail about the technology they use. However I did talk to Fusion-io CEO David Flynn, who tells me that Credit Suisse has been a fan of the Fusion-io technology for some time. He also says several other financial institutions are using it. “Its easier for them to use it than it is for them to talk about it,” he said.

From the looks of the investments and partners that Fusion-io has landed during the last year, he’s not kidding. In April it landed $45 million in a series C round led by Meritech Capital Partners, with Accel Partners, Andreessen Horowitz, New Enterprise Associates, and Triangle Peak Partners also invested. South Korean electronics giant Samsung, which happens to be the world’s largest manufacturer of flash memory made a strategic investment last year, as did Dell Ventures. Meanwhile Hewlett-Packard, IBM and Dell all offer Fusion-io technology as an option on its servers. Headcount has doubled in the last year from 150 to between 300 and 400, Flynn told me.

So with all this going on, is Fusion-io going to be a hot IPO or acquisition target in 2011? Don’t count on it, Flynn says. “Our VCs are willing to wait for the home-run,” he said. “And we’re not in the business of getting acquired. We have the luxury of being able to grow this company without someone with itchy fingers.”

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