

Rackspace Buys Server Management Platform Cloudkick (YC W09) - wouterinho
http://techcrunch.com/2010/12/16/rackspace-buys-server-management-platform-cloudkick/

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dotBen
As an on/off CloudKick user _(long story)_ my concern is that RackSpace has
purchased the company to obtain performance and metric data for its
competitor's serving solutions. If I'm right, expect to see them reduce the
price and/or increase the allowances of the free tier in order to obtain more
data.

This is always a problem when a company is purchased by one of the vendors it
sits above in the value chain, esp when impartiality and independence is
important in a space such as vendor monitoring.

I can't see RS buying CloudKick for internal monitoring of its own customer's
servers and instances because they would already have a mature solution by
now.

I'm not sure I want to be providing RackSpace with performance data of my
servers running on their competitor's instances, the CloudKick agent is placed
to send _(albeit transparently)_ all sorts of data back to RS. And don't be
surprised if other vendors raise concerns to this effect too.

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pquerna
Hi, I'm Paul and I worked at Cloudkick / am now a Racker.

I just want to respond to one point.

    
    
      > I can't see RS buying CloudKick for internal 
      > monitoring of its own customer's servers and 
      > instances because they would already have a 
      > mature solution by now.
    

The intention is to use Cloudkick to monitor things like this. Rackspace has
many existing internal solutions, but they have many issues that Cloudkick
helps knock out, even for monitoring their internal infrastructure.

~~~
dotBen
Well if RackSpace, an industry veteran with 12 years of serving experience and
$600m+ annual revenues, feels that a two-year old venture funded startup
offers superior monitoring functionality than that says a lot about the
company's internal processes and development priorities.

 _(that's not a disrespect to CloudKick, but an examination of scales of
economy)_

But whatever. If this is about bolstering RS's own monitoring does that mean
CloudKick will no longer be monitoring 3rd party vendors?

I'm guessing CloudKick will still continue to be more than happy to monitor
Amazon EC2, Linode, GoGrid, etc out of the box.

And so even if this acquisition is going to help RackSpace's own monitoring,
the point still stands that RS now has a massive competitive intelligence
operation going on here too. If the data is available inside the company then
it even has a duty to shareholders, as a publicly listed company, to make the
most out of that data to enhance profits.

~~~
davidu
Strong Disagree. Great products often have to come out of small teams and
companies. Often times it's even former employees who create those comapnies
and are re-acquired!

This is why Cisco acquires companies started by former Cisco employees on a
regular basis that some folks have been acquired into Cisco 3 or 4 times in
their careers!

Also, the competitive intelligence is not as useful as it may seem. Data for
the sake of data isn't valuable. And when you figure out what they could turn
it into, it doesn't seem like it would show much more than economic and market
forces already show, even if CK got to scale.

~~~
dotBen
Yeah that wasn't the point I was making - of course innovation rarely comes
from big companies.

My observation was just if you are a $600m/year web serving infrastructure
company than a core competency should be monitoring. And thus if a two year
old scrappy startup can build out better monitoring, what on earth have
RackSpace been building and relying on for the past 12 years?

On the competitive intelligence I think it's insanely useful for RackSpace.
Down to shit like being able to monitor up-stream connectivity and routing of
other providers and then being able to cross-sell their own proposition
knowing the weak points of the current 3rd party solution.

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po
My main complaint with cloudkick has always been the wide price gap between
the free account and the first paid version. I would have paid for their agent
based service for a few of my projects but at $99 a month for the cheapest
version, it would have cost over 5x what the server it was monitoring cost.

I think they would have grown much faster with a smoother price curve. Make a
plan with 2 or 3 servers of full monitoring for $30 a month to grab the low
end of the market when people are just starting and putting in the
foundational pieces of their technology stack.

Overall though, they're really good. They seem to have done plenty well
anyway. Congratulations.

~~~
mathgladiator
That's why I am writing my own: <http://crondom.com/>

I wanted very basic things (namely application event monitoring for fraud), so
I built my own analytics package around cron jobs.

~~~
po
I saw you promoting this before and to be frank I looked at it and didn't
understand what it would be good for. I thought, "Oh, ok so it's like a cron
task that's easier to manage but you pay for" and then filed it away deep in
my brain under "Maybe someday I'll need that"

Maybe I'm mistaken but I don't see how it is even remotely similar to what
these monitoring services provide. Can you explain that better?

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tomhoward
Couldn't have happened to a better bunch of guys. Really great news, congrats
gents.

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mbreese
I wonder what this will mean for Cloudkick's support for other clouds...

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bretpiatt
From the post on the Cloudkick blog, "We are committed to continuing support
for multiple clouds within the Cloudkick tools. This means no matter which
cloud infrastructure vendor you choose or what data center you have physical
servers in, you can continue using Cloudkick."

For some background Jungle Disk still supports multiple clouds as well.

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pdx
This is nothing against cloudkick. I've never even been to their site. I'm
sure their service is amazing. My question is a general question that I ask
almost every time I see a company get bought.

The question is, "Why buy, when you can build?"

Let's say I'm Rackspace. I have a cloudkick account that I used when I was
evaluating them to see if I wanted to buy them. I know exactly what they
offer.

So, let's say I take that and I create an engineering specification. Build a
service that does this, this, this, and this, duplicating cloudkick, right
down to the screen layout of the dashboards, if you're so inclined.

Now, go hire 10 engineers. No, make it 20. Now hire 5 project managers. Pay
each engineer $100K + benefits, say they cost me $150K per year. Pay each
project manager $150K + benefits, say they cost me $200K per year. So now I
have 20 engineers and 5 project managers whose combined salaries + benefits
cost me $4 million a year. Let them work for two years. For $8MM, I have my
own cloudkick, right?

Why would I pay more than $8MM? Perhaps they didn't, I don't know. Again, my
questions isn't about cloudkick. It's about why you see companies make the buy
decision, when it often seems like it would be well within their ability to
build it themselves, if they are so willing to spend money.

~~~
tptacek
(1) Building is more expensive than you think it is. For instance, if you're
not staffed to build something, you have to recruit. Recruiting is dreadfully
slow and painful. "Go hire 10 engineers" could take a year.

(2) Building (obviously) takes more time; the time you spend building is time-
to-market that you're conceding to competitors. When you buy a competitor,
that gap is erased; you get the benefit of their earlier time-to-market.

(3) Building comes with enormous risks. Deciding to build a cloud monitoring
platform is not the same thing as executing on a cloud monitoring platform
that the market will embrace. It may in fact be more likely that you will, on
some important but perhaps subtle axis, fail utterly. Now you've made a huge
investment in your target market and gotten negative returns.

(4) Acquirees are proven in the market. If an acquiree sucks, you buy one of
their competitors (unless they suck on an axis you can readily remediate, in
which case you probably get a big discount).

(5) Acquirees come with customer traction.

~~~
OmarIsmail
I think this is a fantastic post, not just in response to this question but as
a response to "Why can't company G just make something like it and take you
guys out?"

Fundamentally, and quite succinctly, you've explained why building a
successful business/project/technology is hard. And because it's so hard,
those that have made something successful and with traction have something of
value.

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revorad
Merry Christmas, YC!

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ericflo
Awesome news for both CloudKick and Rackspace. For what it's worth, I hadn't
really tried out CloudKick before, but tried it after today's news...I'm quite
impressed. I really hope Rackspace rolls this functionality into their own
offerings.

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OoTheNigerian
YC is on a roll. Congratulations to all involved.

Now back to work as i wait patiently from my turn. :)

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vidar
Price anyone?

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paraschopra
Based on 2.5 mil they have raised, price would be north of $25-30 mil. Great
job for a 2 year old company!

~~~
bluelu
Do you think it's that much with amazon offering a monitoring solution now as
well.

~~~
paraschopra
In fact, I think the acquisition would have been in $50 mil range simply
because VCs otherwise won't allow the sale. If they raise $2.5 mil at say
$5-7.5 mil post money valuation, then for making 10x VCs would only say yes to
an offer of $50-75 mil.

~~~
bl4k
VCs may not have had a say - which has become more common, esp after only a
single round.

Rackspace don't really do inflated acquisitions - they paid $18M for Slicehost
and Jungledisk (combined). Cloudkick raised $2M back in April, so you would
think that the price would be more around $15-20M.

Either way, congratulations to the team, RS and to YC. CK is a great product.

~~~
vidar
I am going to guess 30m, give or take a few bucks.

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joetyson
Congrats cloudkick! Rackspace is getting an awesome product and even more
amazing team.

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johnyzee
Score another for YCombinator.

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ConceptDog
Good for them. Good toolset, good platform. Really needs an iPhone app.

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foobarbazetc
Let's hope the insane CloudKick pricing is looked at by RackSpace.

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geekinthecorner
Rackspace is desperately in need of as much help as they can get. Whereas the
rest of the industry (Softlayer, etc) spent the last five years building out
automated infrastructure, Rackspace spent it mostly on sales. As a customer
with dozens of servers at Rackspace, and hundreds at Softlayer, the difference
is night and day.

I feel bad for Cloudkick as a company, though. San Antonio is a million miles
away from San Francisco, culturally. Good job on having an exit, good luck on
not hating yourselves in a year.

~~~
Greenisus
I've been working on mobile apps for Rackspace from San Francisco for a long
time, and I have to disagree about the SF/SA cultural difference, at least in
this context. While San Antonio is definitely vastly different from San
Francisco, the culture within Rackspace is certainly compatible with Cloudkick
and most other Bay Area tech companies.

