3ware Loses Its Head

Beau Vrolyk, president and CEO of IP storage startup 3ware Inc., was part of a round of layoffs that took place at the company this week, just days before a $15 million round of funding is set to close.

Controversy is swirling around the layoffs, Vrolyk's departure, and questions about how the company should spend its new funding.

Roughly 40 percent of the staff, about 30 employees, were laid off over the past few days, mostly in the marketing department. The remaining headcount is just under 50, spokespeople say.

Internal sources at the startup say Vrolyk was asked to leave. He did not voluntarily resign,” one staffer said. “He is a fabulous visionary and an excellent spokesperson, but he isn’t a great manager and he cannot execute.”

“Hogwash!” says Vrolyk. “I made the layoffs and came to the conclusion that the company needed to remove the most bloated overhead -- yours truly.” (See: John R. “Beau” Vrolyk, President and CEO, 3ware.)Scott Sandall, general partner at New Enterprise Associates (NEA), the lead investor in 3Ware, was able to shed some light on the situation. “It is really the same thing. [Vrolyk] proposed a layoff that included himself to increase the time the company has left with cash.” Vrolyk was "very expensive," Sandall added.

Vrolyk also appears to have been caught in a kerfuffle with other members of 3ware's executive team over how their new funding should be spent. The conflict centers on how much of the investment should go to long-term research and development versus ramping up sales.

3Ware's first product, which combines an iSCSI-based IP storage array and Ethernet switch in a single box dubbed Palisade, is now available, but it is not yet shipping in volume.

3ware’s founder, Peter Herz, pushed for more R&D and it would appear that Vrolyk was on his side. But reportedly the rest of the board members think the company should be beefing up sales now. The directors have decided to promote Bob Henry, currently worldwide head of sales, to president and CEO.

Herz is allegedly “irate” at the direction the company is now taking. “He would like to see 3ware follow a different strategy,” Vrolyk acknowledges.A CEO with a background in sales will have a different strategic approach than Vrolyk's, whose background is in engineering.

In many ways, 3ware is in a strong position. Having pared its staff, it is about to announce an ample round of funds, bringing its total raised to date to $100 million. It is one of just a few companies shipping IP storage products in a market that's set to grow.

— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com