Telstra just invested $10 million in the company that secretly runs the internet

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Telstra just made one of its most important investments, pouring $10 million into, Nginx (pronounced “Engine-X”), one of the most important startups you’ve never heard of.

As it stands right now, Nginx’s flagship web server technology is immensely popular, with 150 million websites using it, total. This includes everyone from Netflix to Airbnb and Instagram.

In fact, 49.2% of the top 1000 busiest websites in the world use Nginx to handle the heavy lifting of delivering web pages to a browser, as measured by tracking authority W3Techs.

That’s far ahead of Microsoft’s competing IIS, which powers 6.8 per cent of those top 1000 websites, Google Servers, which claims 9.8%, or the Apache web server, which is still the most popular overall, but can’t match Nginx’s supremacy of the very top, with 26.6%.

Gus 1 nginx ceo gus robertsonNginxNginx CEO Gus Robertson

Even NASA used Nginx to power the website that streamed the footage from the NASA Curiosity Mars rover, under the crushing loads of millions of people trying to watch simultaneously.

Furthermore, Nginx has seen its star rise even further with the rise of so-called microservices — a Silicon Valley trend for building software from lots of little pieces, instead of one big one. Nginx’s technology plays a crucial role in coordinating all of those pieces, no matter what other vendor’s technology they’re using.

“We have been impressed with how NGINX has delivered improved capabilities and performance in application delivery, especially for video heavy sites, and sites experiencing high traffic volumes,” Telstra Ventures managing director Mark Sherman said.

“We believe they have significant growth potential thanks to their rapidly expanding technology leadership in the application delivery and deployment market.

“Indeed, we will actively look to work with them to expand their market reach to new geographies, including Australia and across the Asia-Pacific, leveraging on our extensive customer footprint.”

“We innovate around us,” says Nginx CEO Gus Robertson.

With the involvement of Telstra, Nginx is planning on taking its business international: Telecommunications companies like Telstra are big fans of Nginx’s technology, says Robertson, plus they have connections in Australia and beyond. And so, now is the time to go global, with Telstra’s assistance.

Room to grow

But Nginx’s popularity also puts it in a difficult position. Most of those Nginx fans are using the free, open source version of Nginx, where they never ever have to pay the company a dime for the software. It’s a similar struggle faced by hot companies like Docker and Canonical.

To actually make money, Nginx has a few menu items: First, Nginx Plus, an actual paid software product that goes beyond the free version and offers customers deeper tools for managing their web apps.

“Nginx Plus can do a lot more than just web serving,” Robertson says.

Second, it has a consulting business, where its team of experts go in and help customers install and manage their Nginx-based architectures. That’s especially important as companies move towards microservices, which can be a bold new world for companies used to building software the traditional way.

That business is growing quickly, Robertson says, with 300 per cent more revenue in 2015 compared to 2014 — though Nginx doesn’t disclose specific financials and he declined to comment on whether or not it’s profitable.

He does say that Nginx wasn’t actively seeking funding, and had enough funding to go on for a long while — Telstra came to Nginx with a gameplan for international expansion, and Nginx decided now was the time to seek funding after all.

Existing Nginx investors New Enterprise Associates, e.ventures, Runa Capital and Index Ventures all put cash in this round as well. Including this round, Nginx has raised $41 million in funding since its founding in 2011.

Still, Nginx is keeping things fairly lean. Even with all of those users, Nginix’s headcount only just broke 100 recently, Robertson says, and the company tries to avoid “bloat” by only adding those features that users really need.

“We’re not trying to patch too much in the product,” Robertson says. “We’re very discrete about the features we add.”

A big part of managing that involves Nginx’s community. Because the core Nginx software is open source, any developer anywhere can download it, tweak it, and upload their fixes and improvements back to the main source code. That, in turn, means Nginx Plus continually gets better, without the company having to spend as much time or money improving the core of the product.

“The open source model and community is a lift unto itself,” Robertson says.

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