These days, when you hear about a cloud computing company landing a boatload of venture capital, you probably figure it’s run by a couple of kids who look fresh out of summer camp. Not so with San Francisco’s NewRelic, which on Tuesday will announce an $80 million haul led by Insight Venture Partners and T. Rowe Price.
Take a gander at NewRelic’s executive roster, and you see an awful lot of grey hair. “We’re old,” laughed President Chris Cook, 50, who’s been in the tech industry for three decades and joined venerable BMC Software when it was just a startup.
This is Cook’s second go-round with NewRelic CEO Lewis Cirne, who founded Wily Technology in 1998. That company, Cook said, was a pioneer in application performance management, which is a fancy way of saying that it helped customers make sure their software worked.
Cook likened Wily’s product to “the Gordon Gekko satellite phone – it was great, but it was expensive, and not a lot of people could use it.” Landing new customers, he said, required Wily to deploy a large sales force that slowed growth.
So after selling the company to Computer Associates for $350 million, Cirne in 2008 decided to build app management software that developers could download themselves, without the need for a sales force or extensive training. NewRelic is delivered over the cloud, and Cook likened it to a smart phone: “It’s affordable, and that’s why we’ve had such mass adoption.”
NewRelic claims 35,000 customers, such as ESPN, Sony, E-Trade and OpenTable. But because it uses the “freemium” pricing model, not all of them pay. Cook said about 5,000 of its users buy bells and whistles such as 24/7 support and detailed analytics; maybe twice that many pay via NewRelic’s distribution partners, who include cloud-infrastructure players like EngineYard, Salesforce.com, Rackspace and VMWare.
Cook said the company will use the cash infusion to roll out new services for mobile developers and enterprise customers, as well as to continue its international growth. While more than half of NewRelic’s traffic comes from overseas, Cook said few of those customers are of the paying variety, so the 200-person company needs to add multilingual sales reps.
Cook (rather surprisingly) volunteered that the new funding values NewRelic at $750 million. Previous investors Benchmark Capital, Trinity Ventures and Tenaya Capital also ponied up in the round; Benchmark’s Peter Fenton is NewRelic’s board chairman.
Cook said T. Rowe Price tends to be choosy about investing in tech startups, “but they and Insight want to have the inside track on the IPO.” Not, he added, that NewRelic’s management team is in a rush to go public. “We’ve already had the impatient stage of our lives,” he quipped.
As for the company’s name? It’s an anagram of “Lewis Cirne.” But, perhaps unintentionally, it also suggests that its old-dog management team is more than capable of new tricks.