They can't all be unicorns: Once-hyped cloud startup Nebula goes out of business


Nebula One


The Nebula One controller turned servers into a cloud like the kind used by big tech companies.

Nebula, a once-hot startup co-founded in 2011 by an ex-NASA CTO and funded to the tune of $38.5 million by some of Silicon Valley's foremost venture capitalists, has gone out of business.


They can't all be unicorns.

Hold tight, because this one gets a little bit personal: I spent a little over a year and a half at Nebula in 2012 and 2013 as a content marketing specialist.

Once, Nebula was hyped up by investors and the media as the ones who were going to change cloud computing by helping people turn their existing server rooms into high-performance data centers of the kind used by Apple, Google, and Facebook to run their web apps.

Today, a farewell letter on Nebula's website reads, in part:


When we started this journey four years ago, we set out to usher in a new era of cloud computing by curating and productizing OpenStack for the enterprise. We are incredibly proud of the role we had in establishing Nebula as the leading enterprise cloud computing platform. At the same time, we are deeply disappointed that the market will likely take another several years to mature. As a venture backed start up, we did not have the resources to wait.

On paper, Nebula seemed like a can't-miss. In addition to co-founder Chris C. Kemp, who headed up the super popular OpenStack open source cloud project at NASA, the executive team at the product's launch included Jon Mittelhauser, who co-invented the first web browser, Mosaic, plus Dave Withers, a former Dell sales bigshot.

Kemp and co-founder Devin Carlen were able to exploit their NASA connections to bring over a ton of engineering talent from the space agency, too. Investors like Ram Shiram and Eric Schmidt's Innovation Endeavors were quick to put money in.

The Nebula product took two years to develop, with the team trying to get it just exactly right, and was reticent to talk about the work in the meanwhile. While that work was going on, the team was burning cash. Kemp, a passionate public speaker with a NASA resume, was in high demand for technology conferences, keeping the Nebula name out there.

When the product launched in the spring of 2013, the future seemed bright, as Nebula's earliest customers reported positive experiences. But sales were slow to follow. People didn't really understand what Nebula was trying to sell, and many chose instead to go with competitors they understood.

In late 2013, Kemp was replaced by Gordon Stitt, formerly a founder of Extreme Networks through its IPO, as Nebula's board sought change (Kemp stayed on as chief strategy officer). I left in 2013, but Nebula's fortunes apparently never turned around, and it took out $3.5 million in debt financing last April.


"This is a difficult announcement for us to make and we want to assure our customers, shareholders, and employees that we have worked hard to explore alternatives and exhausted all potential options," says Nebula's farewell letter.

The company shuts down today, and customers won't be able to get support for their Nebula clouds.

Just take it as an object lesson in how investor hype, press interest, slick marketing, and cool new technologies are no guarantee of success - you actually need a product that people understand and need.

Everybody wants to be a unicorn, but nobody wants to be a lemon.

Incidentally, while I was there, I wrote the official founding story, some papers, a bunch of sales brochures, and I played a part in scripting the official launch video. (We can't say who that voice is, but if you make a guess, you're probably right).


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