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EngineYard & future of Web 2.0 infrastructure

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EngineYard, a Sacramento, California-based start-up that has developed expertise in providing managed Ruby-on-Rails (RoR) application deployment environments, and a smart two-pronged go to market strategy, is fast becoming a major trend.

Lance Walley, co-founder of EngineYard argues that if you are a business that depends on RoR applications or you’re a RoR application developer, you should not have to muck around with the innards of the systems. Instead, use their service, pay monthly (for what you use) and focus instead on what you know best: developing and deploying applications. (See how it works: PDF.)

This is not the first time a company has provided hosted environments. 3Tera, a company that provides a set of web services in a similar hosted environment, comes to mind.

What is different about EngineYard, however is their hyper specialization, and their business model. Typically companies offering hosted environments offer an extremely large and complicated menu of services, without much expertise in any one specific environment. There are other examples of hyper specialization, such as companies providing hosted PHP or Perl.

EngineYard offers two different types of services: a RoR development and deployment environment using virtual server slices and an installation, service and support of dedicated on-site RoR appliances for larger customers. Lance explains that many companies like to start on EngineYard’s virtual slice service, but they often quickly upgrade to dedicated appliances.

By using the EngineYard service for a few months, developers can judge for themselves how good (and scalable) EngineYard services really are without banking on marketing spiel. The biggest downside of the upgrades is that EngineYard will have to constantly add more support staff, which means that the cost advantages of running a large cluster could simply vanish.

Despite that, I think that we’re about to see a trend of web2.0 infrastructure services use a similar dual-pronged go-to-market strategy as Engine Yard.

Allan Leinwand is a venture partner with Panorama Capital and founder of Vyatta. He was also the CTO of Digital Island.

15 Responses to “EngineYard & future of Web 2.0 infrastructure”

  1. Niall and others: Thanks for the comments – they are appreciated.

    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.

  2. Hello Allan.

    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 :-)

  3. Allan,

    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.

  4. I’ll get my hands dirty here:

    A number of weeks ago I wrote this article on why I decided to launch VentBox with TextDrive. What I haven’t update yet is that we’re now on Engine Yard and loving it. Things didn’t go as planned, more or less, with the launch at TextDrive. Being with EY so far has been quite a pleasure for a number of reasons Om has mentioned. It’s also very true about it being “worth it” to buy the services as a slice.

  5. Niall, how is it reading like a paid promotional advert?

    it is one man’s opinion, he is not an investor in that company and his firm’s investment in FM has nothing to do with his relationship with me.

    In fact he is someone who has been a long time friend, who has been involved with the networking industry for a long time.

    I think before pointing fingers at someone, think.

    As far as other issues are concerned, he chose to focus on one start-up that is focusing on one of the newer technologies.

    in fact, if you read allan’s previous posts, you can find out that he has extensively written about computing grids and all that stuff.

  6. This post reads like an advertisement, coming from the venture capital company that invested in Federated Media Publishing, GigaOM’s advertising provider.

    There are a variety of companies providing specialized hosting by language, framework, or a specific web application. This article seems more focused on a particular provider than the new trends of containers, grids, specialized and tuned hosting, and creating a brand within a development community.