12 ms·

I'm so curious to understand how you pitch Docker at a 1.3BUSD valuation. With I assume a potential valuation of ~10BUSD to give the investors a decent exit? D

by new299 9y ago

I'm so curious to understand how you pitch Docker at a 1.3BUSD valuation. With I assume a potential valuation of ~10BUSD to give the investors a decent exit? Does anyone have an insight into this? Looks like Github's last valuation was at 2BUSD. That also seems high, but I can understand this somewhat better as they have revenue, and seem to be much more widely used/accepted than Docker. In addition to that I can see how Github's social features are valuable, and how they might grow into other markets. I don't see this for Docker...

jasode 9y ago
>Does anyone have an insight into this? I don't have insight but I'm guessing the valuation comes from the prospects of enterprise sales.[1] Also, Docker (the company) isn't staying still. We have to assume they will evolve to add future upmarket services on top of Docker that companies will pay for. Investors would see the PowerPoint slides for those future products but we as outsiders don't. Maybe an analogous situation would be the Red Hat multi-billion valuation even though Linux kernel itself is free and open source. [1] https://www.docker.com/pricing https://www.docker.com/pricing
- programd 9y ago
  Their enterprise pricing is per node. So if enough companies sign on to this, ever box/VM they put docker on brings Docker Inc. revenue. I'm sure at large scale this will be more of a flat rate negotiated deal ($XX,XXX per year) but still that's a lot of potential cash on the table. The risk of course is that the nobody will want to pay per-node and the community will just invest in the open source container ecosystem and replicate the Enterprise features with plugins and forks. Still, the market might be big enough that they can become another Red Hat just based on support and stewardship revenue.
  - new299 9y ago
    Becoming another Redhat wouldn't be enough to justify investment at this valuation though would it? They need an upside potential 5 to 10x higher than Redhat's current valuation.
    - yeukhon 9y ago
      Well, valuation is a gamble. You can try to justify the potential growth. The tech community is embracing the adoption and maturity of container-based CI/CD deployment. In the end, some number trick is done, higher valuation is posted, investors (new and old) are going nuts. Some months later, the big guy cash out large of the initial buying and move on to the hot baby in town.
  - axus 9y ago
    VMware did pretty well, though!
    - ccmonnett 9y ago
      I think Docker would be quite happy being the 'next VMware', and as an ex-VMW person myself it's hard for me to fault that, too.
  - bluGill 9y ago
    There are enough things I find as a company user annoying about docker to make me suspect some company will help fund the community fork. We are not quite there, but if docker keeps making changes that break us.
ransom1538 9y ago
In 2007 we used to rack hardware. Like physically open boxes, rack hardware with Ethernet cables. In 2014 I don't think a startup existed trying to use physical machines - it was all aws,etc. We then would use all this BS like puppet, salt, chef, etc to manage all the chaos (devops). Now 2017+, I am starting to see containers become the defacto. I see the future as running a docker file on your laptop, running it through a ci system, then pushing it to a container service. Docker is the clear standard.
- throwaway0071 9y ago
  Except you don't need Docker Inc. for that. Many container runtimes exist now, the user experience is very easy to replicate. Plus, their cloud doesn't seem to be making any money. So I too have trouble understanding where this valuation is coming from.
  - ransom1538 9y ago
    Sure. You can host your own github too. But the future will be containers. They seem pretty good at that.
    - smt88 9y ago
      You can host your own GitLab*, not your own Github. Also, a lot of the value of Github is social. You can only get that (after a certain point) by paying Github money. By contrast, you can get 100% of the value of the Docker community without paying a cent to Docker, Inc.
      - keeran 9y ago
        FWIW you can host your own GitHub https://enterprise.github.com https://enterprise.github.com
        VT_Drew 9y ago
        $21 a month per user.....to host it on my own hardware....no thanks. If I am hosting on my own hardware then you get a one-time-fee, none of this subscription nonsense.
wtvanhest 9y ago
Valuations in private funding are made up numbers. The main difference between public equity and private equity is liquidation preferences and interest. I dont know the deal terms, but it is likely that the investors expect to get their money back, plus some interest with the potential for more upside if there happens to be a big exit. They are likely not counting on it as their returns are nearly guarenteed through the liquidation pref plus interest. Employees of docker just saw their chances of a big monetaty exit cut dramatically with this funding round since they are in last place. It is an area that yc continues to be silent on and is a travisty of the start up world today.
mathattack 9y ago
A couple thoughts: 1 - As has been mentioned before, it's not really 1.3 Billion. If they have liquidation preferences, the value is much less. 2 - If they come in very late, growth investors may be ok with 3X or 5X.
mbesto 9y ago
Simple - VMWare is valued at $40B. Someone is going to make the argument that Docker is the biggest threat to VMWares business and VMWare will likely just buy them to keep shareholders happy.
- yc20017 9y ago
  Except that VMware never open sourced VMkernel. That massively contributed to the lack of feature parity between VMware and Microsoft (I'd say VMware was 1-2 years ahead of MSFT). That helps you secure the market in the early years, and what you see as the valuation. Docker Inc is not similar to VMware in that regard.
  - manmal 9y ago
    Docker does not use VMWare, so it's a threat - it's that simple.
    - wbl 9y ago
      Everyone already has containers and had for decades now. Why didn't they buy Sun then?
      - TallGuyShort 9y ago
        Perhaps they eventually would have if the company who currently also owns VirtualBox hadn't done so first.
        jopsen 9y ago
        Unrelated, but at the time virtualbox was owned by Sun :)
      - sah2ed 9y ago
        If by everyone you meant UNIX-derived OSes, it's arguable that they all had containers in one form or another with the exception of Linux which only changed when cgroups [0] were added to the v2.6.24 kernel ~10years ago. I think that addition to Linux paved the way for containers to enjoy wider adoption than was previously possible with other less popular container tech in OSes like Solaris (zones) or BSD (jails). [0] https://en.wikipedia.org/wiki/Cgroups https://en.wikipedia.org/wiki/Cgroups
elmar 9y ago
You pick the Valuation, I set the Terms… https://medium.com/@Alexoppenheimer/you-pick-the-valuation-i-set-the-terms-2d2ce08b9177 https://medium.com/@Alexoppenheimer/you-pick-the-valuation-i...
georgeecollins 9y ago
I am normally a huge cynic when it comes to software valuations but I think GitHub is likely to be very valuable. First, it's a service that I and developer's gladly pay for. Second, the network effects are very powerful. When GitHub becomes the place to find and store repos that you want to share, there is a lot of inertia to that. And it becomes a powerful way for developers to find each other.
klarrimore 9y ago
Developer tools have never had a huge market. Honestly, what are the necessary products for a relatively small market of thrifty developers? Maybe an editor, a nice keyboard, hosted code repo, and some code analysis tools? It's not a huge market. Containers are something else entirely. They'll probably be running on every device on the planet in one form or another in just a few years. Anytime you're on the forefront of something like that, there's money to be made.
- nostrademons 9y ago
  Developer tools have never had a huge market, but the enterprise ops automation market is huge. Think of IBM - this is their bread & butter. Investors must be betting that containers are going to be the next Java, XML, or virtualization in enterprise computing, and that by controlling that technology, Docker positions themselves for extremely lucrative enterprise IT support contracts.
lugg 9y ago
GitHub is only source control. Docker is much more than dockerhub. I'd guess the valuation is based on the orchestration and hosting solutions much more than the container engine. They're competing with AWS and Google cloud on many fronts. And docker controlling the defacto only strengthens the argument. Personally I wouldn't bet my money on their hosting solutions but I wouldn't ignore them either.
- jopsen 9y ago
  docker services like "docker cloud" or "docker hub" are a little less than perfect.. But so was docker to start with... Given that we're all using the docker cli, and coding automation against the docker remote API, they have a massive impact on a huge community. Even if they aren't ahead right now, the game is still wide open.
nickstinemates 9y ago
It's pretty hard to. I got off the train. I wish them the best though!
lathiat 9y ago
The best I can offer is that MySQL sold nearly 10 years ago for 1B. Much like a commentor further up the thread you probably don't know anyone that pays for MySQL (despite knowing many who use it) but they had a surprisingly decent customer base and revenue - and also a large profitable BU under Oracle - so not a meaningless valuation.
avifreedman 9y ago
At the late stage, investors usually want to see 3-10x vs 10-100x as a realistic range vs earlier stage (A round) investors. Usually they also look to there being a MUCH lower change of going completely to 0 - more like 10-20% vs well over 50%. And usually there it's because of the fundamentals of the business are starting to show (margin, cost of acquiring customers, customer churn and upsell, etc.) Sometimes IP or assets add value/valuation as well, though. In Docker's case, there is also probably a feeling that the asset (control of "Docker") is worth hundreds of millions. In CloudFlare's case, it is millions of sites as users, and the ability (mostly untapped, I think) to monetize the data from that.

by new299 9y ago

jasode 9y ago

>Does anyone have an insight into this? I don't have insight but I'm guessing the valuation comes from the prospects of enterprise sales.[1] Also, Docker (the company) isn't staying still. We have to assume they will evolve to add future upmarket services on top of Docker that companies will pay for. Investors would see the PowerPoint slides for those future products but we as outsiders don't. Maybe an analogous situation would be the Red Hat multi-billion valuation even though Linux kernel itself is free and open source. [1] https://www.docker.com/pricing https://www.docker.com/pricing

programd 9y ago
Their enterprise pricing is per node. So if enough companies sign on to this, ever box/VM they put docker on brings Docker Inc. revenue. I'm sure at large scale this will be more of a flat rate negotiated deal ($XX,XXX per year) but still that's a lot of potential cash on the table. The risk of course is that the nobody will want to pay per-node and the community will just invest in the open source container ecosystem and replicate the Enterprise features with plugins and forks. Still, the market might be big enough that they can become another Red Hat just based on support and stewardship revenue.
- new299 9y ago
  Becoming another Redhat wouldn't be enough to justify investment at this valuation though would it? They need an upside potential 5 to 10x higher than Redhat's current valuation.
  - yeukhon 9y ago
    Well, valuation is a gamble. You can try to justify the potential growth. The tech community is embracing the adoption and maturity of container-based CI/CD deployment. In the end, some number trick is done, higher valuation is posted, investors (new and old) are going nuts. Some months later, the big guy cash out large of the initial buying and move on to the hot baby in town.
- axus 9y ago
  VMware did pretty well, though!
  - ccmonnett 9y ago
    I think Docker would be quite happy being the 'next VMware', and as an ex-VMW person myself it's hard for me to fault that, too.
- bluGill 9y ago
  There are enough things I find as a company user annoying about docker to make me suspect some company will help fund the community fork. We are not quite there, but if docker keeps making changes that break us.

ransom1538 9y ago

In 2007 we used to rack hardware. Like physically open boxes, rack hardware with Ethernet cables. In 2014 I don't think a startup existed trying to use physical machines - it was all aws,etc. We then would use all this BS like puppet, salt, chef, etc to manage all the chaos (devops). Now 2017+, I am starting to see containers become the defacto. I see the future as running a docker file on your laptop, running it through a ci system, then pushing it to a container service. Docker is the clear standard.

throwaway0071 9y ago
Except you don't need Docker Inc. for that. Many container runtimes exist now, the user experience is very easy to replicate. Plus, their cloud doesn't seem to be making any money. So I too have trouble understanding where this valuation is coming from.
- ransom1538 9y ago
  Sure. You can host your own github too. But the future will be containers. They seem pretty good at that.
  - smt88 9y ago
    You can host your own GitLab*, not your own Github. Also, a lot of the value of Github is social. You can only get that (after a certain point) by paying Github money. By contrast, you can get 100% of the value of the Docker community without paying a cent to Docker, Inc.
    - keeran 9y ago
      FWIW you can host your own GitHub https://enterprise.github.com https://enterprise.github.com
      - VT_Drew 9y ago
        $21 a month per user.....to host it on my own hardware....no thanks. If I am hosting on my own hardware then you get a one-time-fee, none of this subscription nonsense.

wtvanhest 9y ago

Valuations in private funding are made up numbers. The main difference between public equity and private equity is liquidation preferences and interest. I dont know the deal terms, but it is likely that the investors expect to get their money back, plus some interest with the potential for more upside if there happens to be a big exit. They are likely not counting on it as their returns are nearly guarenteed through the liquidation pref plus interest. Employees of docker just saw their chances of a big monetaty exit cut dramatically with this funding round since they are in last place. It is an area that yc continues to be silent on and is a travisty of the start up world today.

mathattack 9y ago

A couple thoughts: 1 - As has been mentioned before, it's not really 1.3 Billion. If they have liquidation preferences, the value is much less. 2 - If they come in very late, growth investors may be ok with 3X or 5X.

mbesto 9y ago

Simple - VMWare is valued at $40B. Someone is going to make the argument that Docker is the biggest threat to VMWares business and VMWare will likely just buy them to keep shareholders happy.

yc20017 9y ago
Except that VMware never open sourced VMkernel. That massively contributed to the lack of feature parity between VMware and Microsoft (I'd say VMware was 1-2 years ahead of MSFT). That helps you secure the market in the early years, and what you see as the valuation. Docker Inc is not similar to VMware in that regard.
- manmal 9y ago
  Docker does not use VMWare, so it's a threat - it's that simple.
  - wbl 9y ago
    Everyone already has containers and had for decades now. Why didn't they buy Sun then?
    - TallGuyShort 9y ago
      Perhaps they eventually would have if the company who currently also owns VirtualBox hadn't done so first.
      - jopsen 9y ago
        Unrelated, but at the time virtualbox was owned by Sun :)
    - sah2ed 9y ago
      If by everyone you meant UNIX-derived OSes, it's arguable that they all had containers in one form or another with the exception of Linux which only changed when cgroups [0] were added to the v2.6.24 kernel ~10years ago. I think that addition to Linux paved the way for containers to enjoy wider adoption than was previously possible with other less popular container tech in OSes like Solaris (zones) or BSD (jails). [0] https://en.wikipedia.org/wiki/Cgroups https://en.wikipedia.org/wiki/Cgroups

elmar 9y ago

You pick the Valuation, I set the Terms… https://medium.com/@Alexoppenheimer/you-pick-the-valuation-i-set-the-terms-2d2ce08b9177 https://medium.com/@Alexoppenheimer/you-pick-the-valuation-i...

georgeecollins 9y ago

I am normally a huge cynic when it comes to software valuations but I think GitHub is likely to be very valuable. First, it's a service that I and developer's gladly pay for. Second, the network effects are very powerful. When GitHub becomes the place to find and store repos that you want to share, there is a lot of inertia to that. And it becomes a powerful way for developers to find each other.

klarrimore 9y ago

Developer tools have never had a huge market. Honestly, what are the necessary products for a relatively small market of thrifty developers? Maybe an editor, a nice keyboard, hosted code repo, and some code analysis tools? It's not a huge market. Containers are something else entirely. They'll probably be running on every device on the planet in one form or another in just a few years. Anytime you're on the forefront of something like that, there's money to be made.

nostrademons 9y ago
Developer tools have never had a huge market, but the enterprise ops automation market is huge. Think of IBM - this is their bread & butter. Investors must be betting that containers are going to be the next Java, XML, or virtualization in enterprise computing, and that by controlling that technology, Docker positions themselves for extremely lucrative enterprise IT support contracts.

lugg 9y ago

GitHub is only source control. Docker is much more than dockerhub. I'd guess the valuation is based on the orchestration and hosting solutions much more than the container engine. They're competing with AWS and Google cloud on many fronts. And docker controlling the defacto only strengthens the argument. Personally I wouldn't bet my money on their hosting solutions but I wouldn't ignore them either.

jopsen 9y ago
docker services like "docker cloud" or "docker hub" are a little less than perfect.. But so was docker to start with... Given that we're all using the docker cli, and coding automation against the docker remote API, they have a massive impact on a huge community. Even if they aren't ahead right now, the game is still wide open.

nickstinemates 9y ago

It's pretty hard to. I got off the train. I wish them the best though!

lathiat 9y ago

The best I can offer is that MySQL sold nearly 10 years ago for 1B. Much like a commentor further up the thread you probably don't know anyone that pays for MySQL (despite knowing many who use it) but they had a surprisingly decent customer base and revenue - and also a large profitable BU under Oracle - so not a meaningless valuation.

avifreedman 9y ago

At the late stage, investors usually want to see 3-10x vs 10-100x as a realistic range vs earlier stage (A round) investors. Usually they also look to there being a MUCH lower change of going completely to 0 - more like 10-20% vs well over 50%. And usually there it's because of the fundamentals of the business are starting to show (margin, cost of acquiring customers, customer churn and upsell, etc.) Sometimes IP or assets add value/valuation as well, though. In Docker's case, there is also probably a feeling that the asset (control of "Docker") is worth hundreds of millions. In CloudFlare's case, it is millions of sites as users, and the ability (mostly untapped, I think) to monetize the data from that.