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Storage start-up Nishan cuts staff

Nishan Systems, a start-up that pioneered new trends in the storage industry, buckles under pressure from VCs who tell the company to "save cash."

Nishan Systems, a start-up credited with pioneering new trends in the storage industry, is laying off staff, the company confirmed Thursday.

"We have let a few people go," including a handful Thursday, said Randy Fardal, vice president of marketing. The overall work force has dropped from 150 at the beginning of the year to about 135 or 140 now, but more layoffs took place because the company has been hiring replacements for some personnel.

"We've been...rebuilding with what we think (are) stronger people," Fardal said.

As with many start-ups today, "the VCs (venture capitalists) are coming in and telling us to save cash," he said.

Nishan's initial $10 million investment in May 1999 came from ComVentures, Weiss Peck & Greer Venture Partners, Sofinnova Ventures, Discovery Ventures and Altos Ventures, with a $20 million second round in December 1999. A $50 million round included funds from Sun Microsystems, Dell Ventures, Siemens Venture Capital and Quantum Technology Ventures.

Nishan's claim to fame is the use of IP (Internet protocol) in the transfer of storage data, a job currently handled by the faster but more expensive Fibre Channel standard. The connection technology joins servers and storage devices in what's called a storage area network (SAN).

Nishan's first products used IP to join Fibre Channel SANs over long distances. Later came switches that let companies build SANs with both IP and Fibre Channel.