Sep
11
2018
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Packet hauls in $25M Series B as customized cloud vision takes shape

In a world where large hyperscale companies like Amazon, Microsoft and Google dominate the public cloud, it would seem foolhardy for a startup to try to carve out a space, but Packet has an alternative customized cloud vision, and investors have taken notice. Today, the company announced a $25 million Series B led by Third Point Ventures.

An interesting mix of strategic and traditional investors joined the round including Battery Ventures, JA Mitsui Leasing and Samsung Next. Existing investors SoftBank Corp. and Dell Technologies Capital also participated. The company has now raised over $36 million.

The company also showed some signs of maturing by bringing in Ihab Tarazi as CTO and George Karidis as COO. Tarazi, who came over from Equinix, likes what he sees in Packet .

He says they offer several advantages over the public providers. First of all, customers can buy whatever hardware they want. “We offer the most diverse hardware options,” he said. That means they could get servers equipped with Intel, ARM, AMD or with specific nVidia GPUs in whatever configurations they want. By contrast public cloud providers tend to offer a more off-the-shelf approach. It’s cheap and abundant, but you have to take what they offer, and that doesn’t always work for every customer.

Another advantage Packet bring to the table, according to Tarazi, is that they support a range of open source software options, letting customers build whatever applications they want on top of that custom hardware.

They currently have 18 locations around the world, but Tarazi said they will soon be adding 50 more, also adding geographic diversity to the mix.

Finally, each customer gets their own bare metal offering, providing them with a single tenant private option inside Packet’s data center. This gives them the advantages of a privately run data center but where Packet handles all of the management, configuration and upkeep.

Tarazi doesn’t see Packet competing directly with the hyperscale players. Instead, he believes there will be room for both approaches. “I think you have a combination of both happening where people are trying to take advantage of all these hardware options to optimize performance across specific applications,” he explained.

The company, which launched in 2014, currently has about 50 employees with headquarters in New York City and offices in Palo Alto. They are also planning on opening an operations center in Dallas soon. The number should swell to 100 employees over the next year as they expand operations.

Apr
21
2018
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Full-Metal Packet is hosting the future of cloud infrastructure

Cloud computing has been a revolution for the data center. Rather than investing in expensive hardware and managing a data center directly, companies are relying on public cloud providers like AWS, Google Cloud, and Microsoft Azure to provide general-purpose and high-availability compute, storage, and networking resources in a highly flexible way.

Yet as workflows have moved to the cloud, companies are increasingly realizing that those abstracted resources can be enormously expensive compared to the hardware they used to own. Few companies want to go back to managing hardware directly themselves, but they also yearn to have the price-to-performance level they used to enjoy. Plus, they want to take advantage of a whole new ecosystem of customized and specialized hardware to process unique workflows — think Tensor Processing Units for machine learning applications.

That’s where Packet comes in. The New York City-based startup’s platform offers a highly-customizable infrastructure for running bare metal in the cloud. Rather than sharing an instance with other users, Packet’s customers “own” the hardware they select, so they can use all the resources of that hardware.

Even more interesting is that Packet will also deploy custom hardware to its data centers, which currently number eighteen around the world. So, for instance, if you want to deploy a quantum computing box redundantly in half of those centers, Packet will handle the logistics of installing those boxes, setting them up, and managing that infrastructure for you.

The company was founded in 2014 by Zac Smith, Jacob Smith, and Aaron Welch, and it has raised a total of $12 million in venture capital financing according to Crunchbase, with its last round led by Softbank. “I took the usual path, I went to Juilliard,” Zac Smith, who is CEO, said to me at his office, which overlooks the World Trade Center in downtown Manhattan. Double bass was a first love, but he found his way eventually into internet hosting, working as COO of New York-based Voxel.

At Voxel, Smith said that he grew up in hosting just as the cloud started taking off. “We saw this change in the user from essentially a sysadmin who cared about Tom’s Hardware, to a developer who had never opened a computer but who was suddenly orchestrating infrastructure,” he said.

Innovation is the lifeblood of developers, yet, public clouds were increasingly abstracting away any details of the underlying infrastructure from developers. Smith explained that “infrastructure was becoming increasingly proprietary, the land of few companies.” While he once thought about leaving the hosting world post-Voxel, he and his co-founders saw an opportunity to rethink cloud infrastructure from the metal up.

“Our customer is a millennial developer, 32 years old, and they have never opened an ATX case, and how could you possibly give them IT in the same way,” Smith asked. The idea of Packet was to bring back choice in infrastructure to these developers, while abstracting away the actual data center logistics that none of them wanted to work on. “You can choose your own opinion — we are hardware independent,” he said.

Giving developers more bare metal options is an interesting proposition, but it is Packet’s long-term vision that I think is most striking. In short, the company wants to completely change the model of hardware development worldwide.

VCs are increasingly investing in specialized chips and memory to handle unique processing loads, from machine learning to quantum computing applications. In some cases, these chips can process their workloads exponentially faster compared to general purpose chips, which at scale can save companies millions of dollars.

Packet’s mission is to encourage that ecosystem by essentially becoming a marketplace, connecting original equipment manufacturers with end-user developers. “We use the WeWork model a lot,” Smith said. What he means is that Packet allows you to rent space in its global network of data centers and handle all the logistics of installing and monitoring hardware boxes, much as WeWork allows companies to rent real estate while it handles the minutia like resetting the coffee filter.

In this vision, Packet would create more discerning and diverse buyers, allowing manufacturers to start targeting more specialized niches. Gone are the generic x86 processors from Intel driving nearly all cloud purchases, and in their place could be dozens of new hardware vendors who can build up their brands among developers and own segments of the compute and storage workload.

In this way, developers can hack their infrastructure much as an earlier generation may have tricked out their personal computer. They can now test new hardware more easily, and when they find a particular piece of hardware they like, they can get it running in the cloud in short order. Packet becomes not just the infrastructure operator — but the channel connecting buyers and sellers.

That’s Packet’s big vision. Realizing it will require that hardware manufacturers increasingly build differentiated chips. More importantly, companies will have to have unique workflows, be at a scale where optimizing those workflows is imperative, and realize that they can match those workflows to specific hardware to maximize their cost performance.

That may sound like a tall order, but Packet’s dream is to create exactly that kind of marketplace. If successful, it could transform how hardware and cloud vendors work together and ultimately, the innovation of any 32-year-old millennial developer who doesn’t like plugging a box in, but wants to plug in to innovation.

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