Team cloud.com, we are proud of you !

Cloud.com, a leading cloud computing company that we have had the opportunity to partner with two years ago, announced today that it got acquired by Citrix (http://www.businesswire.com/news/home/20110712005746/en/Citrix-Game-Cloud-Infrastructure-Cloud.com-Acquisition). This is an incredible achievement for Sheng Liang, Shannon Williams, Kevin Kluge, Peder Ulander and their team to have created a leader in a large market from a fledgling start-up within less than three years of it’s formation. We are grateful to Sheng for selecting us as his partner.

We turn over the reins of cloud.com with mixed emotions. While it is an incredible success for the cloud.com team and an exceptional return for all investors, we would miss participating in the creation of a technology platform that is changing the foundation of IT infrastructure. We watched as the talented team at cloud.com focused on building a disruptive solution. We discussed alternatives and often gave suggestions, though the cloud.com team was always one step ahead of our thinking. Yes, we make investments to get good returns for our investors, but our thrills come from seeing, from courtside seats and in real time, birth and early childhood of game changing solutions.

We got interested in cloud technologies, before “cloud”joined the common technology vernacular. In emerging markets, most IT infrastructure will be built around flexible capacity. We initially learnt ofthe demandfor cloud infrastructure in India and globally from Netmagic Solutions, the largest independent data center and managed service provider in India, where Nexus is an investor. Cloud computing provides some key benefits such as enabling organizations to focus on its core business rather than on infrastructure. It also provides highly improved IT manageability, planning flexibility and visibility. It enables better uptime and service quality while saving money with a significant reduction in total cost of ownership. Consumer-focused computing has demonstrated benefits of cloud technology. Companies are looking for new revenue sources, accelerating the introduction of new products and services. And with the Indian economy being more dynamic and fast changing, where IT needs are difficult to forecast, cloud is probably even more relevant for India and emerging economies than for the developed countries.

It was fall of 2008, when I first met Sheng Liang, a couple of months after he founded his start-up, VMops( which was later renamed to cloud.com ). Though it was just the first meeting after we were introduced by our mutual acquaintance, Chiradeep (one of the three fantastic founding engineers of cloud.com ), the clarity of Sheng’s thinking, his smarts, passion, energy and sincerity in his conviction blew me away and I knew instantly that we got to find a way to work with him. Thankfully, it didn’t take much time for all of us at Nexus to get convinced: we were on top of the un-served and growing need in the market and we loved Sheng. I think he also appreciated the clarity of our thinking and the Nexus team’s entrepreneurial beginnings. We finally co-led the series A investment in cloud.com in Q2 2009 and the journey began.

It was fascinating to see how fast we were able to get the product out and build a world-class team. Very soon cloud.com assumed product leadership position in the market. Despite minimal marketing, we started getting overwhelming in-bound requests from several managed service providers world-wide, who wanted to use cloud.com software stack to convert their static data center into dynamic cloud infrastructure. Soon we started signing in big name customers of the likes of Tata communications, Korea telecom, Macquarie Telecom, and IDC Frontier. As it happens when you build something great, we barely spent a quarter of the Series A investment, but started getting several pre-emptive offers and closed the Series B investment into the company in Q1 of 2010. Though we did not need the money at that time, all of us were in agreement that if money is coming in with minimal effort, at an attractive price and with a value-added board member on top of that, it’s probably wiser not to say no to.

Not only were the customer interests coming from the service providers who were looking to build public clouds, we also soon started seeing interests from enterprises who wanted to use cloud.com solution for building private cloud infrastructure. Probably the best example in that category is zynga, who were looking to build their own cloud to reduce their dependence on amazon web services. After rigorous evaluation of cloud.com versus all other existing vendors, Zynga chose us : a mega win for the company.

Things were going extremely well at cloud.com, with strong customer pipeline, increasing revenue ramp, key partnerships and alliances, and established leadership in the industry. Not surprisingly, big companies started taking keen interests and though there was no plan whatsoever to sell the company, Citrix made an offer that the team could not refuse.It was a great outcome for all the stake-holders involved, within less than three years of the company getting founded.

For all of us at Nexus, it was an absolute pleasure and an honor to work with Sheng and team. Partnering with exceptional entrepreneurs to help build category leading companies is all that we stand for. All the very best to cloud.com team for their future endeavors, with the hope that our paths will cross again in the future!

Jishnu Bhattacharjee
Nexus Venture Partners

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