Reductive Labs nails $2 million in funding--Q&A

Reductive Labs, creator of the popular open-source IT automation project Puppet, has raised $2 million in Series A funding from True Ventures, the firm that also invested in (then) open-source marketing automation vendor Loopfuse.

Reductive plans to use the funding, which was announced Tuesday, to build out the functionality of Puppet, a move that won't win it any friends among competitors like Hewlett-Packard's OpsWare.

It's a good time for the company to be raising money. Counting such heavyweights as Google, Digg, Twitter, the New York Stock Exchange, Barclays Capital, Oracle, Sun Microsystems, Red Hat, Harvard Law School, and Stanford University, among others, as Puppet users, this Series A funding puts Reductive Labs in a prime position to add polish to the already powerful Puppet IT automation framework.

I caught up with Luke Kanies, Reductive Labs' founder, to ask him about the funding.

Q: You've eschewed raising money before now so...why now? What does cash give you that you couldn't (or wouldn't) do before?
Kanies: The last six to nine months has seen two significant changes for us: large company after large company is revealed to be a Puppet user (e.g., eBay, Oracle, NYSE, and large government agencies) and our current sales team isn't built to operate on their time frames or that widely. We also have spent almost nothing on marketing, and increasing funding there will help those companies already using Puppet to see how we can help, while helping those on the fence see the value of our solution.

Also, we've found that our primary constraint today is execution, rather than research or adoption--we have major development areas almost entirely planned and ready to execute, wanting only the funding for the development itself.

Chef claims to be a an upgrade over vanilla Puppet. Is the fundraising in part a response to Chef? How does this help you to compete against and beat the Chefs of the world?
Kanies: The fundraising is in response to our community's and customers' needs, not potential competitors. Chef is a somewhat similar open-source project but you can't buy support, training, or consulting for it, you can't get custom development done on it, and it's only been around for six months. We're obviously staying conscious of its potential to compete, but it's not on the radar for any of our customers today.

That being said, the funding helps us stay ahead of the curve; while Chef has to focus on maturity and becoming suitable for wider audiences, we can continue to play on Puppet's strengths there while we add the next level of functionality for our customers and community.

How is the business doing? Any statistics you can provide around Puppet adoption?
Kanies: In terms of public users, Red Hat, Sun, Stanford, Google, the Guardian newspaper, Shopzilla, Digg, Twitter, and Barclays Capital are just a few of the worldwide leaders using Puppet.

Our stats are relatively minimal, because we just haven't been able to fund much in that aspect of our marketing. But we've got more than 1,200 people on our users list, revenue is growing 300 to 400 percent this year--in a horrible recession--and our Web traffic is growing 400 percent a year.

HP bought OpsWare in 2007 for $1.6 billion, yet the OpsWare software is arguably less elegant and powerful than Puppet. Should HP/OpsWare be nervous?
Kanies: Yes. Our solution has already been chosen over both BladeLogic and OpsWare at multiple companies. People have picked a Reductive Labs solution for less than one-tenth the cost of a less functional solution from one of the big boys that takes longer to install and has a higher upkeep cost.

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