Venture capital was never supposed to be safe. It was meant to back wild adventures, where risk is guaranteed and success is unlikely. With such brutal odds, what reasonable person would try building or investing in such a thing?
No reasonable person would, and that’s why ventures that result in world-altering outcomes are always achieved by people who seem crazy to everyone else.
A lot of reasonable people think the team at Oxide is crazy. At face value, that’s understandable: They set out to build an entirely new kind of computing infrastructure, aimed at going head-to-head with some of the biggest, most formidable companies in the world — Amazon, Microsoft, and Google— and becoming the de facto first choice for cloud infrastructure for the entire enterprise.
But that’s what truly bold innovation looks like, and what venture capital is actually meant to support — rebels who don’t care if everyone else thinks their idea is too hard, too complex, or too risky. Builders who have conviction in their idea because they understand the problem so thoroughly, they just might be the only people who can pull it off.
Oxide has been doubted since they set out in 2019 to build the world’s first truly scalable hybrid cloud solution aimed at tackling one of modern computing’s most common (and difficult) problems: Finding a better way for the tens of thousands of organizations that use on-prem IT infrastructure to utilize cloud technology. Due to regulatory, security, or latency requirements, an astounding 85% of IT systems globally are outside the public cloud giants AWS, Azure, and GCP. The workaround is cumbersome and often imperfect, as each on-prem organization is forced to cobble together a bespoke system of servers, switches, virtualization software, and monitoring tools from multiple vendors to build their own private cloud.
As big as the problem is, nobody — not even the world’s hyperscalers — wanted to take it on.
The problem clearly needed a new company, but even though Oxide founders Steve Tuck and Bryan Cantrill brought the right technical and operational expertise, many investors found the idea simply too daunting. This fear highlights a disconcerting trend in the innovation ecosystem: Venture capital has become decoupled from its original mission. What was a frontier has become a formula — an asset class to be optimized, smoothed out, hedged, indexed, managed. Contrarian projects like Oxide are increasingly less likely to be supported because they don’t fit the pattern investors have come to look for: Momentum chasers, not people with wild ideas taking dead aim at incumbents.
When I first met Steve and Bryan in 2019, I saw that they had the guts and the chops to pull their idea off, and Eclipse led Oxide’s seed round. The challenges were indeed daunting: Building a full-stack, rack-level computer system is not simply a matter of integrating off-the-shelf parts. It requires foundational rethinking across hardware, firmware, and software. But Oxide proved up to the formidable task, and in 2023 debuted the world’s first commercial cloud computer: An integrated, elastic, API-driven system that provides programmable cloud infrastructure to on-prem IT.
The response has been significant, and Oxide today has a growing number of customers that are deploying Oxide infra and delighting users, including Switch, Shopify, and various government labs like Lawrence Livermore National Laboratory. Eclipse is excited to be participating in Oxide’s $100 million Series B round to support the company in its mission to become the “hyperscaler-like” solution for customer-owned data centers.
We got one of these beautiful machines just a few days ago.
— tobi lutke (@tobi) May 24, 2024
If you want to hack on this amazing hardware, and press it into service for commerce, join up https://t.co/lNAN3CMmk2
Designing and building cloud software and rack-level hardware together is an epic achievement, and the potential is huge. Already, private cloud computing represents $135B of the $400B global IT infrastructure market and is expected to grow significantly in the next decade. Just as GPU demand reshaped chip markets, the AI revolution is reshaping the dynamics of the global infrastructure market. Enterprises are finding that, while convenient for training AI, the public cloud is economically unsustainable for inference and production-scale operations. This means the need for elastic, high-performance infrastructure has never been higher, and Oxide is uniquely positioned to become the leading provider at the intersection of this shift.
Moreover, with the installed base and software stack Oxide is building, it is positioning itself for its own AWS-like scope and longevity. Having built a deeply integrated hardware and software foundation, combining custom board design, advanced networking, and seamless management software, the company can strategically pursue opportunities well beyond on-premises computing in the future — becoming a true alternative to the public cloud.
Adventure capital is alive at Eclipse. We stand with the builders. The engineers. The founders who are told it cannot be done. The ones who hear no and build anyway. Oxide is driven by courage, grounded by real-world needs, and runs on transparency, rigor, and customer obsession. They don’t care what you think of them, they just want to build something that has the potential to completely upend cloud infrastructure as we know it, and define the next era. We are proud to be working with them.
More on today's news from Reuters
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