Billion Dollar Unicorns: Cleversafe’s Unique IP Strategy

Continuing with our Billion Dollar Unicorn club analysis, here is the story of another interesting company. Chicago-based Cleversafe was founded in 2004 by MIT alumnus, engineer, and serial entrepreneur Chris Gladwin. The company is addressing the growing large scale enterprise storage market, which according to IDC is estimated to grow to $17 billion by the year 2015.

Cleversafe’s Offerings

Prior to founding Cleversafe, Chris had founded a music services company MusicNow. MusicNow licensed the music and powered digital music services for companies like Best Buy, Microsoft, and Clear Channel. MusicNow had built a big system to store the music. At that time, Chris realized that the demand for data storage was going to grow rapidly simply because more and more things were becoming capable of creating data that would become important to somebody. He also realized that legacy systems were not going to be able to meet the requirement created by the growth in data. The products that were available for MusicNow weren’t really good enough.

Using his experience and technical expertise, Chris knew that the techniques that the basic Internet used could meet the market requirements and that led to the idea behind Cleversafe. Essentially, Cleversafe was created to take the techniques that were successfully working for networking and telephony and apply them to the problem of massive storage. They focused on enterprise customers, especially those that needed petabytes of storage data.

Cleversafe uses its patented object-based storage solution that leverages information dispersal algorithms encrypted to expand, virtualize, transform, slice and disperse data across a network of storage nodes. Their information dispersal architecture uses a single instance of data with a minimal expansion of the data and gives them tremendous advantage over other traditional storage systems that need to maintain multiple copies of the same data. The solution is thus not only cost effective, but also scaleable while ensuring that the data confidentiality and integrity is maintained.

Their products have thus attracted several customers and the customer base includes organizations like Shutterfly, Photobox, Future Publishing in the UK, a top mobile provider in Japan, and several US federal government agencies.

Cleversafe’s Financials

Cleversafe began generating revenues in 2010, almost six years after its founding. They do not disclose detailed financials, but market reports suggest that revenues have grown significantly since then. In July 2014, Chris had mentioned in a discussion with me that the company was earning “many tens of millions of revenue” a year. Analysts estimate that the company is well on its way to earn revenues of $100 million and that if Cleversafe isn’t profitable yet, then they are surely getting there soon.

Cleversafe has been venture funded so far with $100.4 million in investments from New Enterprise Associates, In-Q-Tel, Motorola Solutions Venture Capital, OCA Ventures, Presidio STX, Harrison Street Real Estate Capital, and Alsop Louie Partners. Their last round of funding was held in 2013 when they raised $55 million from New Enterprise Associates at an undisclosed valuation.

Cleversafe’s IP Strategy

Cleversafe’s most unique approach lies in their focus on an IP portfolio. Chris believes that the most important thing for a core technology company is to build an enviable IP portfolio. IP not only helps validate the company’s credentials with customers, but it also positions the company as a defensible entity against large incumbent competitors like HP and EMC. This, in turn, makes the case for a high market valuation with their investors. And Cleversafe has done all that exceptionally well. They began their patent program in 2005 and according to Chris at our recent roundtable, the most current number is close to 250. In fact, they are among the “most patenting US companies per employee”. That definitely makes them a serious technology company and will ensure a justifiable high valuation, when, they go public or get acquired.

Recently, Chris was my guest at the 1M/1M roundtable. You can listen to the recording here:

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

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Photo: Ed Schipul/Flickr.com.