Monthly Archives: May 2021

Father and son duo take on global logistics with Optimal Dynamics’ sequential decision AI platform

Posted by on 18 May, 2021

This post was originally published on this site

Like “innovation,” machine learning and artificial intelligence are commonplace terms that provide very little context for what they actually signify. AI/ML spans dozens of different fields of research, covering all kinds of different problems and alternative and often incompatible ways to solve them.

One robust area of research here that has antecedents going back to the mid-20th century is what is known as stochastic optimization — decision-making under uncertainty where an entity wants to optimize for a particular objective. A classic problem is how to optimize an airline’s schedule to maximize profit. Airlines need to commit to schedules months in advance without knowing what the weather will be like or what the specific demand for a route will be (or, whether a pandemic will wipe out travel demand entirely). It’s a vibrant field, and these days, basically runs most of modern life.

Warren B. Powell has been exploring this problem for decades as a researcher at Princeton, where he has operated the Castle Lab. He has researched how to bring disparate areas of stochastic optimization together under one framework that he has dubbed “sequential decision analytics” to optimize problems where each decision in a series places constraints on future decisions. Such problems are common in areas like logistics, scheduling and other key areas of business.

The Castle Lab has long had industry partners, and it has raised tens of millions of dollars in grants from industry over its history. But after decades of research, Powell teamed up with his son, Daniel Powell, to spin out his collective body of research and productize it into a startup called Optimal Dynamics. Father Powell has now retired full-time from Princeton to become Chief Analytics Officer, while son Powell became CEO.

The company raised $18.4 million in new funding last week from Bessemer led by Mike Droesch, who recently was promoted to partner earlier this year with the firm’s newest $3.3 billion fundraise. The company now has 25 employees and is centered in New York City.

So what does Optimal Dynamics actually do? CEO Powell said that it’s been a long road since the company’s founding in mid-2017 when it first raised a $450,000 pre-seed round. We were “drunkenly walking in finding product-market fit,” Powell said. This is “not an easy technology to get right.”

What the company ultimately zoomed in on was the trucking industry, which has precisely the kind of sequential decision-making that father Powell had been working on his entire career. “Within truckload, you have a whole series of uncertain variables,” CEO Powell described. “We are the first company that can learn and plan for an uncertain future.”

There’s been a lot of investment in logistics and trucking from VCs in recent years as more and more investors see the potential to completely disrupt the massive and fragmented market. Yet, rather than building a whole new trucking marketplace or approaching it as a vertically-integrated solution, Optimal Dynamics decided to go with the much simpler enterprise SaaS route to offer better optimization to existing companies.

One early customer, which owned 120 power units, saved $4 million using the company’s software, according to Powell. That was a result of better utilization of equipment and more efficient operations. They “sold off about 20 vehicles that they didn’t need anymore due to the underlying efficiency,” he said. In addition, the company was able to replace a team of ten who used to manage trucking logistics down to one, and “they are just managing exceptions” to the normal course of business. As an example of an exception, Powell said that “a guy drove half way and then decided he wanted to quit,” leaving a load stranded. “Trying to train a computer on weird edge events [like that] is hard,” he said.

Better efficiency for equipment usage and then saving money on employee costs by automating their work are the two main ways Optimal Dynamics saves money for customers. Powell says most of the savings come in the former rather than the latter, since utilization is often where the most impact can be felt.

On the technical front, the key improvement the company has devised is how to rapidly solve the ultra-complex optimization problems that logistics companies face. The company does that through value function approximation, which is a field of study where instead of actually computing the full range of stochastic optimization solutions, the program approximates the outcomes of decisions to reduce compute time. We “take in this extraordinary amount of detail while handling it in a computationally efficient way,” Powell said. That’s where we have really “wedged ourselves as a company.”

Early signs of success with customers led to a $4 million seed round led by Homan Yuen of Fusion Fund, which invests in technically-sophisticated startups (i.e. the kind of startups that take decades of optimization research at Princeton to get going). Powell said that raising the round was tough, transpiring during the first weeks of the pandemic last year. One corporate fund pulled out at the last minute, and it was “chaos ensuing with everyone,” he said. This Series A process meanwhile was the opposite. “This round was totally different — closed it in 17 days from round kickoff to closure,” he said.

With new capital in the bank, the company is looking to expand from 25 employees to 75 this year, who will be trickling back to the company’s office in the Flatiron neighborhood of Manhattan in the coming months. Optimal Dynamics targets customers with 75 trucks or more, either fleets for rent or private fleets owned by companies like Walmart who handle their own logistics.

Posted Under: Tech News
How Expensify got to $100M in revenue by hiring “stem cells” and not “cogs in a wheel”

Posted by on 18 May, 2021

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The influence of a founder on their company’s culture cannot be overstated. Everything from their views on the product and business to how they think about people affects how their company’s employees will behave, and since behavior in turn informs culture, the consequences of a founder’s early decisions can be far-reaching.

So it’s not very surprising that Expensify has its own take on almost everything it does when you consider what its founder and CEO David Barrett learned early in his life: “Basically everyone is wrong about basically everything.” As we saw in part 1 of this EC-1, this led him to the revelation that it’s easier to figure things out for yourself than finding advice that applies to you. Eventually, these insights — and the adventurous P2P hacker attitude he nurtured alongside his colleagues and Travis Kalanick at Red Swoosh — would inform how he would go about shaping Expensify.

Expensify’s culture can’t be separated from its hiring and growth processes — by joining the company, employees self-select into a group that isn’t likely to get hung up about trade-offs.

It’s striking how Expensify has managed to maintain this character 13 years later, even on the threshold of an IPO. How did this happen? During a series of interviews in February and early March, we found the answer is tied to the level of thought and effort this expense management business puts into its culture.

You see, the people at Expensify are prepared to invent their own playbook, develop it and, if needed, rewrite it completely. Its HR policies and strategy are tailored to find people who would have fun building an expense management product. It has a unique growth and recognition scheme to offset the drawbacks of a flat organizational structure. It’s even got a “Senate” that vets all major decisions. No kidding.

All this, and more, has ultimately helped Expensify reach more than 10 million users and achieve $100 million in annual revenue with just 130 employees. Let’s take a closer look at how Expensify makes it happen.

“We want the fewest people necessary to get the job done”

It’s clear Expensify’s unusually high employee-to-revenue ratio is intentional: “We want the fewest people necessary to get the job done,” Barrett says. But how do you actually achieve it? How do you hire and keep people who can deliver such results? Barrett had to learn how the hard way.

Expensify’s first team was based in San Francisco and comprised Barrett’s old Red Swoosh and Akamai colleagues, who joined a few months after Akamai fired him. A small team was enough to get started, but it was much more difficult to hire additional people. Barrett is eager to clarify the Valley is not really the best place to recruit talent: “Sure, Silicon Valley has a ton of really awesome people, but all of them have jobs!,” he says.

Posted Under: Tech News
Explorium scores $75M Series C just 10 months after B round

Posted by on 18 May, 2021

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Without good data, it’s impossible to build an accurate predictive machine learning model. Explorium, a company that has been building a solution over the last several years to help data pros find the best data for a given model, announced a $75 million Series C today — just 10 months after announcing a $31 million Series B.

Insight Partners led today’s investment with participation from existing investors Zeev Ventures, Emerge, F2 Venture Capital, 01 Advisors and Dynamic Loop Capital. The company reports it has now raised a total of $127 million. George Mathew, managing partner at Insight, and former president and COO at Alteryx, will be joining the board, giving the company someone with solid operator experience to help guide them into the next phase.

Company co-founder and CEO Maor Shlomo, says that in spite of how horrible COVID has been from a human perspective, it has been a business accelerator for his company and he saw revenue quadruple last year (although he didn’t share specific numbers beyond that). “It’s related to the nature of our business. We’re helping enterprises and data practitioners find new data sources that can help them solve business challenges,” Sholmo explained.

He says that during the pandemic, a lot of companies had to find new data sources because the old data wasn’t especially helpful for predictive models. That meant that customers required new sources to give them visibility into the shifts and movements in the market to help them adjust and make decisions during pandemic. “And given that’s basically what our platform does in its essence, we’ve seen a lot of growth [over the past year],” he says.

With the revenue growth the company has been experiencing, it has been adding employees at rapid clip. When we spoke to Explorium last July, the company had 87 people. Today that number has grown to 130 with plans to get to 200 perhaps by the end of 2021 or early 2022, depending on how the business continues to grow.

The company has offices in Tel Aviv and San Mateo, California with plans to open a new office in New York City whenever it’s possible to do so. While Shlomo wants a flexible workplace, he’s not going fully remote with plans to allow people to work two days from home and three in the office as local rules allow.

Posted Under: Tech News
Klaviyo’s next-gen email marketing platform engorges on $320M at a $9.5B valuation

Posted by on 18 May, 2021

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Email marketing is decades old, but it’s a category that has surprising life in it. Multiple generations of email marketing companies have come through and sustained success, from Constant Contact to Mailchimp. These brands often become household names — after all, you probably have hundreds of emails with their logos attached to the email footer.

Klaviyo is not as much of a household name right now, but it is absolutely on its way to the paramount of the next-generation of email marketing startups.

The company announced today that it has raised $320 million in new capital in a Series D round, led by Sands Capital, a private and public equity investor that has, among many areas of focus, a thesis in ecommerce. That brings the company’s total fundraising to $675 million, following a $200 million Series C round from just six months ago.

Klaviyo was the subject of one of our most recent EC-1 analyses, where we looked at the company’s history of growth, how it is rebuilding what’s been dubbed “owned marketing” (i.e. marketing channels that a business owns like email rather than channels owned by platforms like Facebook and Instagram), how marketers are using Klaviyo post-COVID, and some startup growth lessons from the business as well.

There is nearly 10,000 words of analysis packed into that whole story, so read that or save it for the weekend if you really want to get into the nitty-gritty of Klaviyo’s story and how it is fitting in to the wider email marketing space. But suffice it to say that the company’s secret sauce is perhaps obvious: it’s a marketing company that’s pretty damn good at marketing. That’s allowed it to pull in gargantuan numbers of new customers as many retailers and brick-and-mortar businesses fled online in the wake of the COVID-19 pandemic.

In its press statement, the company wrote that “Klaviyo’s customer base doubled over the past 12 months and the company now serves over 70,000 paying customers, a more than 110% increase from 2019 — ranging from small businesses to Fortune 500 companies, in more than 120 countries.” It also said that it plans to increase its head count from 800 to 1,300 people this year.

The company is headquartered in Boston, and Klaviyo’s all-but decacorn valuation is a major win for the Boston enterprise ecosystem, which continues to percolate on high.

In addition to Sands, Counterpoint Global, Whale Rock Capital Management, ClearBridge Investments, Lone Pine Capital, Owl Rock Capital, and Glynn Capital also joined the round as new investors. Previous investors Accel and Summit Partners also participated.

Posted Under: Tech News
Styra, the startup behind Open Policy Agent, nabs $40M to expand its cloud-native authorization tools

Posted by on 18 May, 2021

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As cloud-native apps continue to become increasingly central to how organizations operate, a startup founded by the creators of a popular open-source tool to manage authorization for cloud-native application environments is announcing some funding to expand its efforts at commercializing the opportunity.

Styra, the startup behind Open Policy Agent, has picked up $40 million in a Series B round of funding led by Battery Ventures. Also participating are previous backers A. Capital, Unusual Ventures and Accel; and new backers CapitalOne Ventures, Citi Ventures and Cisco Investments. Styra has disclosed CapitalOne is also one of its customers, along with e-commerce site Zalando and the European Patent Office.

Styra is sitting on the classic opportunity of open source technology: scale and demand.

OPA — which can be used across Kubernetes, containerized and other environments — now has racked up some 75 million downloads and is adding some 1 million downloads weekly, with Netflix, Capital One, Atlassian and Pinterest among those that are using OPA for internal authorization purposes. The fact that OPA is open source is also important:

“Developers are at the top of the food chain right now,” CEO Bill Mann said in an interview, “They choose which technology on which to build the framework, and they want what satisfies their requirements, and that is open source. It’s a foundational change: if it isn’t open source it won’t pass the test.”

But while some of those adopting OPA have hefty engineering teams of their own to customize how OPA is used, the sheer number of downloads (and potential active users stemming from that) speak to the opportunity for a company to build tools to help manage that and customize it for specific use cases in cases where those wanting to use OPA may lack the resources (or appetite) to build and scale custom implementations themselves.

As with many of the enterprise startups getting funded at the moment, Styra has proven itself in particular over the last year, with the switch to remote work, workloads being managed across a number of environments, and the ever-persistent need for better security around what people can and should not be using. Authorization is a particularly acute issue when considering the many access points that need to be monitored: as networks continue to grow across multiple hubs and applications, having a single authorization tool for the whole stack becomes even more important.

Styra said that some of the funding will be used to continue evolving its product, specifically by creating better and more efficient ways to apply authorization policies by way of code; and by bringing in more partners to expand the scope of what can be covered by its technology.

“We are extremely impressed with the Styra team and the progress they’ve made in this dynamic market to date,” said Dharmesh Thakker, a general partner at Battery Ventures. “Everyone who is moving to cloud, and adopting containerized applications, needs Styra for authorization—and in the light of today’s new, remote-first work environment, every enterprise is now moving to the cloud.” Thakker is joining the board with this round.

Posted Under: Tech News
Artificial raises $21M led by Microsoft’s M12 for a lab automation platform aimed at life sciences R&D

Posted by on 18 May, 2021

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Automation is extending into every aspect of how organizations get work done, and today comes news of a startup that is building tools for one industry in particular: life sciences. Artificial, which has built a software platform for laboratories to assist with, or in some cases fully automate, research and development work, has raised $21.5 million.

It plans to use the funding to continue building out its software and its capabilities, to hire more people, and for business development, according to Artificial’s CEO and co-founder David Fuller. The company already has a number of customers including Thermo Fisher and Beam Therapeutics using its software directly and in partnership for their own customers. Sold as aLab Suite, Artificial’s technology can both orchestrate and manage robotic machines that labs might be using to handle some work; and help assist scientists when they are carrying out the work themselves.

“The basic premise of what we’re trying to do is accelerate the rate of discovery in labs,” Fuller said in an interview. He believes the process of bringing in more AI into labs to improve how they work is long overdue. “We need to have a digital revolution to change the way that labs have been operating for the last 20 years.”

The Series A is being led by Microsoft’s venture fund M12 — a financial and strategic investor — with Playground Global and AME Ventures also participating. Playground Global, the VC firm co-founded by ex-Google exec and Android co-creator Andy Rubin (who is no longer with the firm), has been focusing on robotics and life sciences and it led Artificial’s first and only other round. Artificial is not disclosing its valuation with this round.

Fuller hails from a background in robotics, specifically industrial robots and automation. Before founding Artificial in 2018, he was at Kuka, the German robotics maker, for a number of years, culminating in the role of CTO; prior to that, Fuller spent 20 years at National Instruments, the instrumentation, test equipment and industrial software giant. Meanwhile, Artificial’s co-founder, Nikhita Singh, has insight into how to bring the advances of robotics into environments that are quite analogue in culture. She previously worked on human-robot interaction research at the MIT Media Lab, and before that spent years at Palantir and working on robotics at Berkeley.

As Fuller describes it, he saw an interesting gap (and opportunity) in the market to apply automation, which he had seen help advance work in industrial settings, to the world of life sciences, both to help scientists track what they are doing better, and help them carry out some of the more repetitive work that they have to do day in, day out.

This gap is perhaps more in the spotlight today than ever before, given the fact that we are in the middle of a global health pandemic. This has hindered a lot of labs from being able to operate full in-person teams, and increased the reliance on systems that can crunch numbers and carry out work without as many people present. And, of course, the need for that work (whether it’s related directly to Covid-19 or not) has perhaps never appeared as urgent as it does right now.

There have been a lot of advances in robotics — specifically around hardware like robotic arms — to manage some of the precision needed to carry out some work, but up to now no real efforts made at building platforms to bring all of the work done by that hardware together (or in the words of automation specialists, “orchestrate” that work and data); nor link up the data from those robot-led efforts, with the work that human scientists still carry out. Artificial estimates that some $10 billion is spent annually on lab informatics and automation software, yet data models to unify that work, and platforms to reach across it all, remain absent. That has, in effect, served as a barrier to labs modernising as much as they could.

A lab, as he describes it, is essentially composed of high-end instrumentation for analytics, alongside then robotic systems for liquid handling. “You can really think of a lab, frankly, as a kitchen,” he said, “and the primary operation in that lab is mixing liquids.”

But it is also not unlike a factory, too. As those liquids are mixed, a robotic system typically moves around pipettes, liquids, in and out of plates and mixes. “There’s a key aspect of material flow through the lab, and the material flow part of it is much more like classic robotics,” he said. In other words, there is, as he says, “a combination of bespoke scientific equipment that includes automation, and then classic material flow, which is much more standard robotics,” and is what makes the lab ripe as an applied environment for automation software.

To note: the idea is not to remove humans altogether, but to provide assistance so that they can do their jobs better. He points out that even the automotive industry, which has been automated for 50 years, still has about 6% of all work done by humans. If that is a watermark, it sounds like there is a lot of movement left in labs: Fuller estimates that some 60% of all work in the lab is done by humans. And part of the reason for that is simply because it’s just too complex to replace scientists — who he described as “artists” — altogether (for now at least).

“Our solution augments the human activity and automates the standard activity,” he said. “We view that as a central thesis that differentiates us from classic automation.”

There have been a number of other startups emerging that are applying some of the learnings of artificial intelligence and big data analytics for enterprises to the world of science. They include the likes of Turing, which is applying this to helping automate lab work for CPG companies; and Paige, which is focusing on AI to help better understand cancer and other pathology.

The Microsoft connection is one that could well play out in how Artificial’s platform develops going forward, not just in how data is perhaps handled in the cloud, but also on the ground, specifically with augmented reality.

“We see massive technical synergy,” Fuller said. “When you are in a lab you already have to wear glasses… and we think this has the earmarks of a long-term use case.”

Fuller mentioned that one area it’s looking at would involve equipping scientists and other technicians with Microsoft’s HoloLens to help direct them around the labs, and to make sure people are carrying out work consistently by comparing what is happening in the physical world to a “digital twin” of a lab containing data about supplies, where they are located, and what needs to happen next.

It’s this and all of the other areas that have yet to be brought into our very AI-led enterprise future that interested Microsoft.

“Biology labs today are light- to semi-automated—the same state they were in when I started my academic research and biopharmaceutical career over 20 years ago. Most labs operate more like test kitchens rather than factories,” said Dr. Kouki Harasaki, an investor at M12, in a statement. “Artificial’s aLab Suite is especially exciting to us because it is uniquely positioned to automate the masses: it’s accessible, low code, easy to use, highly configurable, and interoperable with common lab hardware and software. Most importantly, it enables Biopharma and SynBio labs to achieve the crowning glory of workflow automation: flexibility at scale.”

Harasaki is joining Peter Barratt, a founder and general partner at Playground Global, on Artificial’s board with this round.

“It’s become even more clear as we continue to battle the pandemic that we need to take a scalable, reproducible approach to running our labs, rather than the artisanal, error-prone methods we employ today,” Barrett said in a statement. “The aLab Suite that Artificial has pioneered will allow us to accelerate the breakthrough treatments of tomorrow and ensure our best and brightest scientists are working on challenging problems, not manual labor.”

Posted Under: Tech News
Merge raises $4.5M to help B2B companies build customer-facing integrations

Posted by on 17 May, 2021

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Merge, a startup that helps its users build customer-facing integrations with third-party tools, today announced that it has raised a $4.5 million seed round led by NEA. Additional angel investors include former MuleSoft CEO Greg Schott, Cloudflare CEO Matthew Prince, Expanse co-founders Tim Junio and Matt Kraning, and Jumpstart CEO Ben Herman.

Launched in 2020, the core focus of Merge is to give B2B companies a unified API to access data from what is currently about 40 HR, payroll, recruiting and accounting platforms, with plans for expanding to additional areas soon. But Merge co-founders Shensi Ding and Gil Feig, who have been lifelong friends and previously worked at companies like Expanse and Jumpstart, stress that the service isn’t aiming to replace workflow tools Workato or Zapier.

Image Credits: Merge

“What we built is more similar to Plaid than MuleSoft or other things,” Feig said. “We built a unified API, so we’re fully embedded in a customer’s product and they build one integration with us and can automatically offer all these integrations to their customers. On top of that, we offer what we call integrations management, which is a suite of tools to automatically detect issues where the customer would have to get involved — automatically detect that stuff and handle it without ever having to involve engineering again.”

When Merge’s systems detect issues with an integration, maybe because a data schema in an API response has changed without notice (which happens with some regularity), Merge’s engineers can fix that within minutes, in part because the teams also built an internal no-code tool for building and managing these integrations.

Image Credits: Merge

As Ding also noted, B2B buyers today also simply expect their tools to feature integrations with the service they use. “Companies, when they purchase a vendor, they expect that vendor to have integrations with all the other vendors that they own,” she said. “They don’t want to have to purchase a vendor and then purchase a workflow product and then connect those products.”

And while Merge’s focus right now is squarely on a few verticals, the plan is to expand this to far more areas shortly, likely starting with CRM. “Salesforce has a pretty large market share, so we thought that it wasn’t going to be as interesting of a market,” Ding said. “But it turns out that their API is so complex that customers would still prefer to integrate with us instead if we simplify it for them.”

Ding and Feig tell me the company, which came out of stealth about two months ago, already has about 100 organizations on its platform, varying from seed-stage companies to publicly listed enterprises. The team credits its focus on security and reliability (and its SOC II compliance) with being able to bring on some of these larger companies despite being a seed-stage company itself.

To monetize the service, Merge offers a free tier (up to 10,000 API requests per month) and charges $0.01 per API request for additional usage. Unsurprisingly, the company also offers customized enterprise plans for its larger customers.

“The time and expense associated with building and maintaining myriad API integrations is a pain point we hear about consistently from our portfolio companies across all industries,” said NEA managing general partner Scott Sandell, who will join the company’s board. “Merge is tackling this ubiquitous problem head-on via their easy-to-use, unified API platform. Their platform has broad applicability and is a massive upgrade for any software company that needs to build, manage, and maintain multiple API integrations.”

Posted Under: Tech News
Fast growth pushes an unprofitable no-code startup into the public markets: Inside Monday.com’s IPO filing

Posted by on 17 May, 2021

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At long last, the Monday.com crew dropped an F-1 filing to go public in the United States. TechCrunch has long known that the company, which sells corporate productivity and communications software, has scaled north of $100 million in annual recurring revenue (ARR).

The countdown to its IPO filing — an F-1, because the company is based in Israel, rather than the S-1s filed by domestic companies — has been ticking for several quarters, so seeing Monday.com drop the document on this Monday morning was just good fun.


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The Exchange has been riffling through the document since it came out, and we’ve picked up on a few things to explore. We’ll start by looking at the company’s revenue growth on a historical basis to see if it has accelerated in recent quarters thanks to the pandemic. Then, we’ll turn to profitability, cash burn, share-based compensation expenses and product vision.

We’ll wrap at the end with a summary of what we’ve learned and also make sure to check out the company’s marketing spend, because I’m sure you’ve seen its digital ads.

It’s a lot to chew through, so no more dilly-dallying. Into the numbers!

As always, we’re starting with revenue growth because it’s still the single most important thing about any venture-backed company.

Revenue adds are accelerating

This is great news for the startup, its employees and its investors. From 2019 to 2020, Monday.com grew its revenues from $78.1 million to $161.1 million, or 106%.

From Q1 2020 to Q1 2021, the company’s revenues grew from $31.9 million to $59.0 million. That’s about 85% growth. So, by what measure do we mean that the company’s revenue growth is accelerating? Its sequential-quarter revenue growth is picking up. Observe the following:

Image Credits: Monday.com F-1 filing

From Q2 2019 to Q3 2019, the company added around $4 million in revenue. From Q2 2020 to Q3 2020, that number was $6.1 million. More recently, the company’s revenue added $7.6 million from Q3 2020 to Q4 2020, which accelerated to $8.8 million from the final quarter of 2020 to the first quarter of 2021. Of course, from an ever-larger base, the company’s growth rate may decline. But the super-clean and obvious expanding sequential revenue gains at the company are solid.

The fact that it added so much top line in recent quarters also helps explain why Monday.com is going public now. Sure, the markets are still near record highs and the pandemic is fading, but just look at that consistent growth! It’s investor catnip.

Posted Under: Tech News
New Relic’s business remodel will leave new CEO with work to do

Posted by on 14 May, 2021

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For Bill Staples, the freshly appointed CEO at New Relic, who takes over on July 1, yesterday was a good day. After more than 20 years in the industry, he was given his own company to run. It’s quite an accomplishment, but now the hard work begins.

Lew Cirne, New Relic’s founder and CEO, who is stepping into the executive chairman role, spent the last several years rebuilding the company’s platform and changing its revenue model, aiming for what he hopes is long-term success.

“All the work we did in re-platforming our data tier and our user interface and the migration to consumption business model, that’s not so we can be a $1 billion New Relic — it’s so we can be a multibillion-dollar New Relic. And we are willing to forgo some short-term opportunity and take some short-term pain in order to set us up for long-term success,” Cirne told TechCrunch after yesterday’s announcement.

On the positive side of the equation, New Relic is one of the market leaders in the application performance monitoring space. Gartner has the company in third place behind Dynatrace and Cisco AppDynamics, and ahead of DataDog. While the Magic Quadrant might not be gospel, it does give you a sense of the relative market positions of each company in a given space.

New Relic competes in the application performance monitoring business, or APM for short. APM enables companies to keep tabs on the health of their applications. That allows them to cut off problems before they happen, or at least figure out why something is broken more quickly. In a world where users can grow frustrated quickly, APM is an important part of the customer experience infrastructure. If your application isn’t working well, customers won’t be happy with the experience and quickly find a rival service to use.

In addition to yesterday’s CEO announcement, New Relic reported earnings. TechCrunch decided to dig into the company’s financials to see just what challenges Staples may face as he moves into the corner office. The resulting picture is one that shows a company doing hard work for a more future-aligned product map and business model, albeit one that may not generate the sort of near-term growth that gives Staples ample breathing room with public investors.

Near-term growth, long-term hopes

Making long-term bets on a company’s product and business model future can be difficult for Wall Street to swallow in the near term. But such work can garner an incredibly lucrative result; Adobe is a good example of a company that went from license sales to subscription incomes. There are others in the midst of similar transitions, and they often take growth penalties as older revenues are recycled in favor of a new top line.

So when we observe New Relic’s recent result and guidance for the rest of the year, we’re more looking for future signs of life than quick gains.

Starting with the basics, New Relic had a better-than-anticipated quarter. An analysis showed the company’s profit and adjusted profit per share both beat expectations. And the company announced $173 million in total revenue, around $6 million more than the market expected.

So, did its shares rise? Yes, but just 5%, leaving them far under their 52-week high. Why such a modest bump after so strong a report? The company’s guidance, we reckon. Per New Relic, it expects its current quarter to bring 6% to 7% growth compared to the year-ago period. And it anticipates roughly 6% growth for its current fiscal year (its fiscal 2022, which will conclude at the end of calendar Q1 2022).

Posted Under: Tech News
Cisco strikes again grabbing threat assessment tool Kenna Security as third acquisition this week

Posted by on 14 May, 2021

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Cisco has been busy on the acquisition front this week, and today the company announced it was buying threat assessment platform Kenna Security, the third company it has purchased this week. The two companies did not disclose the purchase price.

With Kenna, Cisco gets a startup that uses machine learning to sort through the massive pile of threat data that comes into a security system on a daily basis and prioritizes the threats most likely to do the most damage. That could be a very useful tool these days when threats abound and it’s not always easy to know where to put your limited security resources. Cisco plans to take that technology and integrate into its SecureX platform.

Gee Rittenhouse, senior vice president and general manager of Cisco’s Security Business Group wrote in a blog post announcing the deal with Kenna, that his company is getting a product that brings together Cisco’s existing threat management capabilities with Kenna’s risk-based vulnerability management skills.

“That is why we are pleased to announce our intent to acquire Kenna Security, Inc., a recognized leader in risk-based vulnerability prioritization with over 14 million assets protected and over 12.7 billion managed vulnerabilities. Using data science and real-world threat intelligence, it has a proven ability to bring data in from a multi-vendor environment and provide a comprehensive view of IT vulnerability risk,” Rittenhouse wrote in the blog post.

The security sphere has been complex for a long time, but with employees moving to work from home because of COVID, it became even more pronounced in the last year. In a world where the threat landscape changes quickly, having a tool that prioritizes what to look at first in its arsenal could be very useful.

Kenna Security CEO Karim Toubba gave a typical executive argument for being acquired: it gives him a much bigger market under Cisco than his company could have built alone.

“Now is our opportunity to change the industry: once the acquisition is complete, we will be one step closer to delivering Kenna’s pioneering Risk-Based Vulnerability Management (RBVM) platform to the more than 7,000 customers using Cisco SecureX today. This single action exponentially increases the impact Kenna’s technology will have on the way the world secures networks, endpoints and infrastructures.,” he wrote in the company blog.

The company, which launched in 2010, claims to be the pioneer in the RBVM space. It raised over $98 million on a $320 million post-money valuation, according to Pitchbook data. Customers include HSBC, Royal Bank of Canada, Mattel and Quest Diagnostics.

For those customers, the product will cease to be stand-alone at some point as the companies work together to integrate Kenna technology into the SecureX platform. When that is complete, the stand-alone customers will have to purchase the Cisco solution to continue using the Kenna tech.

Cisco has had a busy week on the acquisition front. It announced its intent to acquire Sedona Systems on Tuesday, Socio Labs on Wednesday and this announcement today. That’s a lot of activity for any company in a single week. The deal is expected to close in Cisco Q4 FY 2021. The company’s 170 employees will be joining the Security Business Group led by Rittenhouse.

Posted Under: Tech News
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