Wavefront raises $52m in Series B round to accelerate product roadmap

The investment will help the company accelerate its product roadmap and expand its operations in North America and Europe.
Written by Tas Bindi, Contributor

Wavefront, a monitoring service for cloud applications, has raised $52 million in an oversubscribed Series B round with a valuation four times that of its Series A round.

The round was led by Tenaya Capital, with contribution from Wavefront's existing investors Sequoia Capital and Sutter Hill Ventures, as well as other equity holders.

The Series B round of funding brings the total amount raised by the Palo Alto, California-based company to $65.5 million, and will be used to accelerate the company's product roadmap in addition to expanding its sales, marketing, and support operations.

Wavefront claims it has experienced "hyper growth" since the closure of its $13.5 million Series A round in 2014, and wanted to accelerate that momentum.

"When things are going well, you want to hit the pedal and go for the win," Rob Markovich, CMO of Wavefront, told ZDNet.

Pete Cittadini, president and CEO of Wavefront, said the company surpassed key milestones in the past year and so it was the ideal time to close a new funding round with strategic investors.

Among these milestones include more than 10 times revenue growth across all customer segments in the past 12 months; the acquisition of large customers like Workday, Box, Lyft, Intuit, Citrix, and Groupon; and new appointments such as CEO, CFO, CMO, VP of sales, and VP of engineering.

The genesis of Wavefront

Wavefront's co-founders Dev Nag, Clement Pang, Sam Pullara, and Durren Shen have previously worked across companies like Google, Twitter, and PayPal.

The inspiration for creating Wavefront spawned from Nag and Pang's experience as senior software engineers at Google, which had to overcome the operational challenges caused by intense growth and scale.

"Google had a unique problem. It's the biggest site in the world with [a large number of] visitors who all expect to get very fast responses to their search queries -- within a few hundred milliseconds," Nag told ZDNet.

"Google brought forth a whole bunch of new technology to [help monitor its performance], but it didn't work. They ended up developing a system called Borgmon that was based on metrics."

Years later, Facebook and Twitter experienced similar challenges, and they too had to build metrics-based monitoring systems in-house. Facebook built ODS and Scuba, while Twitter built Viz.

"In fact, ex-Google engineers who went to Twitter and Facebook pretty much rebuilt Borgmon," said Nag.

Wavefront's founders and investors are all familiar -- from personal experience -- with the challenges that emerge from building a highly scalable solution in a cloud-based environment.

For example, Pullara, who is a partner at Sutter Hill Ventures and an investor in Wavefront, experienced the problem first hand when he was an engineering director at Twitter, as did partner at Sequoia Capital Bill Coughran when he was the senior vice president of engineering at Google.

The founders teamed up to build a solution that could be deployed across cloud and application environments, ultimately eliminating the need for companies to build scabable monitoring platforms from scratch.

A new way to monitor

Introduced in late 2013 and converted to general availability in late 2014, Wavefront's sole offering is the Wavefront Metrics Monitoring Service.

The technology allows companies to prevent, detect, and diagnose outages; manipulate data with real-time analytics; standardise analytics with a unified view of metrics; and gain insights about the relationship between device, software, and end user.

The need to optimise user experience in real-time has never been greater, the company added.

"Monitoring has become an analytics problem and must go beyond standard cookie-cutter metrics to application metrics customised to each company's specific business and environment," according to Wavefront.

Nag told ZDNet that flexibility was built into the Wavefront system so that it can unify and process all kinds of metrics.

"It could be the temperature in Sydney every hour in the last year, for example, or the speed of your car. The kind of metrics we get include things like CPU, memory resources, application transaction levels, behavioural metrics, as well as devices and power, and so forth. We handle every kind of data inside the datacentre," said Nag.

Markovich added that customers understand what metrics are important to their business and can set alerts that are specific to their architecture.

"For Lyft, it could be the time from when the customer requests a pick up to when the driver arrives. They set alerts, and if those numbers are increasing, the system's operators are alerted that something has gone awry," Markovich said.

"By creating intelligent alerts based on the most important business metrics, teams are able to proactively address problems. This is how companies maintain their high performance."

Legacy monitoring systems such as application performance monitoring (APM), network performance monitoring (NPM), and log monitoring don't work in cloud and modern application environments, according to Wavefront, because such systems are not unified, real-time, enterprise scale, reliable, or developer-friendly, and tend to offer either no analytics or unusable analytics.


Screenshot of Wavefront dashboard.


Nag said Wavefront allows companies to have a universal data format and a unified, correlated view of all metrics, as opposed to the silos that come about from traditional systems like APM and NPM.

"There tend to be silos with one type of data, so you can't actually see across the different layers of the stack. Mediation is a lot slower because of that," said Nag.

Markovich said he described Wavefront to his mother as "an EKG [electrocardiography] system for the internet ... that allows [companies] to find anomalies and report proactively when things start to go wrong."

He added that development teams are standardising Wavefront as their visualisation, monitoring, and alerting tool.

"What's interesting is many of our larger customers who have hundreds of developers using the system have groups that are organised around a particular piece of the system. One team might monitor storage metrics, while another monitors the network. Another might monitor application metrics and maybe there's a systems-wide group that looks at everything," Markovich said.

"That flexibility is really important because it allows developers to create custom queries, build unique alerts, and organise the screens they look at. The fact that everybody's using the same tool and a common language allows great collaboration. They can work together faster to resolve problems."

Wavefront also offers a whole range of "recipes" that companies can apply to resolve their particular problem.

Currently, Wavefront has two main groups of customers: Software-as-a-Service (SaaS) companies and enterprises going through digital transformation.

Wavefront operates on a "Metrics-Monitoring-as-a-Service" model, meaning that it charges customers based on how many metrics per second are being fed into its system.

"This consumption-based model is one of the things our customers like about us. We don't charge by number of users or by type of metric," said Markovich.

Wavefront can now process more than 1 million metric data points per second, delivering insights at what Wavefront claims to be the "speed of thought".

"We're one of most scalable -- if not the most scalable -- solutions in the industry. We have customers that are approaching [a million metric data points per second] because Wavefront is so widely adopted across their organisation," said Markovich.

Nag added that many of the companies using Wavefront have a thousand or more developers.

While the company was not able to reveal any revenue growth statistics, it claims a typical deal is in the low six figures with a typical sales cycle length of three to four months.

The next wave of cloud applications

Markovich said Wavefront plays a strategic role in enabling the next wave of cloud adoption.

"Companies like Google, Amazon, and VMware will tell you that cloud adoption is still only sitting at 9 to 10 percent," he said.

"What's [preventing] enterprises from moving more workloads to the cloud is the performance and reliability of hybrid cloud."

Markovich said it's only a matter of time before organisations migrate to modern cloud and SaaS application architectures -- including public and private clouds, software infrastructures, DevOps, containerisation, microservices, big data and consumer web platforms -- and so eventually they will require a tool like Wavefront.

"As organisations move to modern cloud applications and [adopt] DevOps principles, they have to think about a whole new way of monitoring. The old system doesn't work in today's new model," Markovich said.

"By having a comprehensive unified monitoring system that can not only look at applications, but also look at cloud, [Wavefront is] going to be essential to that next wave of adoption. The Wavefront approach is really one of the new and only ways to do this."

While Wavefront is more complementary to, rather than competitive with, monitors like Splunk and New Relic, Markovich admitted that customers are increasingly using Wavefront in lieu of other solutions.

"Wavefront is in an interesting position because we integrate with a variety of tools that customers have already deployed, so in one way, we're complementary to Splunk and New Relic. At the same time, we do have many customers who see Splunk as a log monitor, and it's really good for that type of data," said Markovich.

"But when it comes to metrics, they want to send that data to Wavefront. Some customers that have started to use Splunk for metric data have realised that it isn't very good for metrics. It isn't real-time and it doesn't scale very well, so they're using less of Splunk and more of Wavefront."

Upcoming plans

Over the last 12 months, Wavefront hit a number of product-related milestones including the development of over 30 plugins to ingest metrics across a range of sources, and new product functionality such as intelligent alerting, expanded query functions, quick start configuration wizards, and a suite of default dashboards.

The latest round of funding will help the company accelerate its research and development efforts and introduce more functionality. Nag said Wavefront is looking to apply machine learning and predictive analytics to help users detect anomalies faster and receive intelligent recommendations.

The company also plans to expand its sales, marketing, and support operations in North America and Europe. Wavefront currently has about 40 employees and expects its headcount to increase to 70 by the end of 2017.

"A majority of our business is in North America. We also have a growing number of customers in Europe, so it will be more of a focus for us next year. In Asia so far, it's been very opportunistic. We support [companies in Asia] if we can provide them with a service, but it isn't yet a strategic area," said Markovich.

"We're simply finding more than enough business right now in North America and Europe and it's very important that the company remains focused, rather than try to do too much too quickly."

Update: An amendment was made to the article, as Facebook's internal system is ODS, not OBS. The name of an equity holder was also removed upon request.

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