Author: azeeadmin

As companies look for ways to respond to incidents in their complex micro services-driven software stacks, SREs or site reliability engineers are left to deal with the issues involved in making everything work and keeping the application up and running. Rootly, a new early stage startup wants to help by building an incident response solution inside of Slack.

Today the company emerged from stealth with a $3.2 million seed investment. XYZ Venture Capital led the round with participation from 8VC, Y Combinator and several individual tech executives.

Rootly co-founder and CEO Quentin Rousseau says that he cut his SRE teeth working at Instacart. When he joined in 2015, the company was processing hundreds of order a day, and when he left in 2018 it was processing thousands. It was his job to make sure the app was up and running for shoppers, consumers and stores even as it scaled.

He said that while he was at Instacart, he learned to see patterns in the way people responded to an issue and he had begun working on a side project after he left looking to bring the incident response process under control inside of Slack. He connected with co-founder JJ Tang, who had started at Instacart after Rousseau left in 2018, and the two of them decided to start Rootly to help solve these unique problems that SREs face around incident response.

“Basically we want people to manage and resolve incidents directly in Slack. We don’t want to add another layer of complexity on top of that. We feel like there are already so many tools out there and when things are chaotic and things are on fire, you really want to focus quickly on the resolution part of it. So we’re really trying to be focused on the Slack experience,” Rousseau explained.

The Rootly solution helps SREs connect quickly to their various tools inside Slack, whether that’s Jira or Zendesk or DataDog or PagerDuty, and it compiles an incident report in the background based on the conversation that’s happening inside of Slack around resolving the incident. That will help when the team meets for an incident post-mortem after the issue is resolved.

The company is small at the moment with fewer than 10 employees, but it plans to hire some engineers and sales people over the next year as they put this capital to work.

Tang says that they have built diversity as a core component of the company culture, and it helps that they are working with investor Ross Fubini, managing partner at lead investor XYZ Venture Capital. “That’s also one of the reasons why we picked Ross as our lead investor. [His firm] has probably one of the deepest focuses around [diversity], not only as a fund, but also how they influence their portfolio companies,” he said.

Fubini says there are two main focuses in building diverse companies including building a system to look for diverse pools of talent, and then building an environment to help people from under-represented groups feel welcome once they are hired.
“One of our early conversations we had with Rootly was how do we both bring a diverse group in and benefit from a diverse set of people, and what’s going to both attract them, and when they come in make them feel like this is a place that they belong,” Fubini explained.

The company is fully remote right now with Rousseau in San Francisco and Tang in Toronto, and the plan is to remain remote whenever offices can fully reopen. It’s worth noting that Rousseau and Tang are members of the current Y Combinator batch.

There are excruciatingly high stakes for software today. Trillions of dollars of market cap, billions of consumers, hundreds of billions of revenue, and limitless hours of usage are dependent on software working in real time, all the time, without downtime.

As the sophistication of software delivery has increased, every layer of the tech stack has been rewritten — an accelerated evolution has led to a bevy of multibillion-dollar, up-and-coming unicorns and multiple massive public market debuts.

However, today we’re talking about one of the most integral pillars holding up the internet. The Domain Name System, otherwise known as DNS, is the key addressing system that connects browsers, users, devices and servers together. Type in “www.techcrunch.com” in your browser, and DNS finds the address linked to that name and tells routers and switches across the world which server to connect to and how to send data back to you.

Unlike physical postal addresses, innovation around DNS addressing has flourished in recent years. Traffic management, performance scaling, and cost shaping have turned DNS from a basic directory into a vital layer for guaranteeing the reliability of all software in use on the internet today while protecting the bottom line.

Few companies have parlayed internet infrastructure experience into a world-class engineering company quite like NS1. The New York City-based startup has raised more than $100 million as it builds a strategic node at the core of the modern web delivery tech stack. Customers are flocking: 760 at latest count (up from 600 a year ago), with year-over-year bookings growth well into the triple digits.

How did the company take a slumbering and dreary yet reliable aspect of the internet and turn it into a strategic moat and an enterprise win? And what lessons can we learn about the future of the enterprise infrastructure layer from one of its leading lights? That’s what we’re here to find out.

The lead writer of this EC-1 is Sean Michael Kerner. Kerner has been covering the IT and enterprise infrastructure market for more than a decade as a tech journalist (or, @TechJournalist as he is known on Twitter). Perhaps most importantly, he’s also partially fluent in Klingon, which has no bearing on this EC-1, but is one of those cool facts we wanted to include anyway. The lead editor for this package was Danny Crichton, the assistant editor was Ram Iyer, the copy editor was Richard Dal Porto, and illustrations were drawn by Nigel Sussman.

NS1 had no say in the content of this analysis and did not get advance access to it. Kerner has no financial ties to NS1 or other conflicts of interest to disclose.

The NS1 EC-1 comprises four main articles numbering 10,300 words and a reading time of 41 minutes. Here’s what we’ll be (DNS) addressing:

• Part 1: Origin story “1 napkin and 22 lines of code, or how NS1 rewrote the rules of internet infrastructure” (2,700 words/11 minutes) — Sets the context for NS1’s business and provides a brief explanation of why DNS (the technology at the core of the NS1 service) matters.
• Part 2: Product development and roadmap “WTF is NS1? It’s DNS, DDI, and maybe other TLAs” (2,700 words/11 minutes) — Analyzes NS1’s products, vision and open-source efforts through NS1 Labs.
• Part 3: Competitive landscape “The fight for the future of DNS is white hot” (2,300 words/9 minutes) — Evaluates how NS1 competes in a space littered with well-funded Big Tech companies and well-established mature companies.
• Part 4: Customer development “Outages, pandemics and the reengineering of traffic on the internet” (2,600 words/10 minutes) — Explores how companies like Roblox and Pinterest have had to reshape their networking infrastructure in light of massive growth and increasing demands for resilience from users.

We’re always iterating on the EC-1 format. If you have questions, comments or ideas, please send an email to TechCrunch Managing Editor Danny Crichton at danny@techcrunch.com.

It’s the most important primary layer in the modern tech stack for internet software, and its most intriguing evolution was written on a napkin in a New York City bar and translated to just shy of two dozen lines of Python code.

Such is the nature of tech innovation today, and such was the birth of NS1. Kris Beevers, along with Jonathan Sullivan and Alex Vayl, wanted to rebuild the core addressing system of the internet — the Domain Name System, or DNS — and transform it from a cost center into a critical tool for software reliability and cost savings. It was a smart idea back in 2012 and gained much steam a few years later when a fortuitous outage at a competitor left hundreds of websites stranded.

NS1 may make the networks of the internet more reliable. But the story of the company is also built on the back of a durable social network of engineers who met at a little-known NYC startup named Voxel. That startup would go on to become, unintentionally, an incubator for several massive enterprise companies and exits.

Chance encounters, bold engineering and lucky breaks: It’s the quintessential startup tale, and it’s changing the face of software delivery.

“You learn a lot because you’re doing way more than you rightfully should.”

NS1’s story begins back at the turn of the millennium, when Beevers was an undergrad at Rensselaer Polytechnic Institute (RPI) in upstate New York and found himself employed at a small file-sharing startup called Aimster with some friends from RPI. Aimster was his first taste of life at an internet startup in the heady days of the dot-com boom and bust, and also where he met an enterprising young engineer by the name of Raj Dutt, who would become a key relationship over the next two decades.

“We are not a DNS company, despite the name, and despite everything we’re talking about,” NS1 founder and CEO Kris Beevers says.

That might sound counter-intuitive, given that the company’s flagship product offering is literally called Managed DNS. The issue and the challenge NS1 actually solves today goes much deeper, and by positioning itself as being about more than DNS, the company helps to differentiate itself against what is, by any measure, a very commoditized technology.

NS1 looks at DNS differently from the competition: It doesn’t consider it as just a conduit to connect traffic; instead, DNS is treated as a routing system that can direct traffic very effectively.

Across its product portfolio, NS1 leverages data and injects software-defined intelligence, automation and real-time decisioning policy to steer and optimize traffic at the DNS layer, Beevers says. It does all this by a core technology known as the filter chain, and it is foundational to NS1’s current success.

In the first part of this EC-1, I spoke about how Beevers wrote 22 lines of code to sketch out that filter chain technology, bringing NS1 to life. I will now look at how the company has expanded beyond DNS into what’s known as DDI, a key technology stack for managing internal networks within companies. We’ll also talk about NS1’s open-source efforts, and why experimentation remains a bedrock principle of the company’s engineering culture.

Managing external traffic: DNS and active traffic management

“Something that I will say very often to our team and to our customers in the market is, we’re not here to make DNS better; we’re not here to make DDI better, which is another realm that we play in now,” Beevers said. “We’re here to turn those technologies into leverage to solve much bigger problems that equate to connecting applications with an audience more effectively, at better scale, driving better performance and experiences with security and reliability.”

Since its inception, one of the toughest challenges NS1 has faced is the simple fact that DNS is a mature market category with venerable and well-established incumbents. When Kris Beevers and his two co-founders started the company, quite literally every company and internet user already had some form of DNS technology in place. It’s a decades-old technology after all.

Beevers and everyone associated with the company is keen to point out time and again that NS1 isn’t a DNS vendor, but rather a suite of products offering application and traffic delivery, performance and reliability. NS1 in its early days had to constantly preach that message and educate its potential customers on how its offering provided something different than the incumbents with years of performance history.

In the first two parts of the EC-1, we looked at the origins of the company and its core product offerings in DNS and DDI. In this section, it’s time to look at the broader market and the competition facing NS1 and what that portends for the future of the company.

Everyone owns a product they don’t fully understand

Hosting providers typically offer basic DNS services that “just work” out of the box, creating a large challenge for any vendor in the managed DNS space. Eric Hanselman, principal research analyst with S&P Global Market Intelligence, said that among some organizations, there is an expectation that DNS is just part of what happens on the internet.

“I think the largest misconception that I find about DNS in general, is the lack of understanding of how critical it is to the performance and the customer experience of just about everything that organizations do today that is technology related,” Hanselman said.

Sales in enterprise infrastructure is all about meeting a customer’s requirements. But what happens if customers don’t even realize they need a startup’s product in the first place?

In the first three parts of this EC-1, we looked at the origins of NS1, how the company built its DNS and DDI services, and how it competes in a hypercompetitive market. This fourth and final part is where the “rubber meets the road” — the actual customers. Without customers, there is no money, there is no growth and there is no NS1.

As we saw, the challenge for NS1 is that most customers are relatively content with their existing DNS service. It’s a space that has many offerings from legacy as well as public cloud providers, and for most customers, there’s never an urgent force pushing them to upend the fundamentals of their network.

NS1 has had a couple of lucky breaks. The first, as we will see with Pinterest and Roblox, was a major outage of one of the company’s largest competitors, DynDNS, back in October 2016. That failure brought NS1 immediate attention from network architects, turning a relatively staid layer of infrastructure into a critical area for re-architecting.

Beyond that outage, NS1 has been able to educate its customers on why a more flexible base for DNS is important for performance. We interviewed Roblox extensively to understand how the children’s gaming platform has engineered its systems in light of its feverish growth amidst the COVID-19 pandemic.

Finally, we will look at how NS1 continues to expand its product lineup, and what the future holds for the company. NS1 now serves more than 760 customers, including many of the world’s most trafficked applications, such as LinkedIn, Dropbox, JetBlue, Fox and The Guardian. It has become a major infrastructure leader, and an “unusual outcome” likely awaits.

One outage to topple them all

There are a lot of different reasons why any enterprise or organization would choose to buy services from NS1.

Every business and internet user on the planet already has access to DNS in one form or another. NS1 doesn’t sell merely DNS services, as the company repeated time and again in every interview and briefing, but instead sells network resilience and performance. Sure, DNS “just works” in many cases, but “good enough” isn’t good enough when microseconds count and users demand and expect to always be connected at the best possible speed.

Lula, a Miami-based insurance infrastructure startup, announced today it has raised $18 million in a Series A round of funding.

Founders Fund and Khosla Ventures co-led the round, which also included participation from SoftBank, hedge fund manager Bill Ackman, Shrug Capital, Steve Pagliuca (Bain Capital co-chairman and Boston Celtics owner), Tiny Capital’s Andrew Wilkinson. Existing backers such as Nextview Ventures and Florida Funders also put money in the round, in addition to a number of insurance and logistics groups such as Flexport.

The startup’s self-proclaimed mission is to provide companies of all sizes — from startups to multinational corporations — with insurance infrastructure. Think of it as a “Stripe for insurance,” its founders say.

Founded by 25-year-old twin brothers and Miami natives Michael and Matthew Vega-Sanz, Lula actually emerged from another business the pair had started while in college.

“We couldn’t afford to have a car on campus and wanted pizza one night,” Michael recalls. “So I thought it would be cool if there was an app that let me rent a car from another student, and then I thought ‘Why don’t we build it?’ We then built the ugliest app you’ve ever seen but it allowed us to rent cars from other people on the campus.” It was the first company to allow 18-year-olds to rent cars without restrictions, the brother say.

By September 2018, they formally launched the app beyond the campus of Babson College, which they were attending on scholarships. Within eight days of launching, the brothers say, the app became one of the top apps on Apple’s App Store. The pair dropped out of college, and within 12 months, they had cars available on more than 500 college campuses in the United States.

“As you can imagine we needed to make sure there was insurance coverage on each rental. We pitched it to 47 insurance companies and they all rejected us,” Michael said. “So we developed our own underwriting methodologies or underwriting tools into the operations and had the lowest incident rate in the industry.”

As the company grew, it began partnering with car rental providers (think smaller players, not Enterprise, et al.) to supplement its supply of vehicles. In doing so, the brothers soon realized that the most compelling aspect of their offering was the insurance infrastructure they’d built into it.

“Our rental companies begin to put a significant portion of their business through our platform, and one day one called us and asked if they could start using the software in the insurance infrastructure we’d built out in the rest of our business.”

That was in early 2020, right before the COVID-19 pandemic hit.

“At that moment, we began to realize, ‘Hey maybe the big opportunity here is not a car-sharing app for college students, but maybe the big opportunity here is something with insurance,’” Michael said.

A few weeks later, the duo shut down their core business and by April 2020, they pivoted to building out Lula as it exists today.

“In the same way that Stripe has built a payment API that eliminates the need for companies to build their own payment infrastructure, we decided we could build an insurance API that eliminates the need for companies to build their own insurance infrastructure,” Matthew said. “Companies would no longer need to build out internal insurance systems or tools. No longer would they need to deal with insurance brokers to procure them coverage. No longer would they need to deal with insurance teams. We can integrate on to a platform and handle all things insurance for companies and their customers via our API.”

By August of 2020, the company launched an MVP (minimum viable product) and since then has been growing about 30% month over month after reaching profitability in its first four months.

Image Credits: Lula

Today, Lula offers a “fully integrated suite” of technology-enabled tools such as customer vetting, fraud detection, driver history checks, and policy management and claims handling through its insurance partners. It has a waiting list of nearly 2,000 companies and raised its funding to fulfill that demand.

“The main purpose for raising capital was so we can build out the team necessary to fulfill demand and sustain growth moving forward,” Matthew said. “And apart from that, we also just want to further develop the technology — whether it be in the ways that we’re collecting data so we can get more granular and make smarter decisions or just optimizing our vetting system. We’re also just working toward developing a much more robust API.”

Existing clients include ReadyDrive, a car-sharing program for the U.S. military and a “ton of SMBs,” the brothers say. Investor Flexport will be conducting a pilot with the company.

“Every time a trucker picks up a load or delivery, instead of paying monthly policies, they will be able to pay for insurance for the two to three days they are on the road only,” Michael says. “Also, if someone is shipping a container via Flexport, they can add cargo coverage at the point of sale and get an additional layer of protection.”

Ultimately, Lula’s goal is to act as a carrier in some capacity.

Founders Fund’s Delian Asparouhov believes that the way millenials and Gen Zers utilize physical assets is “wildly different” than prior generations.

“We grew up in a shared economy world, where apps like Uber, GetAround, Airbnb have allowed us to episodically utilize assets rather than purchase them outright,” he said.

Despite their recent success, the brothers emphasize that the journey to get to this point was not always a glamorous one. Born to Puerto Rican and Cuban parents, they grew up on a small south Florida farm.

“We started our company out of our dorm room and initially emailed 532 investors only to get one response,” Michael said. “Founders just see the headlines but I just want to advise them to stay persistent and really keep at it. I’m not afraid to share that the company started off slow.”

Rise, shine and get your startup on, early founders. It’s Day One of TC Early Stage 2021: Marketing and Fundraising! Get ready to be schooled — in the best way possible — on essential skills, tips and tactics every founder needs to build a successful startup. And, like the sign says, the emphasis this time around is on marketing and raising funds — with plenty of experienced speakers to guide you.

Pro (crastination) Tip: It’s not too late to attend. Buy a ticket at the virtual door.

We’re about to highlight a few of the info-packed presentations on tap today — just to wet your whistle. But first, here’s how Ashley Barrington, founder of MarketPearl, described Early Stage 2020.

They offered a great variety of sessions and speakers — top investors, founders and credible subject-matter experts — who gave unique insights based on personal experience. You get great mentorship through attending the Early Stage sessions. It’s like a mini masterclass in entrepreneurship.

Be sure to check the event agenda to scope out what interests you the most. Remember, your pass includes video on demand. If you need to get a bit of work done or find that two sessions you want to attend conflict, relax. You can catch everything you missed later at your leisure.

Nailing Your Pitch: Companies aren’t started at the moment of fund raising begins but they can often end there. Nailing your pitch is integral to success. Hear from Adina Tecklu, principal at Khosla Ventures, on how to tell your story and leave investors wanting more.

How to Capitalize on Being Coached: Ted Wang, partner at Cowboy Ventures, comes from the legal world where he was a partner at Fenwick. In short, he’s seen his fair share of startup success and failure. At Early Stage, Wang will explain the value of coaching for startup founders, including the different types of coaches one might utilize, how to choose between them, and how to get the most out of a good coach.

What’s Your Story? You can have a compelling product, but it’s a compelling story that puts your company into motion. In this session, Doug Landis, former Chief Storyteller and GTM leader from Box, Salesforce and Google, will share the core storytelling mechanics to help you nail your origin, product and customer stories that will get your company in motion.

Deep Tech — How to Raise Early in a Notoriously Tough Category: The greatest evolutions in our history have not come from small technological steps, but giant leaps. Frontier tech is the future, but it’s not particularly accessible to average folks. Hear from IndieBio partner Pae Wu and HAX partner Garrett Winther on how to fundraise for your deep tech startup.

School is now in session! It’s not too late to get access to the networking, the community and learning more about the best ways to drive your business forward. Get your ticket for instant access now!

Z1, a Sao Paulo-based digital bank aimed at Latin American GenZers, has raised $2.5 million in a round led by U.S.-based Homebrew.

A number of other investors also participated in the financing including Clocktower Ventures, Mantis – the VC firm owned by The Chainsmokers, Goodwater, Gaingels, Soma Capital and Rebel Fund. Notably, Mantis has also backed Step, a teen-focused fintech based in the U.S., and Goodwater has also invested in Greenlight, which too has a similar offering as Z1.

Z1 participated in Y Combinator’s Winter ‘21 batch earlier this year, and at the time got $125,000 in funding from the accelerator. Maya Capital led its $700,000 seed round in March of 2020.

Put simply, Z1 is a digital bank app built for teenagers and young adults. The company was founded on the notion that by using its app and linked prepaid card, Brazilian and Latin American teenagers can become more financially independent.

João Pedro Thompson and Thiago Achatz started the company in late 2019 and soon after,  Mateus Craveiro and Sophie Secaf joined as co-founders. In its early days, Z1 is focused on Brazil but the startup has plans to expand into other countries in Latin America over time.

“Z1 is what we’re building to be the go to bank of the next generation, and not just be a digital bank for teens,” Achatz told TechCrunch. “We want to grow with him and one day, be the biggest bank in Brazil and LatAm.” 

Thompson agrees. 

“We’re acquiring users really early and creating brand loyalty with the intention of being their bank for life,” he said. “We will still meet their needs as they grow into adulthood.”

Image Credits: Z1

While Z1’s offering is not completely unlike that of Greenlight here in the U.S. the founders agree that its products have been adapted more to the Brazil-specific cultural and market situation.

For example, points out Thompson, most teenagers in Brazil use cash because they don’t have access to other financial services, whether they be traditional or digital.

“We offer an account where they can deposit money, cash out money via an instant payment system in Brazil or spend through a prepaid credit card,” he said. “Most sites don’t accept debit cards so this is a big step compared to what teens already have.”

Part of the company’s use for the capital is to make its product more robust so they can do things like save money for big purchases such as an iPhone and earn interest on their accounts.

Another big difference between Brazil and the U.S., the company believes, is that many parents in general in Latin America haven’t had a true financial education that they can pass down to their kids.

“We’re not top down like Greenlight,” Achatz said. “That approach doesn’t make sense in Latin America. Here, many are independent from an early age and already work whether it’s through a microbusiness, a side job or selling things on Instagram. They’re much more self-taught and the income they earn is often outside of their parents.”

Z1 has grown 30% per week and 200% per month since launch, spending “very little” on marketing and relying mostly on word-of-mouth. For example, the company is following the lead of its U.S. counterparts and turning to TikTok to spread the word about its offering. 

“Step has around 200,000 followers on TikTok, and we have a little under half of that,” the company says. “We’re well-positioned in terms of branding.”

For lead investor Homebrew, the opportunity to educate and provide financial services to Gen Z in Latin America is even more exciting than the opportunity in the US., notes partner Satya Patel.

Over one third of LatAm Gen Z’ers have a “side hustle,” generating their own income independent from their parents, he said.

“While millennials grew up during an economic boom, Gen Z grew up during recessions – 3 in Brazil over the last decade – and wants to become financially independent as soon as possible. They’re becoming economically educated and active much earlier than previous generations,” Patel added.

He also believes the desire to transact online, for gaming and entertainment in particular, creates a groundswell of GenZ demand in Brazil for credit card and digital payments products.

A Coupang delivery driver in Taipei City

One month after entering Japan, its first international market, Coupang has launched in Taiwan. The South Korean e-commerce giant began offering its service in Taipei City’s Zhongshan neighborhood, allowing people there to order items through its app for on-demand delivery between 8AM to 11PM, charging a delivery fee of 19 NTD (about 68 cents USD).

Coupang is testing its service and will assess different models for its delivery infrastructure in Taiwan. The selection of items is similar to what’s available in Japan–customers can buy food, beverages, daily necessities and pet supplies. In Taipei, Coupang’s most direct competition is currently Uber Eats and Foodpanda, which deliver from some retailers, including drugstores, as well as restaurants. A key difference is that Coupang is currently fulfilling orders directly, instead of sending couriers to stores or restaurants.

As it expands into more product categories, it will also compete with e-commerce platforms like Momo and PChome, which both offer 24-hour deliveries. In South Korea, Coupang’s e-commerce platform offers millions of products. Its other services include Rocket Fresh for perishable groceries and Coupang Eats for meals.

Coupang held a successful initial public offering in March on the New York Stock Exchange. Founded in 2010, Coupang has become the e-commerce market leader in South Korea and also developed an international reputation for “out-Amazoning Amazon” with the speed of its deliveries and dollar retention rate (or how often customers return and spend money).

Coupang invested heavily in its own logistics infrastructure when it launched a decade ago, but now also partners with third-party providers in South Korea. It remains to be seen what kind of fulfillment model it will decide on in Japan and Taiwan. The company hasn’t announced what its next market is, but it has been hiring in Singapore for lead operations, retail and logistics roles.