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HashiCorp's big step toward a central role in the cloud

By offering managed versions of its services, the company will appeal to far more enterprise companies looking to embrace the cloud.

​HashiCorp co-founders Armon Dadgar and Mitchell Hashimoto with CEO Dave McJannet.

HashiCorp co-founders Armon Dadgar and Mitchell Hashimoto with CEO Dave McJannet, who spy a big opportunity running cloud services for enterprise companies.

Photo: Courtesy of HashiCorp

As cloud computing matures, a new generation of companies that have known no other way are competing to lead big business into the future. With its new managed services platform, HashiCorp intends to be one of those companies.

During a digital event Monday meant to replace its annual European conference, HashiCorp plans to unveil the HashiCorp Cloud Platform, a collection of fully managed versions of the company's flagship cloud tools. The platform will allow HashiCorp customers to offload the management of those tools to the 8-year-old company, and they will eventually be available to customers running applications on the cloud platforms provided by AWS, Microsoft and Google.

HashiCorp sees a huge opportunity here.

"It took these big enterprises five years just to be comfortable with the idea of public clouds, but they got there and they started that migration," said Armon Dadgar, co-founder and chief technology officer of HashiCorp. But "most of these folks, they don't have enough operational staff with the experience to run these services at scale, and even if they did, those people are best spent focusing on other business value rather than operating infrastructure."

HashiCorp offers four main tools for provisioning and managing cloud infrastructure: Terraform, Consul, Vault and Nomad. Those tools are currently available as open-source projects or paid services that come with additional features beyond the open-source versions, and they are popular: Redmonk estimates the company generated $150 million in revenue during 2019.

But managed services appeal to cloud customers who lack the time, money or experience needed to do a lot of the heavy lifting required to use these tools in their software-development process. Kubernetes, one of the most influential open-source cloud infrastructure projects released over the last several years, didn't really start to take off until cloud vendors, led by Google and followed by Microsoft and AWS, launched managed versions for their customers.

The first service available in the HashiCorp Cloud Platform will be Consul, the company's take on a service mesh. Service meshes help companies that have adopted microservices as part of their development philosophy manage the complicated interactions that result from breaking an app down into lots of smaller, somewhat-independent units, and this is an emerging, competitive space: Google's back and forth on the governance of its Istio service mesh has been a huge topic in the cloud over the last year or so.

The managed version of Consul will be available first on AWS, because that's where most cloud applications live. Vault, which helps companies control the use of sensitive data, will follow, also on AWS, but eventually the four major projects will all be available on AWS, Microsoft Azure and Google Cloud.

For now, the cloud providers love HashiCorp because of the way it's focused on helping big businesses move old applications and launch new applications onto cloud services. However, they also offer their own tools that compete with the smaller company's services to some degree, and at some point tension seems likely to build: After all, there's nothing stopping AWS from launching its own managed versions of the open-source projects developed at HashiCorp.

That tension reached a breaking point in the database world two years ago, when Redis Labs and MongoDB made changes to the licensing behind the open-source projects that powered their commercial products, with the explicit goal of discouraging or preventing AWS and others from selling their own managed versions of those projects. But Dadgar thinks AWS has changed.

"They got burned over the Mongo incident, and the Redis incident, and I think they've come to understand the relationship with the open-source community and the reputation that they've built," he said. "I think they are very conscious of wanting to be good-faith citizens."

HashiCorp has raised $350 million in funding, and is currently valued at $5.1 billion. Founded in 2012 by Dadgar and fellow University of Washington computer science student Mitchell Hashimoto, the company now has 1,000 employees and appears to be on a path to becoming a strong, independent player in cloud computing.

"I think we understand who we are," said Dave McJannet, HashiCorp's CEO. "We are an infrastructure provider that provides this enabling role for the biggest companies in the world. These markets are big enough to support us as a large standalone company."

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