Cloudthread raises a $3M Seed round to make cloud costs a first class metric for engineering teams

Cloud bills are growing in number, size, and complexity

The cloud is growing and it is here to stay. The public cloud market (IaaS) grew 40.7% in 2020 to total $64.3 billion. There are 3 trends we’re seeing that exacerbate the complexity and growth of cloud costs:

1. Breadth of public cloud service offerings: Need compute? AWS has 20+ services to choose from
2. Configuration complexity: Want to use EC2? There are thousands of different instance types with different pricing options
3. Rise of compute intensive technologies: Machine learning, virtual reality, and cryptocurrencies are at the beginning of their adoption curve, represent an increasingly large percentage of cloud bills, and will continue to drive up cloud costs

The “blank check” mentality is dead

As these cloud costs rise, companies are taking action. There’s no shortage of stories where tens of millions of dollars were left on the table due to a cloud cost blank check mentality (e.g. Airbnb, Grofers, Pinterest). A generation of engineering leadership now realizes the value and necessity of considering cloud costs earlier in the scaling process.

There’s increasing protest of the margins that public cloud companies command and a frustration with feeling that there is money being wasted. Cloudflare estimates AWS egress costs to have up to an 8,000% markup and IT leaders self estimate 30% of their cloud spend is wasted.

Teams dedicated to cloud financial management are becoming commonplace for large software companies. The FinOps Foundation, a community of cloud financial management practitioners, is rapidly growing in membership. 

The future of cloud cost management is creating a culture of distributed cloud cost ownership

We believe engineering teams should be empowered to seamlessly incorporate costs into their decision making! In the cloud age, cost is just another variable resource - similar to CPU or memory - and it should be a natural part of the modern engineering process.

The no. 1 problem for cloud financial management teams is engaging engineering teams with cloud costs and empowering them to take action. There's no shortage of tools to give finance top down visibility and take advantage of cloud provider discount mechanisms, but many engineering teams are still flying bling when it comes to cloud costs.

To achieve sustained efficiency in the cloud, organizations need to achieve a culture of engineering cost ownership and move away from costs being considered after the fact and only subject to rate optimization and rate negotiations.

A first class metric 

With Cloud Cost Telemetry, Cloudthread’s vision is to create a toolkit for engineering teams to make cloud costs a first class metric. Our first solution focuses on engineering cost efficiency monitoring, combining cost and application usage data to provide cloud cost unit analytics. This framework empowers engineering teams to intuitively understand the value they’re getting out of the cloud. 

High performing engineering teams have created internal platforms to empower a culture of cloud cost ownership (e.g. Netflix, Lyft). We exist to make this easy for all companies. Our team has been exposed to this problem in different perspectives, from leading the cloud cost management effort at Lyft, to building the data engineering/analytics function at Freeletics, to consulting for enterprise virtualization companies at Citrix. 

We’re humbled by the support of Peak State VC, GFC, Soma Capital, with participation from Patrick Wendel (Co-Founder, VP of Engineering, Databricks), Renaud Visage (Co-Founder, ex-CTO, Eventbrite), Jason Child (CFO, Splunk), Zack Kanter (Founder, CEO, Stedi), Ashley Smith (ex-CMO, Gitlab), and others on the road to delivering our vision. Infinite thanks to users of Cloudthread for your support, trust, and feedback so far - we look forward to building the future of cloud cost management together!