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Job Axe Swings at Storage Startups

SanValley and Scale Eight cut back, but the latter has even tougher problems afoot

Just when you thought things couldnt get any worse, the pink slip hits your desk.

Two prominent startups in the Silicon Valley area underwent layoffs this week. Storage service provider Scale Eight Inc. and iSCSI router manufacturer, SAN Valley Systems Inc. each let go approximately 15 percent of their workforce to ease financial woes.

Scale Eight is down to 67 employees, with eleven cut from engineering and five from administrative and sales positions. SAN Valley is less precise about its headcount, but says it will now fluctuate around the 70s.

Of the two companies, SAN Valley appears to have come through its workforce reduction in one piece and is back on track. Its founder and CEO Sandy Helton has been replaced by Bob Coackley, former CEO of Inrange Technologies Corp. (Nasdaq: INRG). "In this economically uncertain time, we are making prudent cuts and have brought in a new CEO with a strong sales and marketing focus," said Niraj Jain, VP of marketing and business development. Helton will become executive VP and CTO.

Scale Eight appears to have deeper problems to solve. The company’s CEO Dick Watts has resigned, and its primary co-location partner, Exodus Communications Inc. (Nasdaq: EXDS), has just filed for Chapter 11 bankruptcy protection (see Exodus: What's Next?). Scale Eight hosts its global storage service from Exodus data centers in Tokyo, London, Virginia, and San Francisco.

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