The archive · Developer & Business Tools · Strategic decision · 2017–2019
Heptio: VMware acquires the Kubernetes startup founded by two of K8s' creators
Heptio sold open-source Kubernetes tools plus enterprise services; VMware acquired it in 2018 after a $25M Series B at $117M post-money.
Heptio
What the business is
Heptio is a Seattle startup providing professional services for enterprises adopting Kubernetes: open-source management tools, training and support for running container clusters across multiple clouds.
How it started
Joe Beda and Craig McLuckie were two of the three people who created Kubernetes at Google in 2014 before it was open sourced, and the pair later co-founded Seattle-based Heptio to help enterprises adopt it. By September 2017 Heptio had raised a $25 million Series B with investors including Lightspeed, Accel and Madrona, valued at $117 million post-money according to PitchBook.
What happened
Heptio's business paired open-source projects for managing Kubernetes and related container clusters with paid professional services: training, support and implementation help for enterprises adopting the platform. Customers included large, tech-forward companies such as Yahoo Japan. On 2018-11-06, at VMware's big customer event in Europe, VMware announced the acquisition: Beda, McLuckie and the whole Heptio team would join VMware, and Heptio's products and services would reinforce VMware's PKS push to establish Kubernetes as the de facto standard for infrastructure across clouds. VMware said the deal was not material to the company, disclosed no terms, and expected it to close by its fiscal Q4 2019.
How it ended up
Heptio did not stay independent: VMware announced the acquisition on 2018-11-06 with terms undisclosed, saying the transaction was not material and expected closing by its fiscal Q4 2019. Beda, McLuckie and the team joined VMware's cloud-native business, where Heptio's Kubernetes products and services were folded into the PKS portfolio.
Background
Heptio was a Seattle startup co-founded by Joe Beda and Craig McLuckie, two of the three people who created Kubernetes at Google in 2014 before it was open sourced. Its business was selling what enterprises needed once they chose Kubernetes: open-source management tools, training and professional services for running container clusters across multiple clouds.
The bet was directional: Kubernetes, not a proprietary platform, would become the de facto standard for infrastructure across clouds, and a company led by the platform's creators could charge for the expertise around it. By September 2017 Heptio had raised a $25 million Series B with Lightspeed, Accel and Madrona, valued at $117 million post-money according to PitchBook, and its customers included large, tech-forward companies such as Yahoo Japan.
On 2018-11-06, at VMware's European customer event, VMware announced it had acquired Heptio. Terms were undisclosed — VMware said the deal was not material — and it was expected to close by VMware's fiscal Q4 2019, with Beda, McLuckie and the team joining VMware's cloud-native business to extend its PKS Kubernetes push.
The deal came weeks after IBM agreed to buy Red Hat for $34 billion, and VMware framed open source as the winner of the cloud-infrastructure layer — validating the thesis Heptio was built on, even as Heptio itself became a small part of a much larger company.
What has to be true
- The bet was on an ecosystem rather than proprietary technology: Heptio gave away its tools and sold expertise, so its fate was tied to whether Kubernetes became the enterprise standard.
- Founder provenance was the moat: Beda and McLuckie were two of the three Kubernetes creators, which made Heptio's training and support hard to copy and made the team itself the asset VMware wanted.
- The acquisition followed IBM's $34 billion Red Hat deal by weeks, as platforms conceded that open source would own cloud infrastructure — exactly the thesis Heptio was founded on.
- The small exit was a warning about the wedge: VMware called the deal immaterial, so even a winning services bet around a new standard can end as a small acquisition rather than a standalone company.
What can be applied
Creators of an open standard can sell expertise and services around it, but that wedge usually ends as a capability inside a bigger platform rather than a standalone giant.
Aftermath
As of 2018-11-06 the deal was announced but not closed: VMware expected completion by its fiscal Q4 2019, disclosed no terms, and described the transaction as not material. Beda, McLuckie and the Heptio team were to join VMware's cloud-native apps business, where Heptio's Kubernetes products and services would extend PKS; the article records no later independent chapter for Heptio.
Sources
- VMware acquires Heptio, the startup founded by 2 co-founders of Kubernetes
- VMware acquires Heptio, the startup founded by 2 co-founders of Kubernetes
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