2nd Watch Raises $23M to Expand AWS Cloud Migration Business

11/6/13Follow @bromano

2nd Watch just scored $23 million to help large businesses, which are shifting their IT functions to the cloud in droves, move to Amazon Web Services.

The company, headquartered in Liberty Lake, just east of Spokane, WA, brought on new investor Columbia Capital for the round. Madrona Venture Group, which invested $4.2 million late last year, also joined this round.

2nd Watch CEO Kris Bliesner says the company and its investors see “a tidal wave of enterprise cloud adoption coming,” and that others haven’t yet fully grasped the scale of this change—and the business opportunity it presents.

“CIOs look at cloud infrastructure as a way of solving the core needs of what IT should be doing anyway, which is driving business faster and more efficiently,” he says.

Things like digital advertising campaigns can be unrolled in hours or minute as opposed to weeks, because companies don’t have to worry about putting in place the right amount of server, software, and network capacity to handle each one. They just dial up what can effectively be thought of as “infinite infrastructure” in a public cloud.

Bliesner.

Bliesner.

In addition, Bliesner says, the cost savings of using a public cloud for IT infrastructure are increasingly clear. Companies are seeing their own data centers as a competitive disadvantage because somebody else can do it “cheaper, faster, better.”

The new capital will allow the nearly 100-person company to expand with new offices in Atlanta, Texas, southern California, and somewhere in the Midwest over the next six to 12 months. (In addition to Liberty Lake, 2nd Watch currently has an engineering hub and sales in Seattle, and New York and San Francisco sales offices.)

Bliesner says 2nd Watch intends to double its workforce in the next year.

The company also plans to expand its managed services business, which provides hands-on help to customers moving business operations to the cloud as their internal people come up to speed.

While Simon Crosby, co-founder and CTO of Bromium, recently suggested that outdated IT skills are slowing the shift to cloud computing, Bliesner isn’t seeing that. He says virtualization technology has “primed the pump” over the last decade and now most IT departments are used to thinking about dynamic infrastructure.

Likewise, the security and regulatory concerns that caused companies to hesitate in the past are falling away, Bliesner says.

“The reality is, there’s really not a whole lot you can’t host in the cloud anymore from a client security and risk-management perspective,” he says.

If anything is “pacing” cloud adoption, it’s the changes required in a company’s cost models, design patterns, and mindsets accustomed to operating with finite IT resources, he says.

2nd Watch started out in 2010 as “cloud agnostic” but decided to specialize in the Amazon Web Services platform exclusively because, in Bliesner’s words, it offers superior features and is well ahead of the competition in terms of scale.

“That’s important because if I need 1,000 servers tomorrow or a Website capable of taking Super Bowl-level traffic, I want to know the capacity is there and I don’t have to worry about it,” he says.

Moreover, he says, Amazon is happy to run AWS with the same kind of slim margins it runs the rest of its businesses, making it a better value for his customers.

2nd Watch says it has helped with more than 300 migrations to public clouds.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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