What's in Store for Compellent?

Call it “the year of the basement.” After they sold Xiotech, their Eden Prairie data-storage company, to California-based Seagate for $360 million in January 2000, Phil Soran, Larry Aszmann, and John Guider regularly trooped down to Soran’s basement to noodle their next venture.

“My wife would say, ‘What do you guys do down there?’” Soran recalls, laughing. But the entrepreneurial trio wasn’t unaware of what was going on aboveground. On the contrary—it inspired them.

“September 11th, the Northeast power outage, weather disasters, and corporate governance issues got us thinking there’s an opportunity here for innovation in storage technology,” Soran says. To cut to the chase: They decided to start another Eden Prairie data-storage company. And like their previous one, it appears to be on its way to big success.

It’s mid-November, and we’re talking in Soran’s office, a nondescript corner of Compellent’s cubicle farm. He won’t be here long. Compellent—with 120 employees, close to 500 customers, and more than $25 million in sales—will break out of these modest digs in February and head for its own marquee complex a couple of miles down the road. And Soran, appearing every inch the middle-school math teacher he once was, in his sweater vest and checked oxford shirt, could become the leader of a new Minnesota-based public company, whenever the equities market permits it. “We think we have all the elements in place,” he says.

"We want to be predictable in our profit and revenue growth so that we have the resiliency to handle ups and downs in the market," Soran says.

Since its start in March 2002, Compellent’s star has risen even faster than that of Xiotech—and this time, without the benefit of a tech boom. A scant three months after it went into business, Compellent raised $9 million in venture capital, which it used to start developing its product, a storage-management system that combines proprietary software with off-the-shelf hardware. For the next three years, on the strength of the reputation of Soran (Compellent’s CEO), Guider (COO), and Aszmann (CTO), the start-up continued to raise money during a time when other tech companies were struggling for funding. (To date, the company has attracted $53 million in venture capital.) Compellent spent 2006 racking up technology awards, adding key marketing and finance personnel, and running up consecutive quarters of profitability.

Last September, with a $15 million round of venture financing hosted by Japanese investment bank Nomura International, Compellent announced its intention to make an initial public offering of stock. The IPO would raise the company’s profile enough to help it grow even faster. According to Soran, Compellent is striving to capture 10 percent of the worldwide data-storage market—a $16 billion industry growing at an estimated 8 percent a year.

Compellent has left the basement far behind. So how high can it go?