Nebula: The Fall of a Company

By Robert Siegel, Mark Leslie, Matthew Saucedo
2015 | Case No. E574 | Length 18 pgs.

This case explores the rise and fall of Nebula Inc., a company that industry experts had originally predicted would become the market leader in the hybrid cloud computing market. In its early days, Nebula seemed like a guaranteed success—the founding team included Chris Kemp, who helped start OpenStack (an open source cloud computing project) during his time at NASA. Top-tier angel and VC investors, including Ted Schlein (Kleiner Perkins Caufield and Byers), Andy Bechtolsheim, and Ram Shriram, backed the company from its onset, and the private cloud computing space appeared to be a hot early-stage market. 

Nebula launched the first version of its product in the spring of 2013 to great fanfare. Pent-up excitement about the underlying technology contributed to approximately $1 million in first quarter revenue.  Management was thrilled and thought they were the ones who had finally cracked the hybrid cloud market. 

However, sales soon began to slow, and many chose to go with competing and older solutions they understood.  Through the eyes of Chris Kemp and Gordon Stitt, this case examines how such a hot company, led by founders with impressive backgrounds and supported by some of the most noteworthy investors in Silicon Valley, got lost on its path to success.

Learning Objective

The case examines why the company initially proved attractive to venture capital investors and highlights the multitude of issues that contributed to the failing of Nebula—including market timing, product development, company culture, team dispersion, and sales strategies. It also considers what may have been done to course correct and avoid disaster, and when all else fails, when to throw in the towel.

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