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This Guy Just Sold His 2-Year-Old Startup For $175 Million In Cash

Sage Weil
Sage Weil

Twitter/Sage Weil

Inktank founder, CTO Sage Weil

Red Hat on Wednesday announced that it was buying a 2-year-old startup called Inktank for $175 million.

It's yet another amazing win for founder Sage Weil, age 36, who launched into the tech world as a teenage programming genius back in the dot-com era.

Inktank is the commercial arm of an open-source project called Ceph that Weil created for his doctorate at UC Santa Cruz. In 2012, he released Ceph to the world as a free and open-source project and fired up Inktank as a commercial company to offer paid support for Ceph.

Inktank was backed by Weil's second startup, DreamHost. It also nabbed $1 million in seed money from another icon in the Linux and open-source world, Mark Shuttleworth, founder of Ubuntu. Not quite a year ago, it borrowed $13.4 million from an unnamed lender.

Flash forward to today, and the company had about 50 employees in two offices, it said.

So $175 million is a nice payday for the Inktank team, with about $14.4 million invested.

It's Weil's third success. The first is a spectacular dot-com-era story, according to a story published about it some years ago by Josh Jones, the co-founder of Weil's second company, DreamHost.

Weil created WebRing in 1994 when he was in high school. By college, it grew too big for him to manage, so he sold it to a company called Starseed in an all-stock deal.

Starseed was soon sold to GeoCities for $3.5 million in stock. In the heat of the Internet bubble when valuations went crazy, Yahoo bought GeoCities for $3.57 billion in stock. By the time Weil was vested and could sell his Yahoo stock in 2000, Yahoo had essentially bought WebRing for a lot of money, according to Jones.

UPDATE: Sources told us that Weil walked away with more than $1 million. Yahoo's stock dropped a lot by the time Weil was vested and could sell. He wouldn't confirm the actual amount of money his Yahoo stock was worth at any given point, but said the $100 million his friend Jones quoted wasn't accurate.

Weil joined his second startup, DreamHost, at age 18, before he sold WebRing, founding it with some college friends with no money and a single PC to use as a server, the company says on its website. It's a Web-hosting company that's still going strong today.

Inktank wasn't the first open-source storage software startup Red Hat bought. In 2011, it bought Gluster, for $136 million in cash. But Ceph's star was rising and companies were starting to choose it over Gluster, GigaOm's Barb Darrow reported.

Ceph is software that allows companies to use low-cost, commodity storage devices like ordinary PC disk drives, to store a lot of data. They can string them together to form something called a cluster so that a lot of inexpensive small disks act like one large one. And then, because everything is controlled in software, it can do sophisticated things, like "self-healing" meaning it can find and fix problems automatically.

Ceph is part of a bigger trend in the industry called "software-defined storage" competing with expensive storage systems from companies like EMC or NetApp.

At just 2 years old, Inktank already had some impressive customers like Cisco, CERN, Deutsche Telekom and Best Buy. Its partners include Alcatel-Lucent and Dell.

Red Hat plans to combine Gluster with Ceph and take on the storage industry giants.

For Weil, it represents another feather in an already impressive hat.

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