CloudZero

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Founders: Erik Peterson, Matt Manger
Founding: 2016
Mission: Make efficient innovation a reality for every cloud-driven organization
Employees: 53 & ~50% Local
Workplace: Remote
Stage & Capital Raised: Series A, $15.6M
Investors: G20 Ventures, Matrix Partners, Underscore VC
Key Customers: New Relic, Rapd7, Malwarebytes
Glassdoor Rating: 5.0
Valuation (estimated): $50M+ (assuming they sold ~20% of the company in the $5M 2017 Series A fundraise and subsequent growth factored in)
^ this is a useless number. There is no tangible valuation until the business is sold or goes public. Don’t forget it!

CloudZero is “software for cloud infrastructure costs.” The company was founded in 2016 by Matt Manger and Erik Peterson. Matt and Erik are two experienced technical leaders who met at Veracode and had personally dealt with the pain of managing infrastructure costs across multiple clouds, dashboards, and functions.

Back in the late-2000s, Erik was tasked with a project: Scrape the entire internet to identify all of the websites in use by one prospect, and then scan them all for security vulnerabilities (which ended up being about 25,000 sites) – oh, and keep project costs under $3,000. He decided to use what was then a relatively new technical solution, AWS, for the project. Erik successfully completed the project for $2,780.64, prompting his then-employer Veracode to start using AWS much more aggressively. With the increased uptake came increased costs – gentle at first, then exponential. Erik craved a cost visibility platform that would give him relevant, timely views into what his cloud infrastructure cost (and how to manage it effectively). Dissatisfied with incumbent offerings, and the lack of focus on cloud engineering, Erik took Veracode colleague Matt Manger to dinner, where the two agreed to solve this challenge on their own.

Traditionally, software companies (pretty much all companies at this point) look at their infrastructure costs at the partner level. AWS, Azure, Google Cloud, etc. Costs have been racking up pretty relentlessly these past few years if you haven’t heard. Product development and user growth have taken precedent ahead of a more optimized and sustainable way to measure cloud usage. With budgets and tech markets tightening up faster than Storrow Drive on Marathon Monday, there has never been a more urgent time to change the status quo. Engineers, the people most central to cloud infrastructure development, need to be empowered with relevant, timely cost data.

CloudZero is the B2B SaaS cloud cost intelligence platform that puts any cloud or software spend into context for your business. By aligning engineering, infrastructure, and finance teams around common metrics like cost per product feature, customer, or development team CloudZero enables better strategic decisions, stronger unit economics, and more efficient spending. 

CloudZero ingests and normalizes 100% of customers’ cloud, PaaS, and SaaS spend into a common data model. Trusted by top cloud-driven companies like New Relic, Rapid7, and Malwarebytes, CloudZero helps organizations of all sizes achieve cloud cost maturity. Then, through a combination of CostFormation® (CloudZero’s logic-driven allocation language) and business and technical telemetry data, they allocate customers’ spend data in a framework that mirrors their business. Customers can organize and reorganize spend by business units (customers, products, features) or organizational frameworks (engineering teams, R&D, production) to get comprehensive, near-real-time views into their entire spend environments.

CloudZero powers savings in several key ways through engineering-led optimization, anomaly detection, and FinOps partnership:

Engineering-Led Optimization: CloudZero Explorer lets users quickly optimize spend data according to parameters most relevant to them. This lets individual engineers investigate and remediate unusual spend activity for the infrastructure they own — not get bogged down in data relating to infrastructure they’ve never touched. 

Anomaly Detection: CloudZero Anomaly Detection compares hourly spend data from the past 72 hours to hourly spend data from the 90 days preceding it. When the platform logs spend data that exceeds common spend parameters, it triggers a Slack and/or email alert to the engineer(s) responsible for the anomalous infrastructure. The relevant engineers can then quickly investigate and remediate the anomalous activity. 

FinOps Partnership: CloudZero’s customer success (CS) team is made up of 100% FinOps practitioners who partner with every customer to ensure smooth onboarding, develop platform proficiency, and surface nuanced savings opportunities. The ongoing partnership includes infrastructure monitoring, regular spend environment reviews, and continuous aggregation of savings opportunities (“Insights” in platform lingo).

Their growth has been nothing short of impressive. Revenue is up more than 11x over the past two years and cloud spend under management is up 7x over that same period too. Their average customer spends $17.2M in the cloud per year.

Operators to Know (Locally):

My investigative powers continue to need work so apologies to the CloudZero team I know I missed many up & coming operators internally

Key Roles To Be Hired:

If I were interviewing here are some questions I’d ask:

  • Could you share some details about the onboarding process & training? 
  • What are the biggest challenges as you scale the team toward 100 employees? 
  • How have market shifts over the past 6-12 months impacted the market & messaging?
  • What are the most important roles you’ll be looking to add in 2023 // teams that need the most help? 

We’re optimizing for readability here so to learn more about CloudZero you’ll have to D.Y.O.R. I’m excited to watch this team optimize more infrastructure costs for cloud companies. All CTOs, CFOs and back end teams applaud your efforts. See you around town!

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