Why 3 cloud startup founders think it's worth competing against tech giants

June 27, 2018
BELLEVUE, WA—Being a cloud startup is like being a cockroach at an elephant's dance. At least that's what some people think, says Joe Duffy. He's the CEO and co-founder of Pulumi, an early-stage enterprise cloud startup that came out of stealth last week.

"You might get squished," Duffy explained at GeekWire's annual Cloud Tech Summit on Wednesday. He was there to discuss lessons he's learned as a startup founder in the space. He was joined by Michel Feaster, the founder and CEO of Usermind, and BitTitan founder and chief executive Geeman Yip.

With heavyweights like Amazon Web Services and Microsoft Azure in the space, founders of cloud startups are up against some of biggest companies in the tech industry. But ask a handful of founders if there's room for competition in the sector, even from the smallest of companies, and most of them will say yes.

At the conference, Duffy, Feaster and Yip touched on the future of cloud computing—and they also discussed why they decided to leave their cozy tech jobs in favor of creating their own ventures. Yip and Duffy are both former Microsoft employees, with Yip spending nearly nine years years at the tech giant as a program manager and Duffy clocking in 12 years, most recently as a director of technical strategy in the developer tools division. Feaster opted to start her own company after stints at Apptio, where she was employee number 17, and HP Software.

"I feel like [Apptio] was my MBA," Feaster told the audience. "By the time I founded Usermind I had enough experience both in seeing a company get built and being part of winning cultures, and knowing how to hire A-plus people."

Yip said his time at Microsoft and his experience at the helm of BitTitan can't be compared. It was the lure of a new challenge that led him down the entrepreneurial path, he said.

Usermind, founded in 2013, leverages the cloud to integrate enterprise applications and automate end-to-end processes, among other services. To date, the startup has pulled in about $45 million, reaching an $88.5 million valuation earlier this year. Pulumi, which was officially founded last year, announced a $5 million seed round at a $25 million valuation earlier this month. And 11-year-old BitTitan, which helps organizations adopt and manage cloud services, raised a $15 million Series A in 2016. 

As for any concerns of getting squashed by Microsoft, Amazon, Salesforce, Slack or any of the other heavy hitters that have entered the cloud computing space, Yip, Feaster and Duffy agreed the cloud has plenty of room for competitors of all sizes.

"The cloud is massive," Yip said. "Organizations like Microsoft aren't going to be able to satisfy everything ... There are opportunities that we can seize and not only improve the market but monetize it."

Feaster agreed with Yip's sentiment and added her own take. "If you're Amazon, you're facing more competition than ever before," she said. "There is no better time than now to create any cloud startup, particularly those oriented toward the business."

The VC perspective

Venture capitalists have their own opinions on startups in the cloud tech space. Chris Kelley, a principal at DFJ, and Tim Porter, a managing director at Madrona Venture Group, spoke on a separate panel at the GeekWire summit.

When asked if he would fund a startup that competes directly with Amazon Web Services, Kelley said, "The best entrepreneurs don't look at some top-down macro picture. They start a company because they know a pain, they understand that pain and they have such a burning desire to start that company. So if a founder says, 'Hey, we are going to take on AWS'... If they have the right approach, then absolutely."

Porter was a bit less enthusiastic about going head-to-head with Amazon or Microsoft.

"That's one of the trickiest parts about funding the area," Porter said. "One of the most important questions is why should this exist, you know, separate from what Amazon or Azure is going to offer, and sometimes that's a reason not to invest."
 

Learn more about Usermind, BitTitan and Pulumi.

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