We hear a lot about the challenges companies face trying to move to cloud. We hear considerably less about the pain points of trying to move from cloud to on-prem. No, this is not a cloud repatriation “gotcha” story. This is the business opportunity Replicated identified: for companies that primarily sell cloud-based software, there are significant challenges in also offering their products to companies that still operate in on-prem environments.

For vendors, one of the benefits of providing SaaS and hosted software is that they can control the environments in which their software operates. When customers need to run in private clouds, on-prem, or air gapped environments, the possible permutations of configurations expands. This variability in operating environments can make the lift for delivering software heavier.

Replicated helps software vendors deliver their product to a variety of environments. It uses a Kubernetes-based packaging system to help deploy their clients’ software to all environments (even if the enterprise is not currently using k8s.) Replicated helps with the initial installation (which is particularly helpful for getting trials and POCs off the ground so enterprises can more easily experience the product) but they also offer ongoing support and management options once the software is in production.

It’s difficult to switch from offering historically cloud-based software in a different format. Selling across multiple clouds and flavors of on-prem environments forces companies to explore portable platforms. Replicated calls this world “multi-prem.” You could also bucket this into the ‘multi-cloud’ or ‘hybrid cloud’ categories, but given the story they’re telling and the customer they’re going after, it’s a reasonable enough term.

Grant Miller (CEO) and Marc Campbell (CTO) co-founded Replicated in 2015. Mark Pundsack (CPO) and Dustin Dean (CRO) round out the executive team.

The Replicated elevator pitch (from the company itself):

Replicated is the modern way to ship multi-prem software. Replicated gives software vendors the tooling needed to deliver and manage cloud native applications inside customers’​ environments to provide greater security and control.

Size

• 130 remote employees (with an LA mailing address)
• $85M total raised through their Series C
  Seed Round: 6/2015, $1.5M
  Series A: 10/2016, $5M
  Venture Round: 9/2019, $3.5M
  Series B: 10/2020, $25M
  Series C: 7/2021, $50M
• Sales focus in North America, EMEA, and Israel
• 65 of the Fortune 100 are end users of Replicated

Go To Market

The Replicated business model is summarized as B2B2E; in other words Replicated sells their services to another software company that is trying to sell to enterprise customers. Replicated helps the software company package and deliver their software to be easily consumable in various environments, and then the enterprise is the end consumer of the packaging exercise. Replicated occasionally has direct relationships with end users, but can also be white-labeled such that the end user in the enterprise may not even realize that their software vendor is using a third party in their software’s packaging and delivery.

Replicated sells their services to SaaS companies, open core companies, and generally people trying to sell on-prem. For example, Hashicorp uses Replicated to help deliver Hashicorp Enterprise to their on-prem clients. Here’s an interview with Mitchell Hashimoto about the pain points Hashicorp encountered prior to adopting Replicated. Hashimoto is a tastemaker in the industry and people respect his opinions. As far as marquee customers go, this is an important one.

Replicated cites the following benefits in their sales pitch:

• Using Replicated allows software companies to sell into more environments. As an example, Replicated referenced a client that went from SaaS-only to having over 50% of their ARR from self-hosted customers.
• Replicated helps end-users install software faster (one customer reduced their install time from 90 days to 1), which reduces support time and custom work requests to software vendors.
• Vendors are better able to support their customers because Replicated helps field troubleshooting and basic Kubernetes maintenance.

Competitive Landscape

Arguably Replicated is competing against the major Kubernetes distros targeting hybrid environments (e.g. Open Shift, Tanzu, Anthos, etc) but those tools are often in co-opetition as they are also building blocks for Replicated, and in truth their segmentation focusing on software companies trying to sell on-prem means they have a differentiated service and platform-based offering.

DIY is probably the most common alternative to Replicated. There is a great deal of undifferentiated heavy lifting in packaging software for different environments, and Replicated helps make it easier for software companies to package their software and for enterprises to consume. This work is challenging, even for companies that excel in creating software, even for companies that are born in the cloud. Addressing new markets while also addressing enterprise concerns is an important business concern, and many companies have to grapple with whether it makes sense to tackle this packaging exercise on their own.

Disclaimer: Replicated is a RedMonk client but this is an uncommissioned piece of research. Red Hat (Open Shift), VMware (Tanzu), and Google Cloud (Anthos) are also RedMonk clients. Hashicorp is not currently a RedMonk client.