PIPE founder, Gordon Bell invest in OrionVM


news Australian cloud computing startup OrionVM today revealed it had taken angel investment capital from two high-profile technology sector luminaries: PIPE Networks co-founder Stephen Baxter and US engineer Gordon Bell, of Digital Equipment Corporation fame.

The company was founded in early 2010 by three Sydney entrepeneurs — former Ernst & Young financial auditor Sheng Yeo, its managing director, systems administrator and computer science student Joseph Glanville and entrepreneur, engineer and student Alex Sharp. It launched its local cloud computing platform in April this year and has attracted a number of early customers.

In a press release announcing the investment, Yeo said he was “proud and honoured” to have “industry leaders” like Bell and Baxter showing faith in the company, adding that the biggest gain for OrionVM was “not just money”, but the vast breadth of knowledge and experience the pair would bring with them.

The funds would be used to triple staff — OrionVM currently only has a handful — as well as adding to its customer base and exploring “an international presence”. Currently, OrionVM says it has a number of Australian companies, “ranging from ASX-listed companies to small startups”. Clients, which primarily appear to purchase scalable web hosting services, include San Francisco company Wikia.com, Sensis’ Quotify.com.au and local startups Getflight.com.au and DesignCrowd.

Both Bell and Baxter are well known in the technology sector.

Baxter co-founded fibre pioneer PIPE Networks in 2001, which went on to list on the Australian Stock Exchange in 2005 to great commercial success and the financial success of Baxter and his co-founder Bevan Slattery. The company was subsequently acquired by local telco TPG. Baxter’s LinkedIn profile currently lists his occupation as “Turbine Cessna 210 driver/frustrated fisherman”.

For his part, Bell has a significantly higher profile courtesy of his role as an early employee of Digital Equipment Corporation, now part of HP. The engineer designed several of the PDP machines which were the precursors to later machines hosting the first versions of the Unix operating system — now used in many different variants throughout the world. Bell eventually became DEC’s vice president of engineering. Over the past decade and a half he has been a researcher at Microsoft.

OrionVM hasn’t taken any other initial investment capital apart from the funds injected by its founders as well as a $25,000 prize at the annual Tech23 awards. iTNews reported today that the amount invested in the company was “well under the $1 million mark”, although OrionVM wouldn’t confirm the current value of the company.

Nice! I came down pretty hard on OrionVM a week or so ago, slamming what I described as a “fairly unjustified” level of hype which was flooding Australia’s media about the startup. However, this investment goes a long way towards repudiating much of my criticism.

In particular, it seems that OrionVM must now have at least a few hundred thousand dollars kicking around their bank accounts. The company will be able to use this money to build out its cloud computing infrastructure, as well as employ extra sales staff to attract new clients and even perhaps allocate some capital to paying themselves or other developers to continue innovating in infrastructure as a service.

This puts paid to my claim that OrionVM doesn’t have enough cash to build truly scalable cloud computing infrastructure. In addition, the involvement of Baxter and Bell — both of whom know an absolute stack about datacentres and deep computing infrastructure — does much to reassure that the hype around OrionVM’s innovation is justified.

Of course, the company still has a number of challenges.

In its press release this week — as I challenged it to — OrionVM disclosed a number of customers, including some major organisations among them, alongside startups. However, most of those companies appear to be using OrionVM as scalable web hosting infrastructure. That’s hardly a bad thing, but it’s not really true cloud computing either. Scalable web hosting is a particular — and highly specialised variant of cloud computing, but OrionVM has always appeared to have bigger ambitions than that, highly commoditised market. I’d like to see it demonstrate some enterprise IaaS customers over the next year.

In addition, I note that the company last week entered a beta for its support of Windows Server instances on its platform. Supporting Windows is hardly rocket science for international platforms like Amazon, Windows Azure, Rackspace and so on (or even local rivals like Ninefold) and the fact that OrionVM has only just gotten this aspect of its cloud computing infrastructure sorted reveals the relative immaturity of its platform.

Do I still have reservations about the company? Of course. There is a certain … hubris evident here, about both the company and its investors. But this is based more on a feeling than anything else. I’ll shut up for now and let OrionVM prove me wrong ;)

OrionVM — for now — has put its money where its mouth is, and I have to respect that. It’s an Australian startup investing in technology development, it has attracted expert investors from both Australia and the US to support it, it has demonstrated early customers and most importantly of all, it hasn’t sold out to a global corporation within its brief history. These are all the boxes I tick when I look at Australian technology startups.

Image credit: Screengrab of OrionVM founders from recent Ten News report


  1. Thanks for your kind words Renai. :)

    I couldn’t agree more that we have a ton of challenges in our way – the next few months are going to be amazing, difficult and extremely rewarding I think.


  2. I’ve talked to these guy some, and it is possible – just possible – that they are underhyped. They sure know storage technology well anyway.

    The problem is that they are really an infrastructure play, but their public face is a cloud provider.

    Its unclear to me which way they want to go – as a technology infrastructure provider they compete more with EMC & Citrix rather than the Amazon/Rackspace/Ninefold competitors that are highlighted here.

    • “The problem is that they are really an infrastructure play, but their public face is a cloud provider.”

      I definitely agree with this and with your EMC/Citrix comment. I think they are trying to have a foot in both camps — which I’m not sure is a wise approach.

      • Re: EMC/Citrx

        The problem with competing with them is that you have to compete by building out an enterprise sales force. The DNA to do that is pretty different to that required to building a cloud hosting provider.

  3. I have met with the three guys from OrionVM and can honestly say that they are a nice bunch of guys… but very inexperienced. They are certainly not the type of people you would put in front of a customer but rather keep locked in a darkened room in the basement where they can code and play WoW

    The biggest problem that are up against is that they are pushing a technology platform rather than a service platform which is bad given they are pitching themselves as a service provider. They are trying to go head to head with the likes of VMWare, Citrix, Parallels, OnApp etc and then the hardware guys like HP, Dell, EMC, NetApp etc etc. They are not looking at the bigger picture. They are so convinced that the billions of dollars EMC, NetApp etc have spent on development over the years is wasted and that their initial $30k-$50k investment has produced a technology stack that kills the competition… really not sure what they are smoking at OrionVM but I would like some of it.

    They also listed on AngelLists earlier in the year in search of $1M in funding but have not had any luck in even getting the slightest interest from Angels that really count. They are pitching a conflicted business model which is risky for any investor to swallow. They have no real compelling story to tell, they have no substantial value proposition other than an apparent high performance storage sub system, and quite frankly there is a great deal more to this game than just storage performance.

    These guys (3x) have zero commercial experience and a client base you could list on one hand. There are plenty of other cloud hosting providers operating in/out of Australia that provide a far more valuable technology/service stack that OrionVM. Not sure how 3x guys are capable of supporting customers 24×7 as well as running the day-to-day part of the business as well as further developing the service/technology stack.

    Without getting into the intimate details of their underlying technology stack, the general consensus is that it does not scale well. It may work great over 10-20 server host nodes but beyond this performance will drop off and this is a fact. The DSAN model has been around for a long time and it never really took off. Sun Microsystems and SGI tried it years ago and killed it due to scalability issues and the fact that more centralised SAN’s in High Availability offer far better performance and reliability.

    From what I have seen of their infrastructure at the Vocus and Equinix DC’s they certainly are not heavily invested in infrastructure with <100 servers host nodes which is a good indicator of market penetration. There are current Australian Cloud providers operating as startups currently running over 500x physical servers at 80%+ utilisation and have done so in less time that OrionVM

    Oh, and Gordon Bell (historically) doesn't invest anything more that $50k in a startup as an Angel… so my prediction would be that Orion got somewhere between $50k and $100k as the combined investment of Bell and Baxter.

    The last Sydney based 'startup' cloud provider/MSP I spoke to last week would chew $100k in a matter of weeks and they are being careful where they throw their coin. I am really not sure how long OrionVM can survive unless that can land a $1M-$5M investment in the very near future, and based on their AngelLists activity I am not so convinced they will be around in their current form this time next year.

    At this stage, companies like SoftLayer/Amazon/Rackspace etc and other local cloud providers offer a far more compelling and complete offering.

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