DockerCon 2015: Outside the Echo-chamber

DockerCon tore through SF last week and the feeling is that we are at the apex of the hype cycle. Fear not, we at Redpoint are here to (attempt to) distill signal from noise. Here’s a recap of the top story-lines as we see them along with some thoughts…

You down with OCP…?!

What happened: Docker and CoreOS got on stage, kissed and made up and announced the Open Container Project (‘OCP’). OCP is a non-profit governance structure, formed under the Linux Foundation, for the purpose of creating open industry standards around container formats and runtime. You may remember back in December ’14 CoreOS made headlines by announcing rkt, an implementation of appC, the company’s own container image format, runtime and discovery mechanism, which, in contrast to Docker’s libcontainer, was open, both technologically and in its development methodology. Then in May at CoreOS Fest, CoreOS’s inaugural conference, momentum for appC appeared to be gaining steam and image format fragmentation seemed inevitable. Instead, a mere seven weeks later, it appears Docker and CoreOS are willing to put aside differences to work together (and with the likes of Google, Amazon, Microsoft, Red Hat, and Intel) towards an open container spec.

Our take: The big winner is the broader container ecosystem. There are at least half dozen credible alternatives to Docker’s libcontainer emerging, and while competition is generally a good thing, the introduction of multiple different image formats creates ecosystem fragmentation which constrains customer adoption and broader momentum. Consolidation around the OCP spec will ensure interoperability while enabling vendors to continue innovating at runtime. More importantly, by agreeing on low-level standards, the community can move on to solve higher-order problems around namespaces, security, syscalls, storage and more. Finally, the loser in all this appears to be the media now that there’s, at very least, a ceasefire in the Docker-CoreOS war.

Docker Network and more dashed startup dreams

What happened: In early March of this year Docker acquired Socketplane to bolster its networking chops and the fruits of that acquisition were displayed in a new product release called Docker Network, a native, distributed multi-host networking solution. Developers will now be able to establish the topology of the network and connect discrete Dockerized services into a distributed application. Moreover, Docker has developed set of commands that enable devs to inspect, audit and change topology on the fly – pretty slick.

Our take: The oft-forgotten element to enabling application portability is the network – it doesn’t matter if your code can be executed in any compute substrate if services can’t communicate across disparate network infrastructures. Docker’s “Overlay Driver” brings a software-defined network directly onto the application itself and allows developers to preserve network configurations as containers are ported across and between datacenters. The broader industry implication here is that Docker is continuing to platform by filling in gaps in the container stack. The implication for startups? You will NOT build a large, durable business by simply wrapping the Docker API and plugging holes.

Plug-ins and the UNIX-ification of Docker

What happened: Docker finally capitulated to industry demands and announced a swappable plug-in architecture and SDK which will allow developers to more easily integrate their code and 3rd-party tools with Docker. The two main extension points featured were network plugins (allowing third-party container networking solutions to connect containers to container networks) and volume plug-ins (allowing third-party container data management solutions to provide data volumes for containers which operate on stateful applications) with several more expected soon.

Our take: For a year now there’s been an uneasy tension between Docker and the developer community as Docker became less a modular component for others to build on top of and more a platform for building applications in and of itself. The prevailing fear was that in Docker’s quest to platform, it would cannibalize much of the ecosystem, create lock-in and stifle innovation. Docker’s party line has always been that “batteries are included, but swappable,” implying you can use Docker tooling out of the box or swap in whatever networking overlay, orchestrator, scheduler, etc. that works best for you.  The plug-ins announcement is a step in that direction as it appears Docker is finally not only talking the UNIX philosophy talk, but walking the walk.

Container Management Mania

What happened: Whether it’s called “containers as a service,” “container platform,” “microservices platform” or plain old “PaaS”, it’s clear that this is the noisiest segment of the market. We counted no less than 10 vendors on the conference floor touting their flavor of management platform.

Our take: Everything old is new again. The evolution of container management is analogous to that of cloud management platforms (“CMPs”) when virtualization began invading the datacenter. There were dozens of CMPs founded between 2006 and 2010 the likes of Rightscale, Cloud.com, Makara, Nimbula, etc. Several have since been acquired for good, but far from great, outcomes, and the sea is still awash in CMP vendors competing feature for feature. Correspondingly as the compute abstraction layer moves from the server (hypervisor) to the OS (container engine), a new breed of management platform is emerging to provision, orchestrate and scale systems and applications. Will the exit environment this time around mirror the previous cycle?

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Stepping out of the echo-chamber, the big question remains around adoption. There are some technological gating factors that will inhibit enterprise deployments in the short-term – namely persistence, security and management – but the overwhelming constraint holding back containers appears to be general lack of expertise and established best practices. The good news is that these are “when” not “if” issues that pertain to ecosystem maturity, and the steps taken by Docker last week will only help accelerate that process.

With the groundwork laid, we see an exciting year ahead for the container community.  The inevitability of container adoption only feels more inevitable now.  There are many hard problems to solve, but hopefully (fingers crossed) there is now more alignment within the community.  Start-ups and large enterprise companies alike can begin, in earnest, the real work required to drive broad adoption of this technology in datacenters.  Hopefully we will look back a year from now and feel like this was the year that the technology moved beyond the hype phase to real adoption.


Backing Collective Health

I don’t like my existing health plan.  I have good coverage and access to great doctors, but I still find the overall experience to be really frustrating.  Every time a member of my family sees a medical professional, an onslaught of mail follows providing a lot of data, but very little insight.  “THIS IS NOT A BILL” is stamped over the countless statements I receive, but in the barrage of numbers there is no clear explanation of benefits or a summary of where I stand relative to my deductibles.  Deciphering the communications takes way too much time and I have an uneasy feeling that somehow I am getting screwed.   The web experience for customer service and support is equally baffling, so much so that I most often opt to calling customer service and sitting on hold for a while to get basic questions answered.

What’s worse is that as an employer, I have very little control of building the health care plan I want for my employees.  Outside of very large companies, businesses are stuck choosing from a limited set of plans that aren’t customized or differentiated in any meaningful way.  Aside from payroll, healthcare is the single most employee benefit a company provides and, by and large, their employees aren’t really satisfied.

Now imagine a health plan that provides great coverage and access to the best doctors, while also providing an incredibly easy to use web and mobile interface to access coverage data, deductible information, and even anticipated costs of pending procedures, etc.  As an employer, imagine having the ability to build your own plans optimized to your employee base and offering truly differentiated benefits.

In an effort to make this a reality, we are pleased to announce our investment in Collective Health.  Collective Health is a technology company that has built a powerful software platform and partnered with leading healthcare networks to provide a breakthrough healthcare experience for employees and employers. It is the healthcare plan I want and I believe you will too.

While we were drawn to the product and market, as always, our primary motivation is the people.  Founders, Ali Diab and Rajaie Batniji, have built a remarkable team bringing to together data scientists, designers, software architects, healthcare experts, and actuaries uniquely suited to take on the task of building a better health plan.  It is a bold idea and we love partnering with teams with huge ambitions ready to face whatever challenges may come.  We are thrilled to partner with them on their journey and look forward to helping discover how good a health plan can be.


Data-Driven Applications: The Next Generation of Big Data by John Walecka, Scott Raney and Chris Child

In a sign of things to come, a few months ago startup RelateIQ announced that it has raised $40 million in venture financing, the largest amount to date for an emerging class of enterprise applications driven by big data.  These applications combine the flexibility of SaaS with intelligence gleaned from big data that help users make quicker and better decisions in their jobs virtually every day.

It’s a big bet in a space that is just beginning to show its enormous potential. Up to now, big data has been defined by players like Palintir, a leader among companies focused on addressing shortcomings in the enterprise infrastructure. Specifically, these big data infrastructure companies have enabled complex organizations and businesses—from Homeland Security to Wall Street–to analyze and utilize their treasure troves of information. To date, the market for these innovators tops a hefty $16 billion, according to IDC research.

But here’s the thing:  Much of the value derived from these technologies thus far is primarily accessible only through data scientists and engineers. They spend countless hours culling through and then analyzing information to reap the most meaningful insights they can. Business users, charged with making split-second decisions every day affecting everything from sales to marketing to finance, have been left waiting—and wanting.

Until now, RelateIQ is just the latest in a new breed of so-called Data-Driven Application upstarts poised to fill the gap. They are coupling big data with machine learning to fundamentally change the way business users make decisions. In the case of RelateIQ, which targets customer relations management (CRM), the company hopes to make it simple for users to track and manage all their business relationships by analyzing data from call logs, emails and calendars to recommend follow ups, optimal times to reach out, and make sure that no promising relationship is overlooked.

If everything goes as expected, virtually every category of enterprise applications will be transformed by the insights automatically derived from a multitude of data sources. In just the last 12 months, an estimated $150 million has been spent funding startups focusing on everything from security to ITSM to advertising to human resources.

Their missions follow much of the path already blazed by large, consumer-facing Internet companies, such as Facebook, Amazon, Netflix, and LinkedIn. They have leveraged the massive amounts of data they collect and process to provide friend recommendations, personalized content, suggested products, and to help target potential new employers and employees. These processes have led to smarter, faster and more strategic decision-making.

Business users increasingly want the same level of sophisticated, quick insights powered by smarter software. And they are likely to get them from the dozens of companies sprouting up across the country.

This new generation of big data enterprise startups is a natural evolution from what began in the late ‘80s with the emergence of client-server companies. Peoplesoft and Siebel provided packaged software to help companies manage their employees, finances and customers. Then, about a decade ago, SaaS companies like Salesforce and Workday leveraged the Internet to change the way software is consumed and delivered. As powerful as the move to SaaS has been, it is clear that businesses today expect more than just automated processes. They want help making quicker, better and smarter decisions, every day.

That is where the powerful convergence of big data and SaaS comes in. Though virtually every sector will be moving toward these innovative software tools within the next few years, here’s a breakdown of some of the industries most likely to feel—and embrace—the transformation first:

  • Cybersecurity: Security companies have long focused on new technologies to defeat malware, but recently user behavior has come under scrutiny as well.  A new generation of companies like Fortscale is tracking user access logs to find unusual patterns that may show either a compromised computer or an employee with malicious intent, which they call the Snowden problem.
  • Human Resources: HR organizations have long embraced systematic and technological ways to measure employee performance and potential.  Recently, analytics has become part of this. Gild is one company taking a software developer’s entire online presence (including open source code but also social media profiles) and comparing it with known successful engineers at a hiring company. These profiles let them determine if an engineer is not just a good fit professionally, but also culturally.
  • Sales and Marketing: The art of converting marketing leads into sales leads and then bankable deals has always been a bit of black magic practiced by top sales people.  Infer is a company working to bring data science to the problem by building an enormous model of a company’s past leads to close deal conversion, and tying those deals to all kinds of outside data they can track down. Then, they use that model to predict which incoming leads are most likely to convert, and thus, where to allocate salespeople’s time.

The multi-billion-dollar opportunities for this next generation of big data innovators are as immense as the problems they are trying to address. And if they get it right, they will undoubtedly touch not just every function within a company but every person as well.


John Walecka and Scott Raney are partners at Redpoint Ventures, a backer of RelateIQ and Infer. Chris Child is a senior associate.


RelateIQ Joins the Redpoint Portfolio

We are very excited to announce Redpoint’s investment in RelateIQ, a SaaS platform that is turning the traditional CRM space on its head.  We have been admirers of the company (and very happy customers!) for some time and are thrilled to welcome them to the portfolio.

We began using the RelateIQ product last year and were blown away by its impact on our business.  At Redpoint, we are in the business of managing relationships with entrepreneurs.  To help managethese relationships, up until recently, we used a traditional customer relationship management tool.  While traditional solutions worked “ok”, we found them limited; they required considerable manual data entry and, most importantly, didn’t really help us do our job more intelligently.  Enter RelateIQ.  The team at RelateIQ has been busy building a fantastic product with several key innovations:

  • Automatic data capture.  With RelateIQ youdon’t have to manually input events (e.g., that you sent an email or had a meeting with a prospective customer); this is all automatically ingested into RelateIQ and associated with the relevant company/relationship entries.
  • Deep collaboration.  With RelateIQ you can see all communications between your organization and a prospective customer, including email, meetings and notes.   This keeps all team members in the loop so they have full context on the relationship – no more accidentalwire-crossing or unnecessary copying on emails.
  • Data insights.  RelateIQ uses its rich data set to help you manage your relationships better.  For example, if youforget to respond to someone’s email, RelateIQ will automatically remind you.  Another example is RelateIQ’s “Closest Connection” feature, which lets you look at your team’s network to determine who might be the best colleague to make a warm introduction into an account.

It is the data insights which have us so excited over the long run.  We see RelateIQ as a forerunner in an emerging category of data-driven applications.  These applications combine the flexibility of SaaS with intelligent insights powered by big data.  In the future, these smart apps will not only help automate processes, but also will help users make better decisions.

RelateIQ has very ambitious goals and they have the team capable of achieving great things.  The founders, Steve Loughlin and Adam Evans, have built a very talented team top to bottom and they have also spent considerable energy creating anamazing culture that has every team member invested in the continued success of the business.  It’s a fantastic place to work.

We have been happy users of the RelateIQ product for some time and are thrilled to welcome Steve, Adam and the entire RelateIQ team to the Redpoint family.  We look forward to working together for years to come.


Backing CyanogenMod’s Series B & Solving the Android Painpoint

Android has been one of the most extraordinary software movements in history.  When the product was launched in 2007, Andy Rubin and company radically transformed the mobile industry by open sourcing a powerful operating system that rivaled and, in some ways, improved upon iOS.  Mobile handset manufacturers and carriers quickly latched onto this movement in an attempt to capitalize on the smartphone revolution and challenge the Apple iPhone.  In a few short years, Android has became the leading smartphone operating system by market share and its influence continues to expand.

However, all was not well in the Android community.  The handset manufactures and carriers, desperate to build “differentiated” products, took advantage of the open source nature of Android to build custom user experiences.  Unfortunately for consumers, these efforts have been uneven at best.  In many cases, these phones are loaded down with bloatware (which impacts performance), are missing key features and don’t enable users to fully customize their devices.

In 2009, increasingly frustrated by the software handset manufacturers and carriers were providing consumers, Steve Kondik created CyanogenMod (CM) – an open source mobile operating system based on Android – that provides full user control and a number of very cool features.  What Steve started has grown into a full fledged movement.  Tens of millions of people have installed CyanogenMod and today there is a vibrant community propelling the project forward at an ever increasing rate.

To support this movement, Steve Kondik, Koushik Dutta, Kirt McMaster and their team started Cyanogen – a company whose mission is to promote and support the development of CyanogenMod and its community.  Their work, and that of the community of a whole, is helping accelerate device support and the development of great consumer features and services.

Earlier this year, Redpoint participated along with Benchmark Capital in a $7M Series A round to help get Cyanogen off the ground.  Since that time, the team has grown significantly and they have made substantial additions to the product.  In particular, this September, Cyanogen launched a “one-click” installer which dramatically simplifies the process required to install the software and brings it into the mainstream.

Today the company takes another big step forward by announcing a $23M Series B led by Andreessen Horowitz with participation from Benchmark, Redpoint and Tencent.  We are thrilled to welcome them and continue to work with the entire Cyanogen team to build the world’s best mobile operating system.


AOL Acquires Adap.tv

We are thrilled to announce AOL’s acquisition of Adap.tv.

We first invested in Adap.tv in 2007.  At the time, online video consumption was accelerating but monetization of these video views lagged behind. It was clear to us that there was a significant opportunity for a start-up building disruptive technology to address this problem of monetization. We met with a number of startups and while we were impressed with many of the entrepreneurs, the companies felt like traditional advertising networks and lacked differentiated technology.

About that time, we were introduced to Amir Ashkenazi. Amir was an accomplished entrepreneur having been the founding CTO of Shopping.com. We were immediately impressed by his vision for an online video monetization platform and subsequently invested in the company’s Series A and joined the board.

At first, Adap.tv was providing solutions to publishers helping them optimize yield from their ad network partners. Eventually the company evolved into a full platform enabling programmatic buying and selling of online video advertising. Adap.tv offers the most advanced programmatic solution in the market today and is fundamentally changing how video ads are bought and sold. 

I think the AOL acquisition highlights the growing importance of online video as consumption of video shifts from traditional media channels to the Internet. Premium brand and performance advertisers are making very significant commitments to this category, especially as it becomes a core part of media buying plans.  The acquisition also speaks to the strategic importance of programmatic buying and selling of advertising. AOL recognized Adap.tv represented the best opportunity for them to assume leadership in this increasingly important market.

We are thrilled for the entire Adap.tv team including founders Amir Ashkenazi and Teg Grenager. Their leadership and skill, in addition to that of the entire management team, was at the core of the company’s success and I am sure the primary motivation behind the acquisition. It was a pleasure working with the Adap.tv team and I can’t wait to watch their continued success!


Redpoint Invests in Twilio

As you may have heard, Redpoint has invested in Twilio. We have been admirers of the company for some time and are thrilled to welcome them to the portfolio.

By building an incredibly powerful and easy to use communications API platform with a disruptive business model, hundreds of thousands of developers have leveraged Twilio to build powerful cloud communication solutions. It is highly likely that all of you – at some point – have received a text or placed a call powered by Twilio. Twilio’s customers focus on what differentiates their own service, not having to concern themselves with scaling telephony infrastructure, investing in expensive hardware and managing complicated relationships with service providers.

Twilio is also a part of a broader trend towards services and APIs catering directly to developers. At Redpoint, we believe in the power of the developer in both early stage companies and large enterprises. More and more, developers are making critical decisions regarding the nature of the products they are building. Like Redpoint’s earlier investments in Heroku and Stripe, Twilio is at the forefront of this movement, and we can’t wait to watch what they will continue to do.

We are thrilled to welcome Jeff Lawson and the entire Twilio team to the Redpoint family and look forward to working together for years to come.


Consumerization of IT: Is the Traditional Enterprise Software Sales Model Dead?

Consumerization of IT: Is the Traditional Enterprise Software Sales Model Dead?

Imagine you are the CEO of a software company and one day you receive a call from a new customer congratulating you on winning a million dollar RFP.  A great day for any company and a great reward for what was likely a long drawn-out sales effort.  Now imagine that you had never spoken with the new customer before they called to reward you their business.  You had not responded to an RFP and you had not made a single sales call to the decision-maker.  The story may sound too good to be true, but this is a real account I heard from an executive at a fast growing software company. 

This isn’t an isolated case.  The secret to this success lies in the company’s go-to-market strategy.   They have embraced a high velocity, low friction sales model capitalizing on the consumerization of IT.  Instead of selling to the IT organization, they are leveraging consumer marketing techniques to appeal to end-users directly.   Through innovative marketing, a straightforward easy to use product and free trials, they build up a devout group of users who ultimately become advocates within their respective organizations.  These advocates effectively become the company’s best (and cheapest) sales people.  In the example above, a substantial number of end-users at the customer had been using the product, and deriving benefit from it, for some time.  They knew the strengths and weaknesses of the product intimately – far better than they could have gleamed from an RFP response or sales pitch – and when the time came to make a decision the answer was obvious.

As an entrepreneur, the leverage this model affords is very compelling.   Unlike the large up-front investments required to scale up expensive sales forces in traditional software models, this new class of business tends to be more capital efficient and, when it works, highly profitable.   It also expands the addressable market for most products to include small and medium-sized businesses – instead of just large enterprises – which can now be sold to profitably.  Of course, it isn’t applicable in every industry (e.g., telecom software sales), but the trend is undeniable. 

However, a lot goes into building this new breed of software company and we see many companies struggling with a number of key questions.  How do you best drive customer awareness, leads and registrations?  How do you balance product thoroughness with ease of use and simplicity?   How do you minimize the cost of supporting a free user?  Do you focus on small businesses or can you reach upstream into medium enterprises and even large corporations?  What is the best business model to employ – free trials, premium upgrades or usage based models?  While there is no one right answer to these questions, it is clear to us that a new class of entrepreneurs will successfully navigate these uncertainties and build meaningful and lasting companies. 

From my point of view, the most interesting question is how far can this model penetrate and transform enterprise sales.  It is early in the evolution of this market, but several companies such as SolarWinds and Intuit have demonstrated its potential.   Does this success spell the eventual end for traditional enterprise software sales as we know it?