
Chef Software Raises $40M in Series E Funding - GrinningFool
https://www.chef.io/blog/2015/09/09/chef-raises-40-million-in-series-e/
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wspeirs
> "Chef’s business is growing exponentially with annual recurring revenue
> growth accelerating as the company scales"

Makes me wonder why they needed the money.

> "This new round will allow Chef to extend its leadership in the DevOps
> market by expanding Chef’s operations globally and accelerating product
> development amidst surging customer demand"

Maybe I'm just cynical, but doesn't really tell me too much.

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tptacek
This question, every late-series VC round. I think the answer is:

They ostensibly don't _need_ the money, but they've built a machine that takes
a nickel and spits out a dime, and so the more nickels they can get their
hands on, the more money they'll make.

~~~
dave_sullivan
But what are they going to do with all those dimes when they run out of
nickels?

Seriously though, it does seem to be possible to buy revenue, buying profit is
another matter. I suspect these companies are all hemorrhaging cash--while
they can show strong revenue growth (btw is that growth linear or better with
the amount of money invested? i doubt it), they still need the money to stay
in business and support all the contracts they're closing.

Also, interesting relationship between money and terms. The more money you
get, the worse the terms. The argument of "raise money while it's cheap" (IE,
because you get better terms) works for what facebook in '07 when they got
$240M for 1.6% from MSFT. For most of these big fundraising rounds though,
that money is not cheap.

~~~
tptacek
I don't follow this comment at all. What does this have to do with profit and
revenue? If I am profitably selling something direct in Chicago, and I have
the choice of waiting for enough profits to accumulate to light up an NYC
sales office, or I can take $5MM and light up NYC, SF, Atlanta, and London,
then I am in fact in a position to "buy profits".

Similarly, if I'm doing mass-market promotion limited by budget and have a
cost of customer acquisition that's far lower than my customer LTV, I can
slowly accumulate enough proceeds from my business to gradually increase my
marketing spend, or I can take $5MM to go nuts with it. Again: so long as the
metrics stay steady, I am "buying profits".

It's not a mystery. There's no law that says that straightforward things you
do with VC money can't generate profits. In fact, the premise is the opposite.

~~~
dave_sullivan
Sure, I can be more specific.

First I was suggesting that the money printing machine you allude to will
sooner or later get too big to support its weight, at which point you'll be
left with a bunch of dimes (or rather, companies that need to raise more to
live but can't).

I also suggested that the popular narrative of "raise a huge round because
money is cheap" is misleading and founders in these large rounds are actually
giving up large amounts of control. That's more a general, purely anecdotal
observation.

My point re: buying revenue but not profits... I think I'm more saying "More
money will not make your business more profitable. But it can help book
sales." If your metrics all work and you really are a profitable business
already, that may be be made more scalable by more money. But if you're
unprofitable, even accounting for "growth mode", more money isn't going to
improve that by itself. My personal opinion is that many companies are showing
impressive revenue growth but glossing over core profitability, and these
companies will have a tough time fixing that.

~~~
mbesto
> _" raise a huge round because money is cheap" is misleading and founders in
> these large rounds are actually giving up large amounts of control. _

When the money is cheap it means they _aren 't_ giving up control relative to
when money is expensive. There is a phenomenon in tech VC right now, which is
the money is beholden to the tech talent and not the other way around. That's
not usually the case, historically speaking. Not to mention, some of these
rounds are liquidity events for founders who are looking to cash out
personally (i.e. look at Groupon's $800m IPO raise and follow the money).

> _My personal opinion is that many companies are showing impressive revenue
> growth but glossing over core profitability, and these companies will have a
> tough time fixing that._

I see what you're saying, but don't think it's necessarily true. Branding and
network effects are real things. That's why finance is loving tech right
now...if you can buy your land grab and then created a castle with a moat over
a 5-10 year time period, there are some serious rewards of establishing a new
brand with longevity at relatively low risk.

There's going to be a time (soon) where profitability does matter, it's just
not now.

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jMyles
I didn't even realize they weren't called opscode anymore.

What an interesting space - the dynamic between Chef, Puppet, Salt, and
Ansible seems to be a textbook example of healthy and productive competition.

~~~
PlaneSploit
I met their CEO a couple years ago - seemed like a good guy. It always seemed
to me like their new name is an SEO nightmare, though.

~~~
jonknee
A Google search for "chef" has them as the #2 hit (both logged in and in
Incognito so it's not just because I'm a programmer). Seems like they have the
SEO under control.

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proksoup
That's interesting that you saw them as #2 in incognito. I just searched chef
in an incognito window and got them as #1.

I wonder if my assumption about incognito search results being non-
personalized is false.

~~~
jonknee
I think it's probably geography. I'm in Seattle FWIW. The number one hit is a
movie from IMDB: "Chef (2014) - IMDb".

The SEO shouldn't actually be too tough because people are quite a bit more
likely to link to Chef the company using the word "chef" than anything about
cooking.

And hey, Google went with "Go" which is nearly impossible to SEO and it worked
out.

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vezzy-fnord
_And hey, Google went with "Go" which is nearly impossible to SEO and it
worked out._

Though they do have the benefit of being Google. A significantly smaller team
might have had better success than the original Go!, but that's not saying
much.

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BogusIKnow
I know people use Chef for configuring Docker,

but my feeling is that Docker killed Chef and Puppet mainly. Many people I
speak to today think Chef and Puppet were in the end a unmanageable idea. Just
what I hear.

~~~
jamesblonde
Chef and puppet have great support for parameterization of software
installations. Docker does not. Until such time as Docker properly supports
parameterization, they still have a role to play, Imo.

~~~
BogusIKnow
I think either people use something like ectd for config inside Docker or
configure Dockerfiles, sometimes with Puppet as a templating engine.

