Jul
29
2021
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4 key areas SaaS startups must address to scale infrastructure for the enterprise

Startups and SMBs are usually the first to adopt many SaaS products. But as these customers grow in size and complexity — and as you rope in larger organizations — scaling your infrastructure for the enterprise becomes critical for success.

Below are four tips on how to advance your company’s infrastructure to support and grow with your largest customers.

Address your customers’ security and reliability needs

If you’re building SaaS, odds are you’re holding very important customer data. Regardless of what you build, that makes you a threat vector for attacks on your customers. While security is important for all customers, the stakes certainly get higher the larger they grow.

Given the stakes, it’s paramount to build infrastructure, products and processes that address your customers’ growing security and reliability needs. That includes the ethical and moral obligation you have to make sure your systems and practices meet and exceed any claim you make about security and reliability to your customers.

Here are security and reliability requirements large customers typically ask for:

Formal SLAs around uptime: If you’re building SaaS, customers expect it to be available all the time. Large customers using your software for mission-critical applications will expect to see formal SLAs in contracts committing to 99.9% uptime or higher. As you build infrastructure and product layers, you need to be confident in your uptime and be able to measure uptime on a per customer basis so you know if you’re meeting your contractual obligations.

While it’s hard to prioritize asks from your largest customers, you’ll find that their collective feedback will pull your product roadmap in a specific direction.

Real-time status of your platform: Most larger customers will expect to see your platform’s historical uptime and have real-time visibility into events and incidents as they happen. As you mature and specialize, creating this visibility for customers also drives more collaboration between your customer operations and infrastructure teams. This collaboration is valuable to invest in, as it provides insights into how customers are experiencing a particular degradation in your service and allows for you to communicate back what you found so far and what your ETA is.

Backups: As your customers grow, be prepared for expectations around backups — not just in terms of how long it takes to recover the whole application, but also around backup periodicity, location of your backups and data retention (e.g., are you holding on to the data too long?). If you’re building your backup strategy, thinking about future flexibility around backup management will help you stay ahead of these asks.

Apr
29
2021
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Wasabi scores $112M Series C on $700M valuation to take on cloud storage hyperscalers

Taking on Amazon S3 in the cloud storage game would seem to be a fool-hearty proposition, but Wasabi has found a way to build storage cheaply and pass the savings onto customers. Today the Boston-based startup announced a $112 million Series C investment on a $700 million valuation.

Fidelity Management & Research Company led the round with participation from previous investors. It reports that it has now raised $219 million in equity so far, along with additional debt financing, but it takes a lot of money to build a storage business.

CEO David Friend says that business is booming and he needed the money to keep it going. “The business has just been exploding. We achieved a roughly $700 million valuation on this round, so  you can imagine that business is doing well. We’ve tripled in each of the last three years and we’re ahead of plan for this year,” Friend told me.

He says that demand continues to grow and he’s been getting requests internationally. That was one of the primary reasons he went looking for more capital. What’s more, data sovereignty laws require that certain types of sensitive data like financial and healthcare be stored in-country, so the company needs to build more capacity where it’s needed.

He says they have nailed down the process of building storage, typically inside co-location facilities, and during the pandemic they actually became more efficient as they hired a firm to put together the hardware for them onsite. They also put channel partners like managed service providers (MSPs) and value added resellers (VARs) to work by incentivizing them to sell Wasabi to their customers.

Wasabi storage starts at $5.99 per terabyte per month. That’s a heck of a lot cheaper than Amazon S3, which starts at 0.23 per gigabyte for the first 50 terabytes or $23.00 a terabyte, considerably more than Wasabi’s offering.

But Friend admits that Wasabi still faces headwinds as a startup. No matter how cheap it is, companies want to be sure it’s going to be there for the long haul and a round this size from an investor with the pedigree of Fidelity will give the company more credibility with large enterprise buyers without the same demands of venture capital firms.

“Fidelity to me was the ideal investor. […] They don’t want a board seat. They don’t want to come in and tell us how to run the company. They are obviously looking toward an IPO or something like that, and they are just interested in being an investor in this business because cloud storage is a virtually unlimited market opportunity,” he said.

He sees his company as the typical kind of market irritant. He says that his company has run away from competitors in his part of the market and the hyperscalers are out there not paying attention because his business remains a fraction of theirs for the time being. While an IPO is far off, he took on an institutional investor this early because he believes it’s possible eventually.

“I think this is a big enough market we’re in, and we were lucky to get in at just the right time with the right kind of technology. There’s no doubt in my mind that Wasabi could grow to be a fairly substantial public company doing cloud infrastructure. I think we have a nice niche cut out for ourselves, and I don’t see any reason why we can’t continue to grow,” he said.

Apr
28
2021
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DigitalOcean says customer billing data accessed in data breach

DigitalOcean has emailed customers warning of a data breach involving customers’ billing data, TechCrunch has learned.

The cloud infrastructure giant told customers in an email on Wednesday, obtained by TechCrunch, that it has “confirmed an unauthorized exposure of details associated with the billing profile on your DigitalOcean account.” The company said the person “gained access to some of your billing account details through a flaw that has been fixed” over a two-week window between April 9 and April 22.

The email said customer billing names and addresses were accessed, as well as the last four digits of the payment card, its expiry date and the name of the card-issuing bank. The company said that customers’ DigitalOcean accounts were “not accessed,” and passwords and account tokens were “not involved” in this breach.

“To be extra careful, we have implemented additional security monitoring on your account. We are expanding our security measures to reduce the likelihood of this kind of flaw occuring [sic] in the future,” the email said.

DigitalOcean said it fixed the flaw and notified data protection authorities, but it’s not clear what the apparent flaw was that put customer billing information at risk.

In a statement, DigitalOcean’s security chief Tyler Healy said 1% of billing profiles were affected by the breach, but declined to address our specific questions, including how the vulnerability was discovered and which authorities have been informed.

Companies with customers in Europe are subject to GDPR and can face fines of up to 4% of their global annual revenue.

Last year, the cloud company raised $100 million in new debt, followed by another $50 million round, months after laying off dozens of staff amid concerns about the company’s financial health. In March, the company went public, raising about $775 million in its initial public offering. 

Mar
10
2021
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Aqua Security raises $135M at a $1B valuation for its cloud native security platform

Aqua Security, a Boston- and Tel Aviv-based security startup that focuses squarely on securing cloud-native services, today announced that it has raised a $135 million Series E funding round at a $1 billion valuation. The round was led by ION Crossover Partners. Existing investors M12 Ventures, Lightspeed Venture Partners, Insight Partners, TLV Partners, Greenspring Associates and Acrew Capital also participated. In total, Aqua Security has now raised $265 million since it was founded in 2015.

The company was one of the earliest to focus on securing container deployments. And while many of its competitors were acquired over the years, Aqua remains independent and is now likely on a path to an IPO. When it launched, the industry focus was still very much on Docker and Docker containers. To the detriment of Docker, that quickly shifted to Kubernetes, which is now the de facto standard. But enterprises are also now looking at serverless and other new technologies on top of this new stack.

“Enterprises that five years ago were experimenting with different types of technologies are now facing a completely different technology stack, a completely different ecosystem and a completely new set of security requirements,” Aqua CEO Dror Davidoff told me. And with these new security requirements came a plethora of startups, all focusing on specific parts of the stack.

Image Credits: Aqua Security

What set Aqua apart, Dror argues, is that it managed to 1) become the best solution for container security and 2) realized that to succeed in the long run, it had to become a platform that would secure the entire cloud-native environment. About two years ago, the company made this switch from a product to a platform, as Davidoff describes it.

“There was a spree of acquisitions by CheckPoint and Palo Alto [Networks] and Trend [Micro],” Davidoff said. “They all started to acquire pieces and tried to build a more complete offering. The big advantage for Aqua was that we had everything natively built on one platform. […] Five years later, everyone is talking about cloud-native security. No one says ‘container security’ or ‘serverless security’ anymore. And Aqua is practically the broadest cloud-native security [platform].”

One interesting aspect of Aqua’s strategy is that it continues to bet on open source, too. Trivy, its open-source vulnerability scanner, is the default scanner for GitLab’s Harbor Registry and the CNCF’s Artifact Hub, for example.

“We are probably the best security open-source player there is because not only do we secure from vulnerable open source, we are also very active in the open-source community,” Davidoff said (with maybe a bit of hyperbole). “We provide tools to the community that are open source. To keep evolving, we have a whole open-source team. It’s part of the philosophy here that we want to be part of the community and it really helps us to understand it better and provide the right tools.”

In 2020, Aqua, which mostly focuses on mid-size and larger companies, doubled the number of paying customers and it now has more than half a dozen customers with an ARR of over $1 million each.

Davidoff tells me the company wasn’t actively looking for new funding. Its last funding round came together only a year ago, after all. But the team decided that it wanted to be able to double down on its current strategy and raise sooner than originally planned. ION had been interested in working with Aqua for a while, Davidoff told me, and while the company received other offers, the team decided to go ahead with ION as the lead investor (with all of Aqua’s existing investors also participating in this round).

“We want to grow from a product perspective, we want to grow from a go-to-market [perspective] and expand our geographical coverage — and we also want to be a little more acquisitive. That’s another direction we’re looking at because now we have the platform that allows us to do that. […] I feel we can take the company to great heights. That’s the plan. The market opportunity allows us to dream big.”

 

Feb
17
2021
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Microsoft’s Dapr open-source project to help developers build cloud-native apps hits 1.0

Dapr, the Microsoft-incubated open-source project that aims to make it easier for developers to build event-driven, distributed cloud-native applications, hit its 1.0 milestone today, signifying the project’s readiness for production use cases. Microsoft launched the Distributed Application Runtime (that’s what “Dapr” stand for) back in October 2019. Since then, the project released 14 updates and the community launched integrations with virtually all major cloud providers, including Azure, AWS, Alibaba and Google Cloud.

The goal for Dapr, Microsoft Azure CTO Mark Russinovich told me, was to democratize cloud-native development for enterprise developers.

“When we go look at what enterprise developers are being asked to do — they’ve traditionally been doing client, server, web plus database-type applications,” he noted. “But now, we’re asking them to containerize and to create microservices that scale out and have no-downtime updates — and they’ve got to integrate with all these cloud services. And many enterprises are, on top of that, asking them to make apps that are portable across on-premises environments as well as cloud environments or even be able to move between clouds. So just tons of complexity has been thrown at them that’s not specific to or not relevant to the business problems they’re trying to solve.”

And a lot of the development involves re-inventing the wheel to make their applications reliably talk to various other services. The idea behind Dapr is to give developers a single runtime that, out of the box, provides the tools that developers need to build event-driven microservices. Among other things, Dapr provides various building blocks for things like service-to-service communications, state management, pub/sub and secrets management.

Image Credits: Dapr

“The goal with Dapr was: let’s take care of all of the mundane work of writing one of these cloud-native distributed, highly available, scalable, secure cloud services, away from the developers so they can focus on their code. And actually, we took lessons from serverless, from Functions-as-a-Service where with, for example Azure Functions, it’s event-driven, they focus on their business logic and then things like the bindings that come with Azure Functions take care of connecting with other services,” Russinovich said.

He also noted that another goal here was to do away with language-specific models and to create a programming model that can be leveraged from any language. Enterprises, after all, tend to use multiple languages in their existing code, and a lot of them are now looking at how to best modernize their existing applications — without throwing out all of their current code.

As Russinovich noted, the project now has more than 700 contributors outside of Microsoft (though the core commuters are largely from Microsoft) and a number of businesses started using it in production before the 1.0 release. One of the larger cloud providers that is already using it is Alibaba. “Alibaba Cloud has really fallen in love with Dapr and is leveraging it heavily,” he said. Other organizations that have contributed to Dapr include HashiCorp and early users like ZEISS, Ignition Group and New Relic.

And while it may seem a bit odd for a cloud provider to be happy that its competitors are using its innovations already, Russinovich noted that this was exactly the plan and that the team hopes to bring Dapr into a foundation soon.

“We’ve been on a path to open governance for several months and the goal is to get this into a foundation. […] The goal is opening this up. It’s not a Microsoft thing. It’s an industry thing,” he said — but he wasn’t quite ready to say to which foundation the team is talking.

 

May
28
2020
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Wasabi announces $30M Series B as cloud storage business continues to grow

We may be in the thick of a pandemic with all of the economic fallout that comes from that, but certain aspects of technology don’t change, no matter the external factors. Storage is one of them. In fact, we are generating more digital stuff than ever, and Wasabi, a Boston-based startup that has figured out a way to drive down the cost of cloud storage, is benefiting from that.

Today it announced a $30 million Series B led led by Forestay Capital, the technology innovation arm of Waypoint Capital, with help from previous investors. As with the previous round, Wasabi is going with home office investors, rather than traditional venture capital firms. Today’s round brings the total raised to $110 million, according to the company.

While founder and CEO David Friend wouldn’t discuss the specific valuation, he did say it was in the hundreds of millions of dollars.

Friend says the company needs the funds to keep up with the rapid growth. “We’ve got about 15,000 customers today, hundreds of petabytes of storage, 2,500 channel partners, 250 technology partners — so we’ve been busy,” he said.

He says that revenue continues to grow in spite of the impact of COVID-19 on other parts of the economy. “Revenue grew 5x last year. It’ll probably grow 3.5x this year. We haven’t seen any real slowdown from the coronavirus. Quarter over quarter growth will be in excess of 40% — this quarter over Q1 — so it’s just continuing on a torrid pace,” he said.

The challenge for a company like Wasabi, which is looking to capture a large chunk of the growing cloud storage market, is the infrastructure piece. It needs to keep building more to meet increasing demand, while keeping costs down, which remains its primary value proposition with customers.

The money will be used mostly to continue to expand its growing infrastructure requirements. The more they store, the more data centers they need, and that takes money. It will also help the company expand into new markets where countries have data sovereignty laws that require data to be stored in-country.

The company launched in 2015. It previously raised $68 million in 2018.

Note: This article originally stated this was a debt financing round. The company has clarified that it is an equity round.

May
12
2020
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Microsoft partners with Redis Labs to improve its Azure Cache for Redis

For a few years now, Microsoft has offered Azure Cache for Redis, a fully managed caching solution built on top of the open-source Redis project. Today, it is expanding this service by adding Redis Enterprise, Redis Lab’s commercial offering, to its platform. It’s doing so in partnership with Redis Labs and while Microsoft will offer some basic support for the service, Redis Labs will handle most of the software support itself.

Julia Liuson, Microsoft’s corporate VP of its developer tools division, told me that the company wants to be seen as a partner to open-source companies like Redis Labs, which was among the first companies to change its license to prevent cloud vendors from commercializing and repackaging their free code without contributing back to the community. Last year, Redis Labs partnered with Google Cloud to bring its own fully managed service to its platform and so maybe it’s no surprise that we are now seeing Microsoft make a similar move.

Liuson tells me that with this new tier for Azure Cache for Redis, users will get a single bill and native Azure management, as well as the option to deploy natively on SSD flash storage. The native Azure integration should also make it easier for developers on Azure to integrate Redis Enterprise into their applications.

It’s also worth noting that Microsoft will support Redis Labs’ own Redis modules, including RediSearch, a Redis-powered search engine, as well as RedisBloom and RedisTimeSeries, which provide support for new datatypes in Redis.

“For years, developers have utilized the speed and throughput of Redis to produce unbeatable responsiveness and scale in their applications,” says Liuson. “We’ve seen tremendous adoption of Azure Cache for Redis, our managed solution built on open source Redis, as Azure customers have leveraged Redis performance as a distributed cache, session store, and message broker. The incorporation of the Redis Labs Redis Enterprise technology extends the range of use cases in which developers can utilize Redis, while providing enhanced operational resiliency and security.”

Mar
19
2020
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Storj brings low-cost decentralized cloud storage to the enterprise

Storj, a startup that developed a low-cost, decentralized cloud storage solution, announced a new version today called Tardigrade Decentralized Cloud Storage Service.

The new service comes with an enterprise service level agreement (SLA) that promises 99.9999999% file durability and over 99.95 percent availability, which it claims is on par with Amazon S3.

The company has come up with an unusual system to store files safely, taking advantage of excess storage capacity around the world. They are effectively doing with storage what Airbnb does with an extra bedroom, enabling people and organizations to sell that excess capacity to make extra money.

It’s fair to ask if that wouldn’t be a dangerous way to store files, but Storj Executive Chairman Ben Golub says that they have come up with a way of distributing the data across drives on their network so that no single file would ever be fully exposed.

“What we do in order to make this work is, first, before any data is uploaded, our customers encrypt the data, and they hold the keys so nobody else can decrypt the data. And then every part of a file is split into 80 pieces, of which any 30 can be used to reconstitute it. And each of those 80 pieces goes to a different drive on the network,” Golub explained.

That means even if a hacker were able to somehow get at one encrypted piece of the puzzle, he or she would need 29 others, and the encryption keys, to put the file back together again. “All a storage node operator sees is gibberish, and they only see a portion of the file. So if a bad person wanted to get your file, they would have to compromise something like 30 different networks in order to get [a single file], and even if they did that they would only have gibberish unless you also lost your encryption keys,” he said.

The ability to buy excess capacity allows Storj to offer storage at much lower prices than typical cloud storage. Golub says his company’s list prices are one-half to one-third cheaper than Amazon S3 storage and it’s S3-compatible.

The company launched in 2014 and has 20,000 users on 100,000 distributed nodes today, but this is the first time it has launched an enterprise version of the cloud storage solution.

Feb
01
2020
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What Nutanix got right (and wrong) in its IPO roadshow

Back in 2016, Nutanix decided to take the big step of going public. Part of that process was creating a pitch deck and presenting it during its roadshow, a coming-out party when a company goes on tour prior to its IPO and pitches itself to investors of all stripes.

It’s a huge moment in the life of any company, and after talking to CEO Dheeraj Pandey and CFO Duston Williams, one we better understood. They spoke about how every detail helped define their company and demonstrate its long-term investment value to investors who might not have been entirely familiar with the startup or its technology.

Pandey and Williams reported going through more than 100 versions of the deck before they finished the one they took on the road. Pandey said they had a data room checking every fact, every number — which they then checked yet again.

In a separate Extra Crunch post, we looked at the process of building that deck. Today, we’re looking more closely at the content of the deck itself, especially the numbers Nutanix presented to the world. We want to see what investors did more than three years ago and what’s happened since — did the company live up to its promises?

Plan of attack

Jan
30
2020
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OpsRamp raises $37.5M for its hybrid IT operations platform

OpsRamp, a service that helps IT teams discover, monitor, manage and — maybe most importantly — automate their hybrid environments, today announced that it has closed a $37.5 million funding round led by Morgan Stanley Expansion Capital, with participation from existing investor Sapphire Ventures and new investor Hewlett Packard Enterprise.

OpsRamp last raised funding in 2017, when Sapphire led its $20 million Series A round.

At the core of OpsRamp’s services is its AIOps platform. Using machine learning and other techniques, this service aims to help IT teams manage increasingly complex infrastructure deployments, provide intelligent alerting and eventually automate more of their tasks. The company’s overall product portfolio also includes tools for cloud monitoring and incident management.

The company says its annual recurrent revenue increased by 300% in 2019 (though we obviously don’t know what number it started 2019 with). In total, OpsRamp says it now has 1,400 customers on its platform and alliances with AWS, ServiceNow, Google Cloud Platform and Microsoft Azure.

OpsRamp co-founder and CEO Varma Kunaparaju

According to OpsRamp co-founder and CEO Varma Kunaparaju, most of the company’s customers are mid to large enterprises. “These IT teams have large, complex, hybrid IT environments and need help to simplify and consolidate an incredibly fragmented, distributed and overwhelming technology and infrastructure stack,” he said. “The company is also seeing success in the ability of our partners to help us reach global enterprises and Fortune 5000 customers.”

Kunaparaju told me that the company plans to use the new funding to expand its go-to-market efforts and product offerings. “The company will be using the money in a few different areas, including expanding our go-to-market motion and new pursuits in EMEA and APAC, in addition to expanding our North American presence,” he said. “We’ll also be doubling-down on product development on a variety of fronts.”

Given that hybrid clouds only increase the workload for IT organizations and introduce additional tools, it’s maybe no surprise that investors are now interested in companies that offer services that rein in this complexity. If anything, we’ll likely see more deals like this one in the coming months.

“As more of our customers transition to hybrid infrastructure, we find the OpsRamp platform to be a differentiated IT operations management offering that aligns well with the core strategies of HPE,” said Paul Glaser, vice president and head of Hewlett Packard Pathfinder. “With OpsRamp’s product vision and customer traction, we felt it was the right time to invest in the growth and scale of their business.”

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