Silver lining for Dublin start-up

As more companies turn to 'cloud computing' an Irish firm has timed its entry to the market very well, writes KARLIN LILLINGTON

IN A world of me-too start-up companies looking to come to market with a technology or service similar to what is already out there, Dublin-based Cloudsplit seems so far to have a market niche pretty much to itself.

Cloudsplit (Cloudsplit.com), as its name implies, is staking out a corner of the rapidly evolving area of “cloud computing”, in which companies and individuals use applications, services and data stored “in the cloud” – on the internet – rather than hosted on their own computers.

Though only set up last summer, the company is already getting some international attention. It is one of 12 finalists vying for the the European LeWeb awards in Paris next month, considered the most important European awards for web-focused companies and one of the major events outside of Silicon Valley.

CloudSplit also was one of the companies invited to set up a stall and offer a demonstration at the well-known Techcrunch 50 awards held recently in Silicon Valley, where the company got a nod from one of the region’s well-known venture capitalists, Mark Kvamme of Sequoia Capital. And CloudSplit was a finalist in IBM’s Irish Smart Camp initiative, which offers support and mentoring to entrepreneurs with green technology companies.

Not bad for a company created from the headaches experienced by co-founder Joe Drumgoole at his previous start-up, the web back-up and storage service PutPlace.com.

“We’d been hosted in Amazon [which offers inexpensive cloud storage to individuals and companies] and when our bills started to hit around $2,000 each, we thought we’d better take a closer look,” Drumgoole says. “That’s a lot of money – I could buy a lot of servers for $2,000 every two months.”

So, he went to look at the detailed breakdown of the bills, which took a few days to analyse. What he found surprised him.

“About 25 per cent of our costs were in the ‘puts and gets’ – the transaction costs of people uploading and downloading. The costs were not in the storage itself.”

With the cloud model, people pay for everything they do in their cloud space – not simply for the storage, he says.

“So that gave me the seeds of an idea, The more I thought about this, the more I thought it was an opportunity to help companies control cloud costs in real time,” Drumgoole says. Next, he and co-founder Eamon Leonard of Irish web development company Echolibre.com started developing the code needed to create CloudSplit.

The time was also right to move with a new company. While PutPlace had received about €1.75 million in investment, the economic crash meant it was virtually impossible to raise additional needed cash to move the company forward, says Drumgoole. So PutPlace was in effect put into storage itself, and energy redirected to the new start-up.

The service offers real-time analytics of cloud use and enables users to set alerts for when cost thresholds are approached – and to shut off certain aspects of service when they are breached, keeping overall costs under tight control. Initially the service is targeting those using Amazon’s cloud service, but Microsoft’s Azure cloud computing platform is also of interest and they have had support from Microsoft to develop a service to work on the platform.

The plan was for CloudSplit to be a part-time summer project, but Leonard spoke to Dublin technology entrepreneur Ray Nolan, whose company Web Reservations International sold recently for about $340 million to a private equity firm.

“So we did a pitch, and 15 minutes later we had €100,000 to build the first version.”

Drumgoole says he never even got all the way through his six slides. “So we’ve been working hell for leather ever since.”

Nolan says he was very impressed with CloudSplit and has high expectations for the firm, calling it “the shining star at this moment” in Ireland. He believes the start-up is offering something unique and needed as more and more organisations turn to cloud-based computing.

Drumgoole says he is bringing to bear all he learned, some of it painfully, from during the start-up process with PutPlace. They are cutting down on development time, aiming to fund the company’s growth by immediately going after customers who can also help shape the service’s development by supplying feedback, and working to engage with potential customers at events and competitions. With their first working demonstration launched this week, CloudSplit hopes to have its first paying customers before the year’s end, says Drumgoole. “We are working towards fast delivery to market to get revenue quickly and get that to drive the company going forward. So we intend to be customer- not geek-driven.”