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VMware ponies up $30m for Puppet Labs partnership

Getting down to serious – and heterogeneous – control freakage

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VMware injected a little money into systems management software upstart Puppet Labs in its third round of funding back in November 2011. But now the server virtualization juggernaut has its hands firmly up the backside of Puppet Labs as it has become one of the bigger investors in the company after doing the fourth round of funding, weighing in at $30m, all by itself.

Puppet Labs was formed back in 2005 by CEO Luke Kanies, and its first commercial-grade system administration product, called Puppet Enterprise 1.0, came out in February 2011; it could manage as many as 50,000 nodes in a network. In September 2011, Puppet Labs could reach out over the intertubes and manage virty servers running on Amazon's EC2 cloud (which is based on a custom implementation of the Xen hypervisor) as well as those running on VMware's ESXi hypervisor.

At the time of the third round of funding, when Google, VMware, and Cisco Systems all kicked in some dough, Kanies told El Reg that it had around 250 paying customers using its tools. Today, as VMware kicks in $30m, most of which is an equity investment but some of which is being used to put engineering resources on integration of Puppet Enterprise with VMware's various server and cloud tools, Puppet Labs has more than 700 paying customers and has tens of thousands of companies using its freebie version and tens of millions of aggregate nodes under management. The company has been doubling its revenues every year for a long time, says Kanies.

It's no wonder that VMware is interested in Puppet Labs, and it is also no surprise that VMware wants to own a bigger slice of the small firm, which has around 110 employees (up from 60 this time last year). VMware wants its stake to measure up against Kleiner Perkins Caufield & Byers, True Ventures, and Radar Partners leading the funding in the first three rounds. (VMware is not the largest shareholder in Puppet Labs, Kanies said, even after the injection, but he would not say who is.) All told, Puppet has now raised $45.5m in four rounds of funding, and incidentally, all of the prior backers wanted to kick in dough this time around and VMware asked for them all to back off and let it catch up a little and they did.

The wonder is why VMware didn't just buy Puppet Labs outright, but it may be hedging its bets that the Chef tool from Opscode, another upstart systems management tool maker that is trying to take on CA, BMC, IBM, and Hewlett-Packard in this stodgy part of the data center, also gets some traction in the market. VMware may also just decide to create its own tools for managing physical and virtual servers that span multiple hypervisors and multiple clouds. Thus far, VMware continues to believe it has the best cloudy stack and that it needs to work more on improving this than trying to cover all hypervisors and clouds. But now that VMware has a new CEO in Pat Gelsinger and CTO Steve Herrod has just left to join venture capitalist General Capitalist Partners this could change. Or not. VMware has billions of dollars to play with, a near monopoly on enterprise x86 server virtualization, and lots of options.

What Puppet Labs wants to do is take on the established incumbents in systems management, and what VMware wants to ensure with its investment is that it benefits from Puppet Labs' success and gets the control freak upstart to make sure that Puppet Enterprise integrates with its vCloud Automation Center, vCenter Operations Manager, and vCenter Configuration Manager.

Kanies wants to be very clear that the VMware partnership has in no way affected the product roadmap for Puppet Enterprise, but rather that both companies are doing incremental investment around the core product to make the tools work better. Puppet Labs will forge other partnerships and continue to have heterogeneous aspirations.

"We think that the market is changing and there is a shift going on right now," Kanies explained to El Reg. "There is a hole in the industry, with these big four IT management incumbents, but they are all pre-DevOps, they are all pre-cloud, and they are all before the consumerization of IT.

"One of our customers can get Puppet up and running and doing useful work faster than any of those guys can get a salesman on site. We think there is a real opportunity to stand shoulder-to-shoulder with those companies and build a new and independent management company that has the DNA of cloud and DevOps and consumerization. We're really focused on being that company, and that is why, for us, a partnership with VMware rather than an acquisition makes sense." ®

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