Honeycomb was founded in 2016 by two former Facebook engineers to create a new way of looking at application monitoring based on the internal tooling they had seen at Facebook. At the time, they foresaw a changing IT landscape that was being transformed by microservices and containerization and they believed (correctly as it turned out) that the modern IT stack required a different approach to monitoring.
Today the company announced a $50 million investment, a large sum in today’s tightening VC landscape. The new money brings the total raised to nearly $150 million, per the company.
What is attracting such intense investor interest at a time when rounds have tended to be much smaller? Christine Yen, co-founder and CEO at Honeycomb, says she and her co-founder Charity Majors saw this change coming and built a tool specifically for where the puck was going.
“What we saw in 2015 and 2016 is the world moving in a direction where that complexity was unavoidable whether in a heightened interest in being able to do things like breakdown by customer ID or this exploding complexity that was about to come onto the scene driven by Kubernetes, microservices and containers. We [believed] the world [was] going to need a tool like this that allows users to have both speed and flexibility,” Yen told TechCrunch.
And it turns out that they were right. The stack has changed, and they were in the right place at the right time to take advantage. As the world shifted from applications performance monitoring to observability, Yen says Honeycomb was at the forefront of this shift.
But the founders didn’t stop at making their product technically match the changing IT landscape, they also wanted to build something that developers wanted to use. They spent the first couple of years building the tooling and talking at conferences about the notion of observability. They realized that any tool they built required flexibility to match the requirements of each organization, and the customization has proven popular.
Yen won’t talk about many metrics at this point, but she says they have more than 600 customers worldwide, and is happy to share the company’s net revenue retention rate, which measures if those existing customers are sticking around and expanding their usage.
“I think our stand-up metric here is that our net revenue retention is over 160%. Once [our customers] get it and they’re onboard, they grow and they grow and they grow. This reflects not only organic growth, but also again, us showing that we can eat into the budget, and whatever tools they have in place, because inevitably people have some other tool in place,” she said.
Yen says the product plays well in times like these with more budgetary scrutiny. “We are, of course, seeing what the rest of the market is seeing and that folks are being more careful about spend. But it just means that it’s an opportunity to do more of what we have already been doing, which is helping engineering teams do more with less,” she said.
As two women founders they are acutely aware of building diversity into every level of the organization as they build their company. “We have a majority woman board, we have a majority women leadership team, and our company is actually quite evenly distributed. Last I checked, we had 47% men, 43% women, 7% non-binary and the rest unspecified,” she said.
Yen believes if you give underrepresented folks a supportive place to work, they’ll thrive. “It turns out that folks who have been chronically underrepresented in tech don’t want to be hired because they are underrepresented, but because they just want to do good work in an environment where that will be the most interesting thing about them,” Yen said.
Today’s $50 million investment was led by Headline with participation from existing investors Insight Partners and Scale Ventures. The company’s most recent investment prior to this was another $50 million in 2021 led by Insight.