- Mesosphere, a San Franciso cloud-infrastructure startup that once famously turned down an acquisition from Microsoft, is now on a $US50 million annualized run rate.
- CEO Florian Leibert says Mesosphere is on track to be a self-sustaining company, but won’t rule out future options including more fundraising or an IPO.
- While Mesosphere is often portrayed as a key player in “containers,” a trendy Silicon Valley technology, Leibert disputes the characterization.
In October 2015, San Francisco-based data center software startup Mesosphere made headlines when it was reported that the company had turned down a $US150 million acquisition offer from Microsoft.
Two years later, Mesosphere is around and kicking — something that still surprises Silicon Valley, Mesosphere CMO Peter Guagenti tells Business Insider. Guagenti says he regularly hears “nonsense” about Mesosphere being defunct, or otherwise doomed.
Today, Mesosphere exclusively reveals to Business Insider that it’s on a $US50 million annualized run rate, a measure of how much revenue the company will generate in the next 12 months if its numbers hold steady. And while Mesosphere doesn’t have to disclose specific numbers as a private company, it says revenue is tripling every year.
And while Mesosphere still isn’t profitable, the company says it’s heading in the direction of breaking even. With everything moving the right direction, Mesosphere CEO Florian Leibert tells us the company has lots of options.
In its four-year lifespan, Mesosphere has raised over $US122 million in venture capital, from investors including Andreessen Horowitz, Hewlett Packard Enterprise, Khosla Ventures, and even Microsoft itself. There’s enough of that cash left in the bank that Mesosphere doesn’t currently need more investment, though Leibert says that could change.
And when it comes to acquisitions, Leibert won’t rule anything out, but says Mesosphere has a future as an independent company, even through a potential (but not currently planned) IPO.
“I think we are well-positioned to be a standalone company,” says Leibert. “I don’t see any hurdles in the way.”
What is Mesosphere?
The origins of the company trace back to Mesos, a popular piece of free and open-source software, famously used by Apple to power the Siri virtual assistant. Mesosphere founder Ben Hindman created Mesos while at UC Berkeley, and brought it with him to a job at Twitter, working with Leibert and the other Mesosphere cofounders.
Mesosphere’s flagship product is the Data Center Operating System, or DC/OS, built on top of Mesos. As the name suggests, you install DC/OS on a bunch of servers — either your own, or a bunch of virtual servers in Amazon’s, Google’s, or Microsoft’s cloud platforms — and it acts as one, unified machine.
That Mesos pedigree has “gotten [Mesosphere] in the door in a significant number of enterprises,” says Rhett Dillingham, a senior analyst with Moor Insights & Strategy. Mesosphere customers include Royal Carribean International, Verizon, and Time Warner Cable. Leibert says around 25% of the Fortune 50 use Mesosphere.
The DC/OS pitch is as follows. First off, it makes it easier to roll out new data-center software, like the Cassandra database, Spark data-analysis tool, or Google’s TensorFlow artificial intelligence framework. A process that used to take weeks or months can take seconds or minutes, kind of like installing an app on your phone.
Second, because Mesosphere can run on any group of servers, it makes it easier to shift from data center to the cloud, or from one cloud to another, or any combination therein. If you’re just starting to think about moving your applications up from the data center to Amazon’s cloud, Mesosphere can let you do it piecemeal.
And, Mesosphere lets you squeeze more performance from existing hardware — Uber once explained how it used Mesos and Mesosphere to save a whole lot of money, versus either buying more servers or going to the major cloud providers.
The container wars
One side-effect of Mesosphere’s approach is that it makes it really easy for customers to deploy and run “containers,” a trendy Silicon Valley technology for building and managing applications at the scale of, say, Google.
The DC/OS product makes it easy, or at least easier, for companies to add and use containers. Forrester principal analyst Charlie Dai calls Mesosphere “one of the key players in enterprise container platform market.”
The problem, says Leibert, is that this leads to a perception of Mesosphere as being specifically in the container business, competing with the likes of hot $US1.3 billion startup Docker, which essentially created the current container craze.
Leibert believes containers are important, but someday soon, the technology will be so commonplace and commodotized that there won’t be any money in it. He calls it a “race to zero.”
Still, the company’s fortunes are tied in some way to software containers, at least for the time being. Recently, Mesosphere added support for Kubernetes — a technology for managing containers, originally invented at Google, that’s become the standard in the industry, putting pressure on Docker.
Dillingham says the move could be a “bridge” for Mesosphere, riding the success of Kubernetes to new heights, while also furthering what it’s already good at.
From Leibert’s perspective, this is all about helping customers bridge the gap between their own data centres and the cloud. In fact, he says, Royal Carribean is putting that concept to novel use: Each individual cruise ship is powered by servers running Mesosphere, which then dump their data back into the cloud when they get to port. That’s what Leibert is aiming for.
“We want to become the central plane for hybrid cloud,” says Leibert.
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