SmoothSpan Blog

Overview

3Tera is one of the new breed of utility computing services such as Amazon Web Services.  I recently had dinner with Peter Nickolov, COO and CTO, and Bert Armijo, SVP of Sales and Product Management to hear their story.  I’ve been watching utility computing closely, and believe it is the wave of the future for hosting.  Check out the 3Tera web site and at least get a look at the screen shots of their visual data center design and management tool, and I think you’ll agree it’s pretty exciting.

As always in these interviews, my remarks are parenthetical, any good ideas are those of the 3Tera folks, and any foolishness is my responsibility alone.

Introduction to 3Tera

What’s your basic elevator pitch to a customer?

3Tera:  We offer Google-like infrastructure for everyone else.  Running grids to power utility computing let’s you run standard infrastructure software that you are used to including the LAMP stack, Oracle RAC, and most anything else in a virtual datacenter together with the tools to make it very easy to manage that datacenter.

Bob: (As 3Tera’s site says, “If servers are cheap and open source is free, why does it cost so much?”  The answer is you have to manage those servers.  If this is done manually, it is horrendously expensive, and eventually becomes impossible with enough servers.  The alternative is creating automated infrastructure, which is also extremely difficult.  3Tera brings you a “virtual datacenter” where that infrastructure is built-in for a modest cost on top of your normal hosting fees.)

How is your product sold?  By seat/month?  Other metric?

3Tera:  We sell by the server since our software is installed on the server to create the virtualization.  We sell both hosted and on-premises depending on where you want to put your servers.  80% of our customers go for hosted, but the price is roughly the same either way. 

How many customers have you sold?

3Tera:  In our first year since being live, we’ve sold over 100 customers.  90% of them are in production today, and 10% are doing development and proof of concept work.

What kinds of customers come to you?

3Tera:  Most of our customers are doing SaaS and Web 2.0 projects., and there are tons of them out there. They come in all sizes, from very small startups all the way up to Enteprises, including British Telecom. 

Bob:  (I found the rapid adoption of 3Tera to be nothing short of astounding.  Since the interview, I have mentioned 3Tera to everyone I’ve come into contact with who would be a potential customer and the responses made it clear how 3Tera has grown so quickly.  There is a burning need for any mechanism that simplifies hosting and data center operations and makes it possible to grow in a utility computing pay-as-you-go way.  Other than Amazon’s Web Service, which everyone I know is watching very closely, and OpSource which one person mentioned, most were not aware of such a service that is ready today.)

What stage is 3Tera at?

3Tera:  We were founded in August, 2004.  We started Beta test in March, 2006, and our oldest customer (International News Media) went live during that Beta, so we’ve had live customers for about 18 months now.  We brought the service out of Beta and launched it in September of 2006, and now AppLogic is at release 2.2 with around 100 production applications deployed.

We are headquartered in Southern California, but we also have offices in Bulgaria, Israel, the Bay Area, and Canada.  Bulgaria and Israel are developers, we have Tech Support in Canada, and the Bay Area is primarily a sales office.

We never would have thought of doing multiple locations in the past for a startup, but times have changed, communication is much better, and you go where the talent is. 

We live on Skype and WebEx!

How were you capitalized?

3Tera:  The company is funded about half and half by management and angels.  We had successes in other startups that let us fund it in this way.  We have no professional institutional investors at this stage.

How did you come up with the idea?

3Tera:  It was a need that we saw while discussing how folks scale online services.  After a while it became clear much of the difficulty occurred because these distributed systems lacked a mechanism to unify the lifecycle of the application.

There really isn’t much new under the sun.  Mainframes were doing virtualization a long time ago, and I guess you could say we’re the modern, visual equivalent of JCL, LOL.

What is Utility Grid Computing and What Does 3Tera Offer?

What fundamental problem are you really solving here, hosting?

3Tera:  No, we’re not a hosting company. Rather we allow access to the inventory of hardware that hosting companies operate. 

Hosting providers are brutally efficient at operating hardware.  A small hoster has maybe 2000-3000 machines, and large hosters can have 50,000 or more.  Their volume allows them to drive out every last penny and deliver you a server at the lowest possible cost. The problem has been that while this was great for standard web hosting there was no way to use that resource to power large scalable services. 

Take a small web startup.  Two or three guys can take the LAMP stack and write a cool piece of software.  Then they have to host it on something. They can start out on a single server, but pretty soon they’ll need to add more. Then they’ll move to colo and before they know it they’ll find they don’t have any time left to write software.  They spend nearly all of it chasing around the machines and keeping them running. 

Even a well funded startup will find it ridiculously hard and expensive to manage, say, 100 machines.  You can’t get past 100 servers writing scripts and hiring warm bodies.  Machines are failing constantly due to MBTF (Mean Time Before Failure).  Things go into gridlock. Large internet companies have found the way to get beyond 100 machines; they write their own infrastructure software to manage the process.  You have to automate failover, backups, and all the hundreds of other processes involved in keeping the thing going.

The beauty of 3Tera is we provide all of that in a world-class easy to use web-based system, but you don’t have to be at 100 servers to take advantage.  The three guys in the web startup can take advantage right away and it grows with them. 

Bob: (The bottom line is 3Tera accelerates the evolution of a web company.  We’ve all read countless tales of what happens when these companies are “TechCrunched” and have to scramble.  You’ve probably heard the iLike story about driving around the Bay Area borrowing servers to keep up with demand after launching their Facebook app.  We’ve seen companies get large only to have service levels fall of rapidly.  Few companies successfully manage to create the kind of automation and virtualization capabilities 3Tera offers up front.)

Do you have a real story about how that worked?

3Tera:  Sure.  We had a company go live on our system very quickly.  Then one day, 3 months later, the System Administrator quit.  The CTO called us up and said, “I understand we’re running something called 3Tera, I lost my SysAdmin, can you help me find someone experienced on your system to hire?”  So we suggested he take the Grid University training so he could manage the system while he looked to hire.  He was skeptical, but took took a couple of the online courses.  We called him back 3 weeks later to ask how he was doing, and he told us it had been so easy to manage the servers that he was just doing it himself and saw no need to hire a SysAdmin.

Bob: (The 3Tera guys assure me one person can run 100 servers in their spare time with the system.  When you look at what IT people cost, these people costs are nearly always the largest cost item in datacenter operations.  I asked the Director of Operations for one SaaS vendor what they thought those people costs were relative to hardware.  In his mind, people were perhaps 60% of the overall costs.  A system that can drastically reduce the people costs, as well as providing a better service could really make the difference for a lot of datacenters.)

Next Installment

We got the basics on what 3Tera is.  For the next installment, I want to drill down deeper on the service, understand some of the technology they’ve built, and start to see this from the customer’s eyes.  Be sure to click the “subscribe” link at the top left of the blog page so  you don’t miss out on these future posts!