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A year ago, cloud-native pioneer Docker looked like it could be headed for the endangered species list. Management turnover plus a major business pivot signaled trouble at a company that had helped popularize containers and cloud-native computing.
But after an intense year of realigning its priorities, today the company made a series of announcements that included strong financial growth, a big surge in its developer community, and a $23 million round of funding. While it might be too soon for a victory dance, CEO Scott Johnston believes these numbers reflect the dramatic steps Docker has taken to reinvent itself.
“So much of the last year was refocusing and restructuring the company,” Johnston said. “And we learned a lot through that process. And one of the things is that the new Docker is refocused on really being a developer-led, product-led business.”
Docker surfed the wave of cloud-native development it helped propel in the last decade through tools that made it easier to write applications for containers. It raised $40 million in venture capital in 2014, $95 million in 2015, and $92 million in 2017. Eventually, its venture capital total topped $270 million, pushing its valuation past $1 billion and into unicorn territory.
But its shift to selling directly to enterprises fell flat after Google released its Kubernetes orchestration platform for free as an open source project. After cycling through several CEOs, Docker named Johnston to the role in November 2019 when it announced it had sold its enterprise business, the largest chunk of its revenues, to Mirantis. Docker then raised another $35 million in venture capital to pursue its strategy of creating tools for developers.
Docker’s main products are Docker Desktop, its development application, and Docker Hub, a shared container resource repository. The company sells access to these tools through a range of subscription plans. Since the pivot, the company has been busy adding new features, as well as striking partnerships that offer access to third-party tools.
“That strategy was about providing developers with a collaborative application development platform to get their ideas from code to cloud as quickly as possible,” Johnston said.
Those partnerships have included deals with Azure and AWS to simplify and speed up the process of getting applications from a local environment to the cloud. There were also security partnerships with Snyk and Jfrog to reinforce the supply chain, something that became even more critical as work shifted to remote settings last year.
Docker also announced integrations with Apple’s desktop silicon and Nvidia’s desktop and cloud GPUs to let applications run faster.
“That was a core part of the strategy,” Johnston said. “To work with the ecosystem and bring great ecosystem tech to our developers and a great experience — and also give those developers a choice of which cloud to go to and which supply chain partner to work with.”
Developers’ evolving status is one of the major trends benefiting Docker’s current strategy.
Coders are so deeply coveted and in such high demand that they are wielding growing influence, particularly within enterprises, over decisions regarding tools and how applications are written and deployed. The pandemic has only accelerated this transformation by creating a bigger demand for applications even as the collaboration environment is at risk of becoming less productive.
Anything that simplifies and secures those tasks, as Docker aims to do, is welcomed with open arms.
“The developer as kingmaker, that that was on the rise pre-COVID,” Johnston said. “But then the pandemic comes and now there are two really important factors that are tailwinds to this business.”
So far, the numbers have been promising.
The company has gained 1.8 million more registered developers for a total of 7.3 million. Annual recurring revenues rose 170% from last year. That momentum attracted interest from Tribe Capital, which led the new round of funding, with participation from Benchmark and Insight Partners.
With the new money, the company is going to hire more product managers, designers, and engineers to continue to build features for developers. But for the most part, Docker had to do little outbound marketing to attract those developers and doesn’t plan to start any major new initiatives.
For Johnston, the traction Docker has been getting suggests the limitations of trying to sell directly to an enterprise. If grassroots developers are championing a product, it’s because the service is solving a real problem. If an IT manager buys a tool or service and it just sits around ignored, then the company is stuck.
“It goes back to the product-led growth strategy,” Johnston said. “We’re investing in great product that gets developers even more excited so they’re going to keep talking to their friends and keep bringing in more and more developers. We get signals that developers are loving our products because they are consuming them on a daily, if not minute-by-minute, basis. If the developers aren’t using your stuff, you’re in a tough spot as a company.”
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