 Hi, Jeff Frick here with theCUBE. Welcome, we're excited to get out and talk to startups, people that are founding companies when they come out of stealth mode. We're in a great position that we get a chance to talk to them early and we're really excited to have a CUBE conversation with Karthik Rao, the founder and CEO of Signal Effects, just coming out of stealth, congratulations. Thank you, Jeff. So how long have you been working behind the scenes trying to get this thing going? Yeah, we've been at it for two years now. So my co-founder and I started the company in February of 2013. So excited to finally launch and make our product available to the world. All right, excellent. Well, congratulations. That's always a great thing. We've launched a few companies on theCUBE, so hopefully this will be another great success. So talk a little bit about, first off, you and your journey. We have a lot of entrepreneurs that watch a show and I think it's an interesting topic as to how do you get to the place where you basically found and launch a company? Yeah, absolutely. I started my career at a cloud company before cloud really existed as a market. There's a company called LoudCloud. Oh yeah, of course. It was trying to do Mark Andreessen, right? Early days. Mark Andreessen, Ben Horitz, or two of the co-founders of that company. And we were trying to do what the public cloud vendors are doing today before the market was really all that big and before the technologies really existed to do it well. But that was my first introduction to cloud, just right out of college. And that's where I met my co-founder, Philip Liu, as well. Phil and I were both working on the monitoring products at LoudCloud. From there I ended up at VMware for a good run of about seven years where I ran product. Had always wanted to start a company and then a couple of years ago, Phil and I thought that the timing was right and we had a great idea and decided to go build SignalFX together. Okay, so what was kind of the genesis of the idea? A lot of times it's a cool technology looking for a problem to solve, or a lot of times it's a problem that you know and if I only had one of these, it would solve my problem. So how did that whole process work? Yeah, it was rooted in personal experience. My co-founder, Phil, was at Facebook for several years and was responsible for building the monitoring systems at Facebook. And through our personal experience and what we'd seen in the marketplace, we had a fundamental belief and a vision that monitoring for modern applications is now an analytics problem. Modern applications are distributed. They're not a single database running on a single system. Even small companies now have hundreds of VMs running on public cloud infrastructure. And so the only way to really understand what's happening across all of these distributed applications is to collect the data centrally and use analytics. And so that was our fundamental insight when we started Signal Effects. What we saw in the marketplace was that most of the monitoring technologies haven't really evolved in the past 15 or 20 years and they're still largely designed for traditional static enterprise applications where if you get an alert when an individual node is down or a static threshold's been passed, that's enough. But that doesn't really work for modern apps because they're so distributed. If one node out of your 20 nodes is having a problem, it doesn't necessarily mean that your application is having a problem. And so the only way to really draw that insight is to collect the data and do analytics on it and that's what Signal Effects is about. Okay, really because of that distributed nature of modern apps and modern architecture. Yes, there are three things that are fundamentally different. Number one, modern applications are distributed in nature and so you really have to look at patterns across many systems. Number two, they're changing for more frequently than traditional enterprise apps because they're hosted for the most part, cloud applications. And so you can push changes out every day if you want to. And then third, they're typically operated by product organizations and not IT organizations. So you have developers or DevOps organizations that are actually operating the software. And those three changes are quite substantial and require a new set of products. And so the other guys are just, they're still kind of in the, fire off the pager alert, something is going down. It's very noisy, yes. When you're firing off alerts every time an individual alert goes off, when you've got thousands of VMs. We have thousands of VMs, right? And we all know the trend these days is towards microservices, architectures, small, componentized containers or VMs. And so you don't have to have a very sophisticated large application to have a lot of systems. It's so do you fit into other existing kind of infrastructure monitoring systems or kind of infrastructure management systems? So I'm sure, you know, it's another tool, right? You guys got to manage a lot of stuff. How does that work? Yeah, we're focused on the analytics part of the problem. Okay. And so we collect data from any sources. So our customers are typically sending us data, you know, infrastructure data that they're collecting using their own agents. We have agents that we can provide to collect it. A lot of the developers are instrumenting their own metrics that they care about. So for example, they might care about latency metrics and knowing latencies by customer, by region. So they'll send us all that data and then we provide a very rich analytics solution and platform for them to monitor all of this and in real time detect patterns and anomalies. So you just said you have customers. You're coming out of stealth though. So you have some beta customers already? Yes, we have great customers already. Not just beta customers, we've got great customers. Real customers, awesome. Yes. Congratulations. Thank you very much. They're very excited about our product and they range from small startups to fairly large web companies that are sending in tens of millions of data points every day and to signal effects. Right, right. And again, in the interest of sharing the knowledge with all of our entrepreneurs out there, when did they get involved in the process? How much of the kind of product development definition did they participate in? You said you've been at it for a couple of years. Yeah, we had a lot of conviction about this space from the very beginning because our team had solved this problem for themselves in previous experiences. But we did include, we've been in beta for about six months prior to launch. And so over the course of those six months, we recalibrated based on feedback we got from customers. But on the whole, our philosophy and the approach that we took was pretty much validated by the early customers that we engaged with. Okay, excellent. And so I assume you're venture funded? We are. Can you talk about who your backers are? Yes, we raised $28.5 million. $28 million. Yeah, $28.5 million dollars from Andreessen Horowitz with Ben Horowitz on our board and Charles River Ventures with David Eulerker on our board. And how big are you now in terms of the company? Well, we're just getting started now, right? This is kind of day one of the- Yeah, $28 million, you gotta put all that money to work. Well, that's right. We've got a great group of engineers, our company is still in the few dozen people stage at this point, but we're planning to invest aggressively in building out our team, both on R&D and on the go-to-market side this year. Excellent. Once you detect patterns and anomalies, what's kind of the action steps you work with with other systems to swap stuff out? Because now I hear like these huge data centers, they don't swap out this, they don't swap out machines, they swap out racks, it's gonna be swapping out data centers. So what are some of the prescriptive things that people are using they couldn't do before by using your tool? Yeah, I'll give you a great example about one of our early beta customers. They do code pushes very aggressively. You know, once a week, they'll push out changes into their environment and they had a SignalFX console open which, and we're a real-time solution, so every second they were seeing updates of what was happening in their infrastructure, they pushed out their code and they immediately detected a memory leak and they saw their memory usage just growing immediately after they did their code push and they were able to roll it back before any of their users noticed any issues. And so that's an example of these days, a lot of problems introduced into environments are human-driven problems. It's a code push, it's a new user gets onboarded or a new customer gets onboarded and all of a sudden there's 10x the load onto your systems. And so when you have a product-like SignalFX where you can in real-time understand everything that's happening in your environment, you can quickly detect these changes and determine what the appropriate next step is. And that appropriate next step will depend on your application and who you are and what you're building. So our key philosophy is we get out of your way but we give you all of the insights and the tools to figure out what's happening in your environment. That's interesting, that really kind of too comes from your partner's Facebook experience, because they're pushing out new code all the time on those things. Yeah, move fast and break things, right? Right, exactly. And then you're at VMware, so you know kind of the enterprise side. So what if you could speak a little bit about kind of this consumerization of IT on the enterprise side and not so much the way that the look and feel of the thing works, but really taking best practices from consumer IT companies like Facebook, like Amazon that really changed the game because it used to be the big enterprise software guys had the best apps. Now it's really flipped where people like Google and Netflix and those guys had the best apps and even more importantly, they drive the expectation of the behavior of an application. Are enterprises finally getting it and are they really embracing it? We're definitely seeing a growth in new application development. I think when I spent a lot of time talking to CIOs at enterprises as well and they all understand that in order to be competitive you have to invest in applications. It's not enough to just view IT as a cost center and they're all beginning to invest in application development. And in some cases, these are digital media teams that are separate from traditional IT and other places. It's they're more closely tied together but we absolutely see kind of growth in application development. In many of these end up looking a lot like the development teams that we see here in the Bay Area and companies that are building SaaS and consumer cloud apps. Yeah, exciting time. So you should come out of stealth. What's kind of your next kind of milestone that you're looking forward to? You have a big some announcements. You got a show you're going to kind of launch at. Where are we going to see you make a big splash? Well, for us, it's steadily building our business. And so we hope to, you know, we're launching now and we've got a lot of great customers already and hope to sign on several more and help our customers build great applications. So that's our focus. Okay, congratulations. Two years, that's a big development project. Karthik Rao, founder and CEO of Signal Effects. Just launching their company coming out of stealth. We'd love to get them on theCUBE. I want to share the knowledge with you guys, both the people that are trying to start your own company. Take a little inspiration, as well as the people that need this service to monitor the cloud with a modern application. Thanks a lot. Thank you, Jeff. Thank you. You're watching Jeff Frick, CUBE Conversation. See you next time.