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The DL Dossier - Chronosphere: An inside look into the future of cloud monitoring

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February 16 · Issue #81 · View online
The DL
Welcome to The DL Dossier #1! DL Dossiers are deep dives on the next generation of Pacific Northwest startups, written for people who are interested in working at, partnering with, or investing in startups. They aim to explore:
  • Why a company is hot and why investors are excited,
  • Who their customers are and how they’re solving customer problems,
  • Why employees are joining them and what it’s like to work there, and
  • How they expect to grow and how big they can get!
 
This DL Dossier features Chronosphere, a startup offering a cloud-native monitoring solution that helps companies ingest, store, and utilize the data generated by their applications. Chronosphere is built to handle the needs of cloud-native apps, which are often architected as containerized microservices and have different monitoring needs than legacy apps that are built on virtual machines. 

TL;DR
  • Started by an ex-Uber team who built Uber’s open source monitoring platform, M3
  • Raised $55M to-date from Greylock, Lux, and Lee Fixel
  • Customers use Chronosphere for a scalable, reliable, and lower-cost monitoring system for cloud-native applications
  • Employees describe a culture of “continuous learning,” “incredible teammates,” and “open communication
  • Over the last decade, we have seen the success of monitoring tools like AppDynamics ($3.7B acquisition) and NewRelic ($4B market cap) for VMs, DataDog ($35B market cap) for cloud, and Chronosphere believes they will be the next major monitoring platform for containers and microservices
Why is Chronosphere hot, and why are investors excited about them?
Chronosphere was founded by Martin Mao and Rob Skillington in 2019. Both Martin and Rob started their careers at Microsoft and after several stints at other software companies, they reconnected at Uber, where they worked together on the teams that created and ran Uber’s metric stack, M3.
At the time, Uber’s data was growing 10x every year, and they had to build their own monitoring software to keep up with their business growth. Legacy monitoring solutions were designed for a world based on virtual machines and monolithic apps, but since Uber was an early adopter of containers and microservices, they had unique requirements on how to store and access data.
Of course, while Uber was an early adopter of cloud-native architectures, now, the rest of the world is moving to the cloud as well, and the unique requirements that Uber once had are now a must-have for companies building cloud-native applications.
In 2019, Martin and Rob saw this market need for cloud-native monitoring as an opportunity to start Chronosphere and offer “monitoring-as-a-service” to companies that did not want to build and manage an entire monitoring solution themselves.
For their first funding round, they leaned on the success of the M3 open source project they had built at Uber to find their first few investors. Some of those investors were early Uber employees with ties to the VC world, and eventually they connected with Jerry Chen at Greylock, who ended up leading Chronosphere’s $11M Series A in 2019.
Earlier this year, Chronosphere announced the general availability of their service, as well as a $43M Series B, so they are off to a running start. One signal of how well the company is doing is the Series B was led by existing investors, which is a very promising sign because the existing investors wanted to ‘double down’ on their investment. 
Who are Chronosphere’s customers, and how is Chronosphere solving their problems?
The core innovation behind Chronosphere is that it is purpose built for monitoring cloud-native applications. Cloud-native apps built on containers and microservices are architected differently than apps built for virtual machines (VMs) because they can’t make the same assumptions around how VMs behave (e.g., VM persisting for a month while containers might only be online for an hour), and they have different methods for storing data.
Building Chronosphere as a tool for cloud-native applications allows it to be more scalable, reliable, and customizable than tools that were not built for the cloud and containerized applications. As a result, Chronosphere is riding the wave of cloud adoption and attracting several different types of customers who are seeking out their product:
1. Tech unicorns replacing an existing solution
The large, private tech companies are ideal, early adopters for new software tools. However, because many of them were started over a decade ago, their core apps often aren’t cloud-native. Nevertheless, as they launch new products, they know the pain of building out large-scale monitoring systems and realize the value of having one central monitoring and observability solution, so rather than making a large investment in building and maintaining a monitoring stack themselves, they go with Chronosphere.
2. Startups who are scaling up
Another large segment of Chronosphere’s customers are small, but rapidly growing companies that might already be using a set of monitoring tools or applications like Prometheus or DataDog. However, at a certain point, these customers start to encounter issues such as the inability to do fine-grained control on how to store data, the lack of long-term data retention, and large bills from vendors like DataDog. For these customers, Chronosphere focuses on providing an easy on ramp to move over to Chronosphere without asking customers to completely replace their existing tools.
3. Enterprises moving to the cloud
As the wheel of digital transformation continues to turn at enterprises, more and more companies are making a decision to be on Kubernetes and containerized architectures from Day 1. These companies are still using traditional application performance monitoring tools like NewRelic on prem, but they are seeking new products to handle cloud monitoring. The unique insight about these businesses is they are operating at massive scale already, so the cost of using a legacy monitoring tool is very high, and they have more incentive to seek out next generation tools that could be a better fit for their use case.
Case Study: Delivery App Company
One of Chronosphere’s customers is an unnamed “delivery app company” that previously used StatsD for its cloud-native stack and Wavefront for its VM environment. The company prides itself on being data driven, and “everyone is crazy about numbers, from the CEO down to the newest engineer.”
As the company scaled up and continued to add new features, their old monitoring system kept breaking down and losing data. The problem was so bad that “no one was actually paying attention to the metrics generated by StatD, instead relying on workarounds like counting log lines.”
After moving to Chronosphere, they are no longer worried about scaling up to handle more data or losing data. Instead of relying on workarounds to track what is happening in their app, the company says, “We have metrics, and we are using them.”
Why are employees joining Chronosphere, and what’s it like to work there?
When VCs evaluate new investments or employees join a new company, getting to know the team is one of the most important decision criteria, so this section is meant to be a mini version of that ‘get to know you’ process.
To get more color on why people are joining Chronosphere and what it’s like to work there, I spoke to Chronosphere’s CEO, Martin Mao, and sent an email questionnaire to several team members working in different roles.
After asking Chronosphere employees about the top 3 or 4 values that describe the culture at Chronosphere, here were the ones that came up multiple times:
  • Committed to personal growth – Almost all of the surveys I got back from the Chronosphere team describe how much the team focuses on creating a culture of learning and development and making sure that people can try new things and ask for help
  • Impressive team members – People are really impressed with their colleagues at Chronosphere, both as thought leaders and experts in monitoring, as well as the team’s ability to create a strong sense of purpose and cultural values
  • Open communication – Despite being distributed, it sounds like the team communicates well and enjoys working together. Many people shared fun memories of virtual events, in-office lunches, and team events at places like KubeCon
Beyond this high-level overview of how people feel about working at Chronosphere, I thought the rest of this section would best be told in personal stories and quotes from employees:
How did you first learn about Chronosphere and what got you excited to join the company?
  • I was contacted on LinkedIn about a role at Chronosphere. At the time, Chronosphere was still in “stealth mode.” Despite not being able to research the company, the idea of joining at such an early stage excited me. I ended up meeting with Martin Mao for coffee, and after an hour or so of discussing his vision for the company, I was sold. Since joining, we’ve almost tripled in size and have accomplished lots of amazing things. Despite all of this (including a recent Series B announcement!), the passion and drive to achieve the goals set out at the beginning are still standing strong
  • Talking to the founders and hearing how passionate they were. Then meeting the team and seeing the same passion for the product and immense experience in the field but also this strong sense of team, made joining a no brainer
  • I learned about Chronosphere from a coworker at my last company, he worked in sales and had mentioned that this new company Chronosphere was coming up in conversations with customers. I think what really sold me besides the vision was the engineering and product leadership. I strongly felt that they had a deep understanding of the space and how to run high performance orgs
What kind of people tend to be successful at Chronosphere?
  • People who are ready to learn and grow and help others grow. Even Martin and Rob are readily learning on a day-to-day basis. Generally, people who do not come with pre-conceived notions of specific things are right would fit right in. We challenge each other’s decisions and opinions in a congenial manner and that’s what helps both the people and hopefully the company succeed
  • Engineers who are self-starters and autonomous tend to work great at Chronosphere. Engineers who are committed to continuously learning and mentoring others
Do you have a favorite story about what it’s like to work at Chronosphere?
  • I entered Chronosphere knowing nothing about metrics, observability, or time-series databases. Even though my questions may be basic - every team member has welcomed my questions and has been willing to sit down with me to go over everything from basic concepts to more advanced implementations
How does Chronosphere compare to other companies you’ve worked at?
  • This isn’t my first startup experience, but the biggest difference I’ve noticed is that Chronosphere has high technical rigor. At my previous company, the engineering culture was very much ‘move as fast as you can and ship as much as you can’ which inevitably led to outages or huge swaths of code that lacked test coverage. There’s very much a ‘let’s do it right’ attitude at Chronosphere. There’s also considerable foresight on which aspects of the product need to be done right as they’ll become the foundation that critical enterprise features will be built on.
How does Chronosphere expect to grow and how big can they get?
Chronosphere was founded in 2019, and they have grown rapidly over the last two years. They started 2020 with a team of 12 and ended the year with a team of 50. The plan for this year is to grow to 100 employees. Over the last year, the hiring focus has been on product and engineering (about two-thirds of the team), but in 2021, most of the hiring will be on the go to market side.
The team at Chronosphere believes they are at a once in a decade shift in the monitoring market that has been driven by the move to cloud-native software architectures. The way they see it, application performance monitoring first came out in the 2000s, and NewRelic ($4B) and AppDynamics ($3.7B exit) dominated the on prem APM market. Then, the cloud created a new set of opportunities as VMs moved to the cloud, and DataDog ($35B) was able to capture a large piece of the SMB monitoring market while NewRelic and AppDynamics hung on to the enterprise market.
Now that companies are beginning to adopt new, cloud-native architectures based around containers, Chronosphere believes they are positioned to be one of the best products for cloud-native monitoring and has the opportunity to build an equally large company serving the next evolution of this market. 
Key Stats / Information
Team
Investors
Funding Rounds
  • Series A - $11M Series A raised In November 2019
  • Series B - $43.4M raised in January 2021
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