Cloud computing is big business dominated by the world’s largest tech companies. Three of the four most valuable tech companies — Amazon, Microsoft and Google — are among the most prominent players.
Competing with these giants is a tall order, and a panel of top investors at the GeekWire Cloud Tech Summit was split on whether they would fund a startup taking on an Amazon or a Microsoft in the cloud world.
Chris Kelley, principal of Menlo Park, Calif. venture firm DFJ said the best entrepreneurs don’t just look at the players in the market, they look for problems that aren’t being solved. Kelley says DFJ, which has invested in several cloud companies as well as big names like Twitter, Baidu, Redfin, SpaceX and others, would absolutely invest in a company looking to put up a challenge against even the biggest players such as Amazon Web Services or Microsoft’s Azure.
“They start a company because they know pain, they understand the pain, and they have to start that company,” Kelley says of the qualities that are important in entrepreneurs. “They have such a burning desire to start that company because they know that the opportunity is there in front of them. If we found the right entrepreneur, who came to us and said ‘we are going to go start something that is going to take on AWS’ … If they have the right approach, absolutely.”
Kelley added he didn’t think it would make sense to go straight at Amazon, but to find an angle that the cloud giants aren’t covering.
Tim Porter is a managing director at Seattle-based Madrona Venture Group focused on cloud software, intelligent applications, software as a service, machine learning and more. He said investing in cloud infrastructure can be tricky. The key determination in his mind is figuring out whether a problem should be solved by a startup or is it something one of the cloud tech giants will take care of.
“One of the most important questions if it’s infrastructure is why should this exist separate of what Amazon, Azure or Google are going to offer, and sometimes that is a reason not to invest and say I don’t see this being a large standalone company for a long time,” Porter said. “Maybe there is a feature gap, but we think this is going to get filled by one of the clouds and that’s going to be adequate.”