A UK-based open source startup launches its first commercial product, backed by Silicon Valley's most prominent venture capital firm.
Pydantic on Monday announced $12.5 million in Series A funding led by Sequoia, launching an observability platform called Logfire after five months of trials in open beta.
But the company is best known for its eponymous Python library and open-source data validation framework, launched in 2017 by British developer Samuel Colvin. This project has become more and more powerful and is now used by developers in several companies around the world. Big names like Meta, Nvidia, Netflix, Google, and OpenAI.
Businesses deploy Pydantic within applications that need to validate the type of data entered by users. If a form requires an email address and the user enters a phone number instead or leaves it blank, Pydantic will check for this and display a friendly error message. It basically validates data structures to ensure integrity and has countless use cases.
For example, ChatGPT maker OpenAI introduced structured output for its API in August, a feature that uses Pydantic under the hood. So, if a company wants to develop a chatbot that collects user details and returns them in a structured way so that the data can be easily processed in the system, then Pydantic is the way to go.
“What's interesting about Pydantic is that it's the default way to validate responses from LLM,” Colvin said in an interview with TechCrunch last week. “So if you want a structured output, go for it.”
Colvin launched Pydantic as a for-profit entity in 2022, emerging from stealth by raising $4.7 million in seed funding from Sequoia 18 months ago. And now it seems like it's time to start making money. In fact, Colvin says the company is effectively trying to “cash out our credibility and brand name” by using Pydantic as a carrot for other products. , rather than building on Pydantic itself.
Pydantic Team Image Credit: Pydantic
tried and tested
A typical trajectory for a startup building an open source business looks like this: Create open source products that solve real problems. The product gained traction among developers and became an essential tool in a developer's stack. The startup creates commercial services and features on top of its core open-source project to make it even more useful.
While this is a proven model, the problem is that companies are moving away from open source in some way, whether by moving to less permissive licenses like Grafana or abandoning licenses altogether like HashiCorp. They are increasingly withdrawing. The reasons are generally the same. It's all to protect the company's bottom line and prevent large companies from misusing the product's open source credentials.
An entirely new licensing paradigm is also emerging to address open source “use and abuse” issues. Sentry, a multi-billion dollar development tools company, is promoting the concept of “fair source” in an effort to keep pace with “open” software without actually going open source. “Open source is not a business model. Open source is a distribution model, and primarily a software development model,” Chad Whitacre, head of open source at Sentry, told TechCrunch in an interview last month.
Using open source to bring companies into the developer community is by no means a new concept, but Pydantic is a bit unusual in that it uses open source projects entirely as a marketing tool. So rather than trying to turn Pydantic itself into a commercially viable product, we're relying on the gravity of the project to sell other products that aren't directly related (such as Logfire) instead.
“Instead of building a library that is a hosted version of Pydantic, we built Logfire, an observability platform,” Colvin said. “The trust that we have as a company from the Python community is on a different level than a lot of other companies. We went to PyCon US this year right after we announced the beta version of Logire, and everyone knew about the library. , people crowded around our booth all week because they also knew who we were. On the other hand, if we were emerging as a brand new observability company, people would ignore us. Pydantic is better known than almost any other brand in the Python world outside of big names like AWS and Google.
Pydantic's Logfire in action Image credit: Logfire
Logfire is essentially a competing product to Datadog, designed to provide developers with insight into the performance of their software. However, Pydantic wants to simplify the configuration of the entire observability process. As Colvin puts it, “Vercel is to Datadog what Vercel is to AWS.”
“AWS has a huge amount of functionality and is incredibly complex to use,” he said. “Datadog is also a very complex piece of kit, so we're trying to build a simpler experience for developers.Longer term, we want people to be able to use it. [Logfire] Instead of Datadog. But in the medium term, we want it to be a simpler solution for smaller teams. ”
This is certainly an interesting approach to building a business. The startup is essentially using Logfire to solve a different problem for the same people who use Pydantic.
“They are different, but they overlap in that everyone who needs Pydantic, the validation library, also needs observability,” Colvin said. “So we're targeting solutions for the same people.”
please show me the money
Going back to Pydantic's early days, Colvin was able to secure decent sponsorships from some of the framework's biggest enterprise users, including Salesforce, which donated $10,000 in 2022. AWS and GitHub sponsored $5,000 and $750, respectively.
But as businesses grew and venture capital (VC) entered the picture, the frequency of corporate donations decreased.
“We’ve had pretty generous sponsorships, but even more when we were on our own,” Colvin said. “But now that we have Sequoia backing, people are less likely to use their wallets.”
With Logfire now generally available, Pydantic hopes to build on the more than 2,000 developers and 150 companies it attracted during the beta phase. Currently, the focus is on AI companies.
In addition to lead investor Sequoia, Pidantic's Series A round also saw participation from angels such as Logan Kilpatrick and Jason Liu, as well as Partek and Irregular Expression. Colvin said the new cash will be used primarily for payroll and to shore up the company's existing workforce of 13 people spread across the United States and Europe.
“This funding will primarily be used to hire developers,” Colvin said. “Maybe someday I'll hire a sales position, but for now it's just engineering.”