Although the end of zero interest rates has prompted businesses to look for savings wherever possible, there are still areas where there are significant budget drains. Observability (gathering and understanding data and systems) is typically the second-highest cloud spend for organizations, after cloud provisioning itself. People are even talking about an observability cost crisis, highlighted by anecdotes like Coinbase spending $65 million on Datadog claims.
And why is observability so expensive and important? Complex cloud architectures and microservices are here to stay, and security issues and outages are common, making it difficult for operations teams to keep their systems up and running. We need observability data to continue.
Now, a startup called Dash0 is launching to address the cost issue. If not by lowering prices, then at least by making it easier to purchase and pay for services.
Dash0 (pronounced “dash zero”) is a competitor to Datadog, and its pitch isn't about significantly reducing observability costs. Founder Mirko Novakovic (pictured above, left) still expects companies to spend 10% to 20% of their cloud costs on this budget item. But he and his team want to improve transparency, both in terms of pricing and observability itself.
Dash0 is able to achieve this through the way it's built, taking full advantage of the open source observability framework OpenTelemetry (also known as OTel), Novakovic told TechCrunch. This feature includes “Anytime, someone can [to] You can see exactly which services, which developers, which applications are generating how much cost in terms of observability,” he said.
While there are other companies such as Signoz that call themselves OTel native, Dash0's positioning resonates with investors. MulesSoft has raised $9.5 million in a seed funding round led by Accel with participation from Dig Ventures, the investment firm of MulesSoft founder Ross Mason.
Novakovic's track record may also have helped. His previous company, Instana, was also backed by Accel and was acquired by IBM in late 2020 for $500 million, an amount that was not previously disclosed. Several other Instana alumni are also now part of the Dash0 team.
If Dash0 is built on OTel, we are trying to improve it. The framework has actually been around since 2019, but “it's not very user-friendly at the moment,” Novakovic said. “Vendors have to do a lot of work to make it at least as easy as installing a Datadog agent. That's where we still lag behind the proprietary folks.”
As a company, Dash0 wants to take full advantage of OTel's benefits (vendor-agnostic, standardized data) with an intuitive UI, dashboards, and integrations with Slack, email, and other tools. The initial target customers are companies with 50 to 5,000 employees.
Although the company is now publicly traded, it does not intend to invest heavily in sales and marketing until it is confident that its product is a good fit for the market. In the meantime, Novakovic said the company's resources will be devoted to the team's technical and product growth. The team currently consists of 21 people, 19 of whom are engineers, all working remotely.
The upcoming 10 hires include a developer relations specialist who will also help drive adoption of OpenTelemetry as a solid alternative to proprietary options. In that regard, the company intends to collaborate with other OTel-related startups, ensuring that “missing pieces” such as dashboards and query languages fit into projects such as Perses and PromQL. “This is a community effort in collaboration with our customers,” Novakovic said.