AI Storage Play: 26-Year-Old DDN Snags $300M Investment At $5B Valuation

“The funding will let us accelerate R&D, accelerate processes, accelerate go-to-market, create more reseller partnerships and more OEM partnerships, and so forth to enable us to develop the company across the board and accelerate it,” says DDN President and co-founder Paul Bloch.

DDN, a developer of high-performance storage technology, was founded in 1998, and claims to be quite profitable. On Thursday, however, the Chatsworth, Calif.-based storage vendor unveiled the close of $300 million in funding from Blackstone, DDN’s first funding infusion since it closed a small funding round just days before the September 11, 2001, terrorist attack.

Given that DDN doesn’t need the money, why the new funding? DDN President and co-founder Paul Bloch gave CRN a one-word answer to that question: “Acceleration.”

The company is looking to accelerate in a couple areas, including hiring more employees than the 300 it hired in 2024. It also wants to accelerate storage technology development for AI needs, an area where it has already made a name for itself, but where Bloch said it can do much more.

“It's a perfect storm for DDN,” he said. “We have been building up a very, very large system at scale for 20-plus years. It's not easy. It's extremely difficult. And we've done it for the largest organizations for the past 20 years. And starting eight years ago, we started doing it with Nvidia. And so, it's really a natural continuation of DDN, except that we're doing it at the enterprise level. … Now we have technologies to address very large training and large inference. We have technology lined up with digital twins. So we're perfectly lined up with whatever companies might require in the age of AI.”

On a sadder note, DDN is headquartered very close to where the wind-blown wildfires are raging around the north and west of Los Angeles. Those fires, which have claimed at least five lives and thousands of structures, have resulted in a number of DDN employees losing their homes, Bloch said.

“We're obviously taking good care of our team,” he said. “We believe we have a couple of people that might have lost their homes, and so we already have plans to help them out. Because we do believe, first and foremost, in the end, that we are a family and we take care of our people, and we've demonstrated that in the past. It seems now that it is subsiding a little bit. But it is actually totally crazy. I personally have many friends that have lost their homes.”

Read more of CRN’s conversation with Bloch, which has been lightly edited for clarity.

Wow! A $300 million investment in DDN.

DDN for the past 20 years has been fully independent. We grew. We were profitable for the past, give or take, 20 years. We're super excited because we really view Blackstone is more than just a funding partner and much more as a business partner. They have a massive business acumen, their experience and investments in various fields and customers and so forth, managing a trillion dollars.

And so one of the things that we are going to work with Blackstone is to get access to their portfolio, providing technologies and getting introductions to, basically, be able to come to the C-suite as opposed to the technical suite. Historically, we've approached customers through the technical side, which is great. We're going to keep doing it. But we also would like at this point, especially with the maturation of the market and the interest in our technologies and people, to get to the C-suite as well.

Who approached who on this? Did you approach Blackstone? Or Blackstone approach you?

That's actually a fun story. My son David, a go-to-market analyst at DDN, and one of his buddies came to the idea that we should be meeting with Blackstone. We talked to several sources and strategics and so forth for the past couple years. They put together a memo that said we should be meeting with Blackstone because of the value that we could jointly create together. And we put together a dinner about seven or eight months ago. And now have an investment at a $5-billion valuation of $300 million from Blackstone.

DDN was founded in 1998. Have you gone all this time without outside investment?

No. We did one in the past, and we try to forget about it. We did a very small round a month before September 11, 2001. Yeah, not the best timing. That didn't go too well, and so we basically parted with the investors within the next two or three years. We bought them out. Basically, they were not the right investors. And it was basically that.

So why take this investment now after having been a profitable company for a long time?

Acceleration. It's really not a question of needing the money. I mean, it's great to have money. But the company is profitable and delivers a strong EBITDA on its own. So it is really an acceleration. We're going to be very good stewards of any dollars. We tend to like to make money and deliver value to our customers. We're kind of a different company that way. The funding will let us accelerate R&D, accelerate processes, accelerate go-to-market, create more reseller partnerships and more OEM partnerships, and so forth to enable us to develop the company across the board and accelerate it.

Is this a step towards a possible IPO?

That's what everybody's asking. That's one of the obvious paths. I think if growth keeps on delivering what we see and we have an acceleration of the business, that is definitely a path that we will be looking at. But we're probably two years away from that. We're going to take our time. We're going to do things seriously. The end is the long-term play. It is not a ‘get rich scheme’ situation. It's our life. It's our life and the life of our teams. And we've demonstrated for the past 20 or 25 years that we are steadfast, focused, and delivering on delivering value to our customers.

Is the funding enough to reach your goals in terms of acceleration, or would you like to perhaps see another round?

You're asking some of the right questions. I think since we started this round right with Blackstone, we have been embarking on a different strategy, the right trajectory. And if we achieve our goals in 2025, the sky's the limit. Getting involved with incremental partners or incremental strategics by the end of 2025 could make sense as well. But again, this is all open, based on delivering the plan, delivering the growth, delivering the incremental customers, and delivering the accelerated acceptance of our products in enterprise AI.

DDN has not been a really acquisitive company. Will that change?

We actually did a series of acquisitions about five or six years ago. We acquired the Luster file system from Intel. We acquired Tintri. We acquired Nexanta for its file system, as well as [IntelliFlash, formerly known as Tegile]. We did actually do a slew of acquisitions. And I think we learned that some acquisitions are amazing, and others are not as great.

I think at this point we're very focused on organic growth. We hired close to 300 employees, team members, in 2024, and we intend to actually accelerate that in 2025. So I think this is probably more the goal right now. It doesn't mean that we will not look at valuable or potential technology or market acquisitions as they come along.

You'll have enough ammunition if you decide to go out hunting.

Yeah, we can probably access more as well. Absolutely.

How much of this investment is aimed at AI?

All of it, 150 percent. AI is basically our lead. We're part of the inflection. I mean, this is really something where you build all your life something right, and focus on technology, team, people, and then literally all of a sudden you're in the middle of this. And literally what you've done for your life's work applies perfectly to what's going on. So it's a perfect storm for DDN. We have been building up a very, very large system at scale for 20-plus years. It's not easy. It's extremely difficult. And we've done it for the largest organizations for the past 20 years. And starting eight years ago, we started doing it with Nvidia. And so it's really a natural continuation of DDN, except that we're doing it at the enterprise level. So it has to be stable, it has to be fully working at 100 percent. That's clearly what we've been working on for the past four years. And now we have technologies to address very large training and large inference. We have technology lined up with digital twins. So we're perfectly lined up with whatever companies might require in the age of AI.

DDN is located in Chatsworth, just north of Los Angeles. Is the company close to the wildfires raging there?

Absolutely, very close to the fires. We're obviously taking good care of our team. We believe we have a couple of people that might have lost their homes, and so we already have plans to help them out. Because we do believe, first and foremost, in the end, that we are a family and we take care of our people, and we've demonstrated that in the past. It seems now that it is subsiding a little bit. But it is actually totally crazy. I personally have many friends that have lost their homes.

It looks like a war zone. I mean, it's insane. You can't really see it from the pictures. It's all around PCH [Pacific Coast Highway]. I mean, if you go to Malibu, there's nothing. Basically, it's like a war zone, rubble. To see that in our day or age is just crazy. Hopefully AI will try to help alleviate some of that in the future.

You co-founded DDN in 1998 with CEO Alex Bouzari (pictured). How did you know Alex?

That's an old story. We met, actually, the first day I went to Caltech [California Institute of Technology] to get my Masters degree. This is going back a long time ago, 40 or 42 years ago. Basically, on my first day at Caltech, my first class, Alex came to me and said, ‘Are you Paul Bloch?’ And I said, ‘Yes. And who wants to know?’ He knew I was basically coming from France. Pretty much every year, there's a couple guys coming from France to Caltech, and since Alex spoke French, he wanted to meet the new guys as soon as they showed up on campus. And we basically became very good friends. Actually, we became inseparable pretty much that first year. And after that, he went on to MIT and then Stanford, and in the meantime, I basically started working. I got involved in handwriting recognition. That's how I met Alex. It’s crazy. We've known each other now for about 40 or 42 years, and we've been actual partners for probably close to 40 years. It's a long partnership.