Where Storage Gets Top Billing

Isilon Systems co-founder and CEO Sujal Patel has led the digital storage company to a strong position, serving customers such as Hollywood director James Cameron, whose blockbuster Avatar required immense amounts of storage for its 3-D data.

The moment of truth for Sujal Patel came in 2007 when he had to tell his wife, then pregnant with twins, that he wasn’t going to take that planned long paternity leave after all.

Instead, he would assume even more responsibilities at work. “I think I’m going to have to take over the company,” he told his wife.

Coming from another 33-year-old with a bachelor’s degree in computer science that remark might have sounded brash. But Patel had co-founded Isilon Systems, a maker of high-capacity disk storage systems for networks. He had been its first CEO when it was founded in 2001 and remained in charge until he stepped aside in 2003 to allow Steve Goldman, a former executive from neighboring F5 Networks, to step in. Goldman, the board felt, had the experience the company needed to advance to the next stage. Patel had remained with Isilon as its chief technology officer and as a board member. 

But now Isilon was in serious trouble and the board wanted him back. Goldman had led Isilon through a scorching hot IPO at the end of 2006, when its initial $13 offering price rocketed to $27 in its first trading day, valuing the company at more than $1 billion. But then an internal audit revealed that the firm was recording revenues for sales that had never been completed, thereby overstating its growth. Wall Street lost confidence in the business and the stock price plummeted. Just 10 months after the IPO, Isilon’s market share had fallen by more than 75 percent.

Patel agreed to return as CEO, in spite of his desire to spend time with his newborns, because “I had a deep-rooted sense of what we needed to do and a desire to drive it.”

Patel moved quickly to overhaul the company, replacing virtually the entire executive team. He sharply reduced costs, which had ballooned out of control, and moved to re-establish customer confidence. In the fourth quarter of 2009, Isilon managed to turn the corner, pulling in a profit of $140,000, a huge improvement from the $4.3 million loss suffered in the same quarter during the prior year. 

Most impressive, Patel oversaw this dramatic turnaround in the middle of a terrible recession that had caused reduced overall demand for storage systems. Last year, Isilon made $124 million in

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