As an expansion stage investor, it is quite frustrating to see my early stage friends invest in really interesting new technology ideas while I have to watch and wait for the ideas to become technologies, the technologies to go through product and development processes, finally launch products that create value for users, and then wait for the products to be brought to market. Luckily, the product markets slowly develop and expansion stage companies are formed in every successful market. Eventually, I do get the opportunity to participate as the companies reach the expansion stage in these markets.
We have invested in the SAAS wave for almost 6 years at this point with great success (and we are continuing to actively seek the next great SAAS investment), and our thesis is that the infrastructure*-as-a-service market, and more specifically cloud computing infrastructure-as-a-service market, has reached the stage of maturity where several players (and more every day) have reached the expansion stage. We have been more aggressively doing our research and contacting players in the industry recently and have been very impressed with the conversations (the industry has some really great people doing some really interesting things).
I went to the Cloud Connect conference this week and found another data point that the cloud is gaining steam. The conference included a lot of interesting people and companies and a lot of very positive signs that the industry is gaining more and more traction. Network World has a good summary here. Clearly the industry is still more promise than reality, but the market growth is there and the industry appears to be forming nicely (rather than pure hype).
Btw, if you are wondering “what is cloud computing?”, take a look at this answer to the question and you can also join the discussion on Facebook. My answer is: If you are a SAAS company, one day you will be on a cloud infrastructure run by someone else and if you have a data center and/or deal with data center infrastructure (whether you are a SAAS company or not), I suspect that one day you won’t. Clearly, there is still a long way to go for the promise to become a reality, but it will be a fun and interesting period.
Hopefully all of this watching and waiting will turn into an investment in a great expansion stage company that is helping to develop this ecosystem!
*I am very broad with my term “infrastructure” and include any and all aspects of a data center that could be bundled and exposed as a service. I expect that there will be many different angles of attack in this emerging market, just as there have been in the last generation of software to support the server-based data center infrastructure and hosting markets (as well as the mainframe generations before them).