Microsoft is investing millions in a $1 billion startup that rejected its acquisition offer
Today, Mesosphere is announcing a new $73.5 million "strategic" investment, led by Hewlett Packard Enterprise, and with Microsoft listed as a "significant participant."
That brings Mesosphere's total investment up to about $122 million, with a reported valuation of well over $1 billion, and Silicon Valley kingmakers Andreessen Horowitz and Khosla Ventures also on the list of current investors.For HP Enterprise and Microsoft, sinking millions into a tiny venture-backed startup is an important strategic move, as both companies further their campaigns to help customers manage their data centers like the cloud.
And who knows? Maybe it'll kick off another round of bidding.
Mesosphere's flagship product, the Data Center Operating System (DCOS), is supposed to make it as easy to install applications on a huge data center as it is to open your garden-variety messaging app.
Customers like Verizon are using Mesosphere DCOS to manage their data centers. And Apple, Twitter, and Airbnb all use Mesos, the free software under the hood at Mesosphere, to wrangle the tremendous amounts of data that go into their products.
"They are running at a huge scale, an unprecedented scale," says Mesosphere CEO Florian Leibert.
Imagine how much harder it would be to get anything done on your iPhone if you had to choose which of its two processor cores each app would run on, or how much system memory to give it, before it would run. That's what installing software at the data center level can be like.
But install DCOS on your data center, the company promises, and it's as easy to get up and running on hot cloud technologies like Spark and Cassandra as it is to download Snapchat.
Better yet, install Mesosphere's software on clouds like Microsoft Azure or Amazon Web Services, and it can make your data center and your cloud infrastructure work just like one big happy computer.
Friends with benefits
With plenty of big businesses looking to balance the cost and scalability benefits of the cloud with the infrastructure investment they've made in to their existing data center investments, that's a strong sales pitch.
"Our technology is uniquely positioned to do that," says Leibert.
For Microsoft and HP Enterprise, that's a powerful attractor.
With technologies like HP Helion and Microsoft Azure Stack, these companies have banked their cloud strategies on the idea that their customers may be moving in to the cloud in fits and spurts, but they're not ditching the millions they've spent on data centers just yet.
So keeping Mesosphere as a friend is just good strategy. Microsoft, especially, has a strong relationship with Mesosphere, with the two working together on customer deployments.
Even after the acquisition talks were said to have fallen apart, the two companies still partnered (with additional help from the hot srtartup Docker) for the Microsoft Azure Container Service, which helps developers build more software faster.
"They were able to bring it to market so quickly with our technology," Leibert says.
Looking ahead, Leibert says that they're not planning to raise any more cash soon. And while Leibert boasts that Mesosphere has strong customer traction among the Fortune 500, it's not hard to see Microsoft or HP Enterprise making another bid for Mesosphere and its tech.