Microsoft tried to buy this hot two-year-old startup — and got turned down

Satya Nadella
Microsoft CEO Satya Nadella Microsoft

Microsoft tried to buy Mesosphere, a hot cloud computing startup, for as much as $US150 million — but Mesosphere turned them down, reports The Information.

Rumours of a Microsoft/Mesosphere deal first surfaced over the summer, when it came out that the tech giant was interested in Mesosphere’s technology for managing the growing market for running data centres at super-high efficiency.

Apparently, the deal fell apart when Mesosphere wanted more than the $US150 million that Microsoft was willing to offer, but couldn’t find another bidder willing to pay its desired price of $US200 million, per the report.

Instead, Microsoft and Mesosphere will continue their technology partnership, which integrates Mesosphere’s flagship Data Center Operating System (DCOS) product with the Microsoft Azure cloud.

DCOS is a commercial version of an increasingly popular free-and-open source project called Mesos that’s used by developers. Mesosphere founder Ben Hindman created Mesos while at UC Berkley. Hindman and the other Mesosphere founders brought Mesos into Twitter. Then co-founder Florian Leibert, who previously worked at Twitter, brought it to Airbnb.

Benjamin hindman apache mesos mesosphere
Mesosphere founder Ben Hindman YouTube

Mesosphere has benefited from the rising tide of “software containers,” a technology that’s currently very trendy with developers for helping them write their code once and run it anywhere, on any server infrastructure.

The hottest container software comes from a $US1 billion startup called Docker. But Mesosphere’s product helps manage and maintain all of those containers at huge scales, fitting in nicely with Microsoft’s newfound love for containers.

Thanks to this confluence of trends, Mesosphere has raised $US49 million in three rounds from VCs like Khosla Ventures, Andreessen Horowitz, Data Collective, and other big names. The Information report says that Mesosphere is currently fundraising, in the wake of a collapsed deal.

We’ve reached out to Microsoft and Mesosphere and will update the story if we hear back.

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