Open source software is now big business. Last year, Red Hat became the first $1 billion open source company, and there are dozens — if not hundreds — of companies competing for second place.
Attitudes towards open source software have changed so much in recent years, some outfits are now swimming in venture capital. Code hosting service GitHub grabbed $100 million dollars from Andreessen-Horowitz this past July. 10gen — maker of the MongoDB database — has raised $81 million. Cloudera — one of several companies developing the open source big data system Hadoop — has stuffed $141 million into its war chest.
On Tuesday, the Portland, Oregon based IT automation company Puppet Labs announced that it had raised $30 million from tech giant VMware, and that figure actually seems small. It puts the total amount raised by Puppet Labs at “only” $45.5 million. But this is hardly a lean investment.
Puppet Labs makes open source tools for automatically configuring servers. As companies have added more virtual machines to their data centers, they’ve been turning to tools like Puppet to manage them. It plays right into two of the other big trends in corporate IT: virtualization and cloud computing.
According to founder and CEO Luke Kanies, that $30 million investment is sign of how well the company is doing — in more way than one. VMware likes what’s it’s doing, but it doesn’t need than astronomical sums raised by the likes of Cloudera and 10gen. “We’ve gotten more cash from customers than we’ve gotten from investors,” he says. “We’re cash-flow positive. We’re not deep in debt and trying to figure it out.”
Why does the company need any funding at all? It’s expensive to get and keep enterprise customers. GitHub was profitable before it took $100 million in funding, and some new-age enterprise companies are raising even more. Dropbox has raised over $250 million.
There’s also the fact — not mentioned by Kanies — that more companies are moving into the infrastructure automation market. There’s Puppet’s long time rival Chef, which is commercialized by the Seattle company Opscode. Dell developed a tool called Crowbar, which is based on Chef. Canonical, the company behind Ubuntu, built a deployment automation tool called JuJu. And then there’s CFEngine, which came before Puppet Labs. More competition means a greater need for both marketing and engineering.
To bolster the product in the face of increasing competition, Puppet Labs also announced a partnership with VMWare. Specific integrations have yet to be announced however. “We’re each dedicating resources to further integrations,” Kanies says. “But we didn’t want to tie getting more integrations out the door as a contingent on announcing the partnership.”
He also emphasized that Puppet Labs is still working closely with the OpenStack project, which is developing open source cloud tools that compete with some of VMware’s own offerings.
Open Source Outfit Bags $30M in Funding — And That Seems Small
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Open Source Outfit Bags $30M in Funding — And That Seems Small
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Open Source Outfit Bags $30M in Funding — And That Seems Small
