It isn’t the sexiest startup in Silicon Valley, but San Francisco based OpenDNS just closed one of the most competitive venture capital deals in recent history. Top tier firms Sequoia Capital and Greylock Partners came out the winners. The company will announce a second round of financing from both firms shortly.
The deal size and valuation isn’t being disclosed. David Strohm from Greylock and Michael Goguen from Sequoia join previous investor Halsey Minor and CEO Nand Mulchandani on the board of directors. Founding CEO David Ulevitch stepped down in late 2008 to take the CTO role.
OpenDNS, which launched in 2006, is a DNS service provider for consumers and organizations. It has two main benefits. First, users can avoid DNS outages that occasionally plague ISPs because OpenDNS routes around the legacy infrastructure that occasionally gets hit by DDOS attacks and other problems. Last year, for example, a Time Warner outage left many Los Angeles customers without Internet access, but OpenDNS users weren’t affected.
The service also allows users to block certain kinds of sites, like porn and phishing sites. Users have to do some basic configuration of their computer to get it going, and once it’s running they rarely see it again.
A year ago we reported that the company was resolving 7 billion DNS queries per day and revenue from search pages from unresolved URLs brought in as much as $20,000 per day. Today they are resolving up to 15 billion daily DNS queries.
The company has 24 employees and previously raised just $2.5 million from Minor Ventures. They have been profitable for more than 18 months, they say.
freakin’ awesome stuff.
What a lazy, sleepy VC abortion. These guys should be taken out to the woodshed and spanked good.
If they’re making so much money why do they need VC?
I think they also make money off their blocked parental controls pages — think I remember seeing ads on these.
I think the answer to the question is that Minor and company drove them to it…I just hope for their sake the money was very inexpensive, and that the founders got some liquidity. This is the classic next-move in the VC “Steal-The-Company” playbook.
I think in that book, this is a “Red-47 Reverse” play.
sequoia and greylock…that means CIA, right?
Elaborate… What do you mean by the CIA comment?
Pretty reliable service, except for some of the re-directed DNS such as http://www.google.com which resolves to google.navigation.opendns.com [208.69.32.230]. That has failed on more than one occasion and only fixed when they put it back to simply http://www.google.com for a short time. Other than that, I love the service.
I’m a long time user of OpenDNS, kind of have to be with Time Warner’s poor service in LA.
Good to know they are generating some great rev and funding to keep going.
Geees Louise!
This guy posts from the salon nonstop.
BTW, love the product. It maintains hold throughout the day while appearing natural.
OpenDNS is like the Sebastien hair care products of the DNS world
Hope this would help opendns to work faster.
They must be collecting a boat load of information/data on their users…to be later used/sold for targeting ads. That’s my guess.
“There is a high correlation between DNS query resolving and revenue, so that $20k/day number may be much higher now.”
PPC payouts dropped substantially from when the 20K statement was made to today.
really good point actually.
Here’s a likely scenario:
1. They made projections based on market top, thinking we’re doing so good, growth curve looks outstanding, we’re taking over the world.
2. Based on that they went ahead and over spent (we all have)
3. Reality hits home!
4. Scrambling to find a way out of the financial mess, they find out VC’s are still better exit than going out of business.
I don’t think that your scenario is likely. I highly doubt the VC’s mentioned would be fighting over a google adsense play that over spent.
Its all about the data.
I’m also wondering wither Minor wanted out. Do we know if they issued new shares or whether the two new VC firms simply took the existing shares off Minor’s hands?
There were some rumors recently his incubator/fund wasn’t doing so well.
How does DNS query resolution leads to ad revenue ?
Congratulations to everyone at OpenDNS, and best wishes for continued success. You guys deserve it.
Wow — a lot of negativity towards VC funding here in the comments.
There are very valid reasons why a profitable company would take VC money, the most obvious answer being to scale.
I don’t necessarily mean hardware or marketing dollars (or even their current service), but they want to scale their revenue (think 10x) and they think they can do it by taking a chunk of cash and putting it to work.
Congrats to the OpenDNS team on a wonderfully simple and successful service. Excited to see the future.
Take a look at the VC current & past portfolios. A lot of companies in there would be killer partners for OpenDNS.
Looks like a bit.ly/twitter play in the works.
Just a matter of time until these guys get a generous cash out. bravo.
bit.ly/twitter type plays have nothing to do with what OpenDNS is about. I doubt this is the direction they are going in.
what are you talking about??
they need to get in a bunch of devices. the contacts and those VCs will get them in there much easier.
just like the VC connection btw twitter and bit.ly was a major driver of bit.ly becoming the URL shortner of choice for twitter.
douche.
Congrats to the evfryone at OpenDNS.
Congratulations to everyone involved in making this happen!! Awesome news, OpenDns is great Service, I live in Argentina and its the best service by far here. Hope you all the best!!!
I don’t know, I don’t think I like this open stuff!
Another congrats to David and everyone else at OpenDNS!
The only think is that it is not Hacker or Cracker safe… I use OpenDNS and a couple of times I had problems as some moron registered with OpenDNS and took hold of all the BSNL ip-range so that BSNL users with OpenDNS would be blocked out from sites like TechCrunch, Gmail etc… They should be able to verify ownership of IP range in a better way…
Imagine if he could divert all traffic to his own servers, and he would be able to steal money by impersonating paypal and banks…
Anyways OpenDNS is a better than no DNS at all!
They make a lot of money
Congratulations to everyone at OpenDNS, and best wishes for continued success.
Taking vc nothing to do with making money, i know some companies who is looking for VC even they do more than 10 million$ ebitda
more features on OpenDNS
OpenDNS provides an excellent service. I hope whatever they do with this money doesn’t change this.
I hope and expect things will continue to get even better.
Congrads OpenDNS, hope you have big plans for the infusion of $$.
interesting business model to give away some value and monetize the residual searches from URL mistypes. the value prop is overhyped, since phishing sites typically use an IP address rather than a domain name, bypassing DNS completely.
nevertheless, helluva lot better more value than the malware from conduit which monetizes likewise…