In another good example of a rollup of IT management companies, Puppet Labs is today announcing that they have acquired development tool vendor Cloudsmith. Cloudsmith is best known for its Stack Hammer product, a web service that lets developers define stacks (dependencies) from a cloud of shared packages. The service is extended to include developer’s own private components. Users can then share them with whoever they want and install them anywhere, directly from the cloud. It’s a nice little feature that allows system admins and developers to automate the management of their resources. Cloudsmith also created Geppetto, an IDE for building and publishing Puppet modules.
It strikes me that the Cloudsmith tools are eminently useful, but fairly minor features over the totality of a developer’s workflow. As is the case for any company that creates products that are more of a feature than a full product, it’s hard to find ways to really get a critical mass of users, and getting meaningful revenue is even harder. It’s something we’ve seen time and time again, feature companies that get started because the founders have some itch of their own to scratch – in these instances there are two possible outcomes: firstly the company can find ways o scale up what it does to create a real solution or secondly 9and more common in the current environment, the company can find a logical partner who wishes to acquire it.
We’ve seen these so-called acquihires happen time and again in the consumer space, and they are also becoming more common across all sectors of technology – the acquirer enjoys the benefits of some existing code, the credibility of some developers who have a community following and the ability to build out the breadth of their own product – of course sometimes it goes bad and cultural clashes mean the acquisition isn’t quite the success that was anticipated.
Anyway – this deal makes sense for Puppet Labs as it allows them to add additional features to their own product that deliver a broader offering to their customers. The fact that Geppetto has 10000 users doesn’t hurt of course, and Puppet is saying that they intend to integrate the Cloudsmith tools deeply into their own products.
Cloudsmith has been bootstrapped, so the deal doesn’t see any investors lose out – it seems to me a good result for the founders, a smart acquisition for Puppet and, with time, will be a useful addition for Puppet customers.