Why We’re Pursuing a Significant, But Overlooked Market
In August 2006, Amazon posted a one-paragraph announcement that it was launching something called Elastic Compute Cloud (EC2) to bring computing power to the cloud. EC2 joined its recently-launched cloud storage service, S3, to set in motion what would become AWS. The rest is widely-covered history.
What’s been less covered is a segment of the market that AWS does not focus on — the thousands of mission-critical applications that most people thought would always be stuck in the datacenter. It’s not as fun to talk about those “on-premises,” back-office apps that are the heart of an enterprise’s operations.
But back in 2006, a small team in Amazon’s Seattle backyard saw an opportunity to serve those overlooked, mission-critical apps that would eventually need their own path to the cloud. We set about building a special cloud for them. That was the beginning of Skytap.
Today, Skytap is reaching its biggest milestone yet as a company. We are announcing our Series E funding round, led by Goldman Sachs and including existing investors Insight, Ignition, and Madrona. This comes during a period of accelerating growth for our business—total sales more than tripled year-over-year in Q2. Use of our cloud has increased 10x in the last three years. All of our investors are confident in Skytap because they recognize our ability to capitalize on a significant — and overlooked — market opportunity.
Skytap solves a messy, urgent challenge for enterprise IT. We all know AWS, Azure, and the other hyperscale providers are compelling services for building and running new cloud-native applications. But these services combined will still be less than 25 percent of total IT spend in 2020, leaving more than 75 percent of IT budgets tied up in mission-critical applications trapped in the data center.
Skytap frees those traditional applications from the data center and brings them into our cloud. Once there, our unique environments approach enables companies to modernize the way they manage their infrastructure, evolve development with agile and DevOps processes, and extend application architectures with new cloud services. Skytap Cloud enables customers to combine the best of their traditional apps with cloud services to create hybrid applications best suited for ongoing modernization. The end result is that our customers increase business agility and maximize existing investments.
Goldman Sachs and our existing investors love the product-market fit we’ve created in a huge, underserved market. But we have more hard work in front of us.
The next step in our journey begins where the last left off — with our customers. We’re continually expanding our service capabilities to modernize a wider range of traditional applications. That’s why we built the only cloud to support AIX. At the other end of the spectrum, we enable customers to integrate containers into their workflow and manage them side-by-side with traditional application architectures. We have an ambitious roadmap over the next year, a deep team of technically excellent product and engineering people, and a ton more to hire.
At the same time we’ll be increasing our sales presence and enhancing our marketing efforts. Building on our thriving channel with IBM, you’ll soon hear about work we’ll be doing with VMware. Our ecosystem will continue to expand as we give enterprises an ideal bridge to the cloud that can securely connect to any other cloud or data center. There’s much more to do and we are intently focused on scale and execution.
This is an incredibly exciting time for Skytap and our hundreds of enterprise customers. We’re thankful for our employees’ unwavering commitment, and for the trust and support of our customers, partners, and investors.
Now it’s back to work.