DPU developer Fungible has, according to industry sources, laid off a number of employees as it focuses on the mature storage market for its data processing unit technology.
Update: Fungible comment added at end of the article on August 30, 2022.
Startup Fungible developed its own DPU chip and composability software to help servers talk more efficiently to storage arrays, to each other, and to GPUs and other accelerators, across Fungible’s own TrueFabric networking scheme. The company is said to be working toward a composable datacenter coordinated by its FunOS software and DPU hardware, which is used for front-end access by its FS1600 storage array.
We are told by sources close to Fungible that “they nixed a fair number of people.”
Fungible is VC-funded with a total of $311 million raised, the bulk of it via a $200 million C-round in June 2019, three years ago. As we wrote in July 2021, when CEO Eric Hayes was brought on board: “Since then it has launched its first hardware products using its first-generation chip, and bought Cloudistics for DPU-related software composability technology. A sales boss, Brian McCloskey, was appointed in February this year. Cash is being burned.”
Here we are a year later, with more Fungible cash spent, and the US economy has been hit by inflation, supply chain issues, the effects of the Russia-Ukraine war, and actual or looming recession fears. Publicly owned Nutanix laid off 270 employees in August. Times are hard for startups burning cash. Key:value SSD controller startup Pliops gained $100 million of funding in August and had to make layoffs as a prerequisite of receiving that cash. Computational storage startup NGD ran into problems in the same month.
One source said of Fungible: “The [storage] market they want to focus on is saturated by very mature players with deep pockets and very mature products. That will be a challenge for them.”
That person said Fungible’s technology ”is truly disruptive and revolutionary, but in this market you have to pick one thing and stick with it before branching out.”
In their view composable infrastructure and other chip-developing startups have three potential routes to market:
- Build out a composable infrastructure company
- Be an arms dealer for other OEMs, ODMs, and clouds with components and accompanying software
- Build a specific box, such as a storage or a GPU server.
One industry contact told us: “You can’t be all three and expect market success. Pensando had sold something like 100,000 chips by the time they got acquired. They chose the component path and it worked for them.”
SmartNIC-DPU chip designer Pensando was bought by AMD for $1.9 billion in April this year.
We have asked Fungible to comment on its reduction-in-force, and here is what the company spokesperson said:
“Two years ago, Fungible decided to augment its DPU portfolio with higher-level composability software solutions through acquisition and organic development. Despite our best efforts, Fungible was unable to realize traction in the orchestration space compared to the success it has experienced with its DPU-based storage technology.”
That was the Cloudistics asset acquisition.
“We are now strategically focusing our efforts on Scale-out Storage, enabled by the Fungible DPU, and available in our Fungible Storage Cluster solutions to drive success for the company. With this strategic focus on the future of storage and the emerging market segments it serves, Fungible conducted a targeted reduction in force last week. Fungible did not make this decision lightly, but believes it necessary to best position itself for the future.”