Tal Lifschitz
http://www.cashrichmoney.com

The main focus of my post is how some companies are focused on a two-pronged go-to-market strategy for their hosted service. I ask the same questions to every web2.0 infrastructure company I meet as a VC: how do you scale your service if a customer becomes wildly successful? How do you prevent your customers from outgrowing your service?

Engine Yard had one of the first good answers to that question that I’ve heard over the past few years of asking – their addition of a managed, but customer premise-based, solution. Maybe I have not been seeing similar and successful offerings from other web2.0 infrastructure companies and used Engine Yard too much of a poster child. I’ll accept that criticism and I’ll be watching to see how their two-pronged approach plays out.

That being said, I have met the Engine Yard folks exactly once and am not an investor in the company.

Further, although my firm is an investor in Federated Media, I am personally not affiliated with that company in any way. My interactions and friendship with the GigaOm team goes back well before FM was conceived.

Thank you so much for the write up!

Bert: Thank you for your wishes for our success! Lots of competition is good! If there is a lot of competition, that typically means there is a lot of business to earn!

Robert: We try on our site to make it clear that hosting isn’t the entire story. Hosting to most people means access to a well connected computer on the net…but we provide a lot more than that!

We are in the Rails application deployment business. You write the application on your laptop, and we deploy it for you. If you grow, we scale, all the way to your own hardware in your own data center.

Many of the small companies that use us and consider us “Cheap payroll” (as one customer put it). Customers that have ended up on Digg were happy to have a solution in hand and experienced people on call when the traffic came their way :-)

Thanks for the mention, but I think comparing 3tera to EngineYard is a bit of apples vs oranges. It’s been quite a while since we talked, but 3tera’s AppLogic system is a utility computing platform designed specifically for hosting providers. We allow folks like EngineYard to build their business without owning their own datacenter, capital equipment, huge labor bills, or the complication of building and maintaining their own infrastructure platform. This allows them to focus on what differentiates them – knowledge of their customer’s needs.

That said, I see the attraction of EngineYard for developers. I’d actually visted their site a month or so ago after a google alert turned them up. They’re going to have a LOT of competition, but I hope your prediction of their success is correct.

are we saying that this is the model for the future? probably not. hosted services are nothing new, and they have their place on the web, thats all.