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Tape is an Underserved Market; Interview with Spectra Logic CEO Nathan Thompson Part I

One of the most engaging and friendly CEOs one can hope to meet in the technology industry is none other than Spectra Logic’s CEO Nathan Thompson who came from very humble beginnings and has worked hard to build Spectra Logic to what it is today – the leading manufacturer of tape libraries. However, how Spectra Logic came to assume this position is an interesting story in and of itself. Today, in the first part of this interview series with Nathan, he sheds some light on how Spectra Logic became so tape centric and even today views tape as an underserved market.

Jerome: Nathan, thanks for joining me today and agreeing to do this interview. So to start out and for the benefit of DCIG’s readership, please tell me a little bit about yourself and what led you to found Spectra Logic.

nathan_thompson.JPGNathan: Jerome, pleasure to join you and thanks for giving me this opportunity. To set the context, I started this company when I just turned 19 while going to school and getting a degree in engineering.

I’d always run little businesses or been involved in businesses ever since I was a kid. Further, I grew up with very modest means and my parents were unable to give me anything more than about $1,500 for the first two years I went to college. They certainly gave me emotional support but in terms of financial support there was not a lot.

So I worked for a friend of mine during my freshman year and into the summer to make enough money to pay for my sophomore year. Unfortunately he was having some cash flow problems and while I earned about $15,000, he could not pay me much of it at that time. So I was on the order of $4,000 – $5,000 short going into my second year of electrical engineering at the University of Colorado.

So I looked around for a job and got an offer to fix pinball machines for $13/hour at a place called Old Chicago (it was actually the very first Old Chicago) though at that time it was still a pinball arcade. I was thrilled since $13/hour was four or five times what a “student slave” worker was paid.

Unfortunately the amount of time it took to do the work and the time required to do the course work for electrical engineering did not allow me to do both. I needed to do something else to pay my college tuition, so I literally took my last $500 and started a company called Western Automation.

That company made and sold disk, tape and memory products, which I used to pay my college bills. I finally graduated in the spring of 1983 with a company that was employing somewhere between 10 and 12 people (a couple of them are still with us to this day.) We then bought a division of Cypher called Spectra Logic, which was a tape drive company in 1987.

After about four years we incorporated in Delaware in 1991 as Spectra Logic Corporation and have continued doing business under that name to this day.

Jerome: So at one time Spectra did both disk and tape. So why, of the two, did you choose to build Spectra around tape?

Nathan: Over the years there have been many companies associated with tape in the Boulder (Colorado) Valley. Boulder actually traces its roots back to companies like Exabyte and StorageTek (acquired by Sun which is now owned by Oracle.) At one point there were probably six tape manufacturers and maybe more in Boulder.

The way it happened was that IBM built its IBM 360, its breakthrough mainframe product in 1963 or 1964, and was building plants around the country. It built its disk drive facilities in San Jose, CA, and Lexington, KY, semiconductors in Burlington, VT, mainframe CPUs in Poughkeepsie, NY, and tape drives in Boulder, CO.

In the late 1980s and early 1990s this is where all of the IBM tape drives were once designed. In fact, there is a big IBM plant just north of here that actually made magnetic tape and magnetic tape drives before IBM eventually moved those activities to Tucson.

It was the existence of that original IBM plant in Boulder that created a group of people who were tape experts. A number of them went on to start a company in 1969 by the name of Storage Technology that later became StorageTek. So when IBM eventually moved to Tucson, IBM employees who did not want to move created a bunch of IBM tape spinoffs that resulted in Boulder becoming “Tape Central”.

In this sense, Spectra was different in that it was not really a spinoff– nor was I a spinoff– of any of those companies. But being in the area and looking at what skills were available and what the potential for the tape market was, it made sense for Spectra to focus on tape.

Since the 1990’s, Boulder has gone from six companies manufacturing tape drives to only Oracle, and even those tape drives may be made in Puerto Rico. But the knowledge of the markets was imprinted on me and some of Spectra’s early employees.

That is what led us to focus on tape. Spectra does have other products today but the majority of our products are very much tape-focused. Further, Spectra continues to see tape as an underserved market segment so our focus is to be successful in that market and a few others.

At this point Spectra Logic is mostly known for its tape libraries. While I would expect over the next 10 to 15 years for Spectra Logic to bring out other products in other markets, to date tape has been by far its most successful offering.

In Part II of this interview series, Nathan discusses why Spectra Logic recently decided to double down on tape even as many experts were forecasting the death of tape.

In Part III of this interview series, Nathan will talk about how tape libraries are maturing so they may be used in existing as well as in new and emerging roles within organizations.

In Part IV of this interview series, Nathan discusses why tape will remain an integral part of backup processes for a long time to come.

In Part V of this interview series, Nathan talks about what new features we can expect to see from tape and what new roles it will be able to assume in just a few years.


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