The Story Behind a Failed HPC Startup

jbrodkin writes "SiCortex had an idea that it thought would take the supercomputing world by storm — build the most energy-efficient HPC clusters on the planet. But the recession, and the difficulties of penetrating a market dominated by Intel-based machines, proved to be too much for the company to handle. SiCortex ended up folding earlier this year, and its story may be a cautionary tale for startups trying to bring innovation to the supercomputing industry."

Comments

Did you nerds read the article or the links?

[labradore]

They were ahead of schedule to profitability. They lost funding for the next gen. equipment development because one of their VCs was overextended (read: losing too much money on other risky ventures) and decided to pull out. The risk with a company like that may be high but once you get enough profitability, you can fund further product development internally. They had sold about twenty $1.5M machines in about a year's time on the market. They said they were about 1.5 years to profitability, so I'm guessing that they were expecting to sell another 75 or 100 top-end machines to get to break-even. At that rate, they were probably spending less than $20M a year on development. I'm guessing that they burned up $100M to get were they got. In the overall scheme of things, that's not a big bet. If they managed to develop 20 to 50- thousand node machines and increase the output per core within 3 years, that is something that would have been able to do more than fill a niche. They probably would have developed some game-changing technology in the bargain. Stuff that the Intel and Google might just be interested in.

To be clear: this was not a failure due to the economics of competing against Intel/x86. This was a failure due to not being lucky. It takes sustained funding to make your way from start-up to profit in most technical businesses. HPC is more technical and thus more expensive than most.

Re:Lesson learned

[Jacques Chester]

They didn't die because their customers abandoned them for something cheaper. They died because they had a cashflow crisis due to investors pulling out of a planned round of fundraising. They had millions of dollars of sales in the pipeline.

The lesson isn't "Don't compete with Intel", it's "When you run out of money, you're out of business". Or perhaps, "The financial crisis killed lots of otherwise sound businesses". Luck, as the OP pointed out, played a large part.