Public cloud adoption and its associated complexities have been top of mind for us for the better part of the last decade. Since 2011, we’ve backed more than 155 companies, the majority of which being B2B SaaS startups. Since our early days, we saw this inflection point and have had a front-row seat for just how quickly cloud adoption has been taking off.
Today, we’re excited to announce that we are investing in Zesty which enables companies to automate the management of cloud resources and cut cloud costs. Founded in 2019, the company leverages the cloud’s flexibility to its full extent by automatically adjusting resources based on application needs. We’re also thrilled to continue to invest in Israel’s world-class technology hub. We’ve backed numerous Israeli companies including recent IPOs monday.com, Kaltura and Jfrog, as well as recent investments Verbit, OwnBackup and now Zesty. The Israel start-up ecosystem has proven that it can produce innovative, next-generation companies, and we see Zesty as one of those companies.
Back in 2016, we invested in CloudHealth (Acq. by VMware), initially predicting the importance of managing cloud cost complexities and were compelled by the company’s multi-cloud cost management platform. Almost 6 years later, we have again invested in this space because managing the cloud-computing infrastructure has become much more complex and is not only about cost management anymore. It’s more about automation and taking action rather than just providing simple dashboard based analytics.
A Beneficial, Yet Costly Relationship with the Cloud
Cloud computing adoption is going on at an unprecedented pace and it has accelerated in recent years. Organizations are deeming it an absolute essential to maintaining their competitive edge. It’s no wonder that IDC estimates public cloud spend to grow from $393B in 2021 to $834B in 2025.
While there are many benefits to the cloud, it doesn’t come without its challenges and massive associated costs that are oftentimes much more than expected. In recent studies by Capita and Flexera, 58% of organizations found the shift to the cloud has been more expensive than initially thought, and 23% of companies were above their allocated cloud budget in 2020.
As organizations see an uptick in cloud spend, margin pressures and profit erosion emerge as major hurdles. We often hear companies struggling to understand the intricacies of their cloud computing budget, finding it difficult to forecast capacity and associated spend, which more often than not, contributes to cloud waste. On average, 35% of all cloud spend goes to waste which is an enormous number. This wasted spend is so high due to over-provisioning and under-utilization, unscheduled and/or idle resources, on-demand instances and stale snapshots and images.
The ROI of the Cloud Promised Land with Zesty
Zesty was founded in an effort to address these pervasive challenges, save money, and, ultimately, bring back, and potentially even enhance, the promised ROI of the cloud.
Its Commitment Manager product addresses several of the mentioned culprits right off the bat. By automatically purchasing and selling reserved instances, companies can maximize their commitment savings, overcoming the lack of stability and reliability in forecasts. In the process, they help customers achieve more than 50% savings effortlessly.
In addition, Zesty provides a next-gen auto-scaler for cloud storage volumes with its Zesty Disk solution. Continuously monitoring and managing EBS volumes is humanly impossible, and can lead to service degradation, EBS failures or overprovisioning. With Zesty Disk, users can automatically monitor EBS performance metrics, predict usage trends and automate thousands of actions. Furthermore, not only does the Zesty engine bring higher performance and require far less maintenance, but also by disentangling key engineering talent from manually having to grapple with infrastructure, expensive engineering teams can focus on what truly matters–building great products.
We believe that Zesty is truly differentiated with a best-in-class, action-oriented AI engine. The seamless user experience, fast-time-to-value, top-tier support and significant savings are core tenants of the Zesty platform–all of which resonated with us. Even pre-Series A, the company has already begun to drive tangible value for their customers. As the cloud cost optimization problem only becomes greater (driven by the rise of Kubernetes and continued cloud deployments), customers will increasingly find value in the Zesty platform. Zesty’s rapid growth, often into greenfield opportunities, and strong retention metrics are clear indicators of product-market-fit and proof that the vision to be the system of record for cloud management has tremendous merit.
40 Years of Combined Cloud Expertise
After extensive conversations with both founders and Zesty customers, we found that Maxim Melamedov (CEO & Co-Founder) and Alexey Baikov (CTO & Co-Founder) are down-to-earth, driven, talented and technical leaders with the aptitude needed to build and scale a successful business. Customers loved the dynamic duo noting their professionalism, empathy towards customers, engagement and leadership capabilities.
Pairing these qualities with the duo’s 40 years of combined expertise in cloud technologies, there’s no one we’d rather have leading the charge than Maxim and Alexey. They have an obsession with their customer’s success, delivering a phenomenal product and cost optimization, and we are confident in their vision to become the system of record for the cloud. Sapphire is looking forward to help build another company of consequence in cloud computing coming out of the Israeli ecosystem.
