2nd Watch, a Washington state company that helps businesses move their IT infrastructure to Amazon’s cloud service, has raised another $10 million in less than a year. The company also has appointed a new chief executive as it grows to accommodate increasing demand.
“Really what’s pushed us this year has been continued enterprise adoption,” says co-founder Kris Bliesner, who is handing off the CEO title to Doug Schneider. Bliesner will be the company’s chief technology officer. 2nd Watch says it is seeing more Fortune 500 companies use its software and services to set up and manage cloud-computing infrastructure .
Top Tier Capital Partners led the Series C1 investment, which adds to the $23 million 2nd Watch raised last November. Earlier investors Madrona Venture Group and Columbia Capital also participated in the round. The company has now raised more than $37 million.
Bliesner says large businesses are becoming ever more comfortable moving essential pieces of IT that they used to run in their own datacenters to Amazon Web Services (AWS), which 2nd Watch deals in exclusively as an AWS Premier Partner.
“The confidence level has gone up in terms of being able to run production, line-of-business” applications, Bliesner says. “Before, people were definitely willing to run Web applications, campaign management and tools, maybe some big data analytics, or other things that maybe weren’t as mission-critical to traditional business operations. I think now that people are getting comfort around thinking of the cloud and AWS in particular as their datacenter, it really doesn’t matter what applications they run in it.”
That demand, from sectors including financial services, consumer goods, and retail, is keeping 2nd Watch busy. The company says its third-quarter bookings were up more than 600 percent from the same period last year, though it declined to provide absolute numbers. Asked about profitability, incoming CEO Schneider says the company is moving “in the right direction on that front, but it’s not our first and foremost priority.”
Rather, he says the four-year-old company is focused on building upon its leading position. It aims “to manage 10 percent of all AWS infrastructure consumed worldwide within a few years,” 2nd Watch says in a news release.
Schneider spent two decades in leadership roles at Web-hosting companies, most recently Verio, which went public and was later acquired by NTT Communications for more than $5 billion. He believes 2nd Watch can do a better job of selling itself.
“The company in some ways has just been so focused on dealing with delivering its service into the marketplace and really hasn’t lifted its head up and said, ‘Gosh, how are we really telling our message more broadly,'” Schneider says.
Translation: 2nd Watch will be investing its latest capital infusion in sales and marketing, but also in continued product development. Bliesner says the company has a suite of tools that help large businesses evaluate potential savings from moving to the cloud, and then execute the transition.
Bliesner says companies can expect to see a fast return on their investment in migrating to AWS—sometimes in less than a year. The ongoing price war between Amazon, Microsoft, and Google has benefitted 2nd Watch, as “it makes that ROI easier and quicker to get to,” he says. (Though not all companies have found AWS to be such a bargain.)
But does that also mean customers will be shopping around among the various cloud services providers? After all, new technologies such as Docker promise to make it easier to separate applications from the cloud infrastructure that runs them.
Bliesner says that while customers are interested in a multi-cloud strategy “to bounce vendors off each other for better pricing, better security, those kinds of things,” he isn’t seeing many companies shop around yet. That’s “simply because the platforms are dramatically different, especially when you start to talk about production.” He says AWS is still far and away the leading cloud platform for production applications, followed by Microsoft Azure.
“We do see, I think, over time, people wanting to leverage the concept of multi-cloud, the concept of containerization, Docker… as much as that’s possible,” he says. This is much easier to do with newly developed applications, he says, rather than legacy enterprise applications that may not work with newer technologies.
2nd Watch has about 85 employees spread between its headquarters in Liberty Lake, WA, just east of Spokane, and a growing office in Seattle, as well as outposts in San Francisco and New York.
