CloudZero Helps Companies Optimize Their AWS Spending

CloudZero is a Boston-based cost intelligence platform that helps companies determine how best to invest in their cloud infrastructure. Founded in 2016, the startup uses machine learning to produce up-to-date cost insights, allowing engineers to make informed decisions in real-time when launching new products and features.

The inspiration for CloudZero came to Erik Peterson, the company’s founder, CTO, and CISO, during his time at an earlier startup. “The last company I worked for before founding CloudZero was an application security company called Veracode,” he says. “This is where I really cut my teeth on AWS in terms of building real, at-scale systems.”

Veracode was a SaaS company and had built everything in its own datacenter. But when a client with tens of thousands of websites wanted Veracode to test their security, it became clear to Peterson that they would need to move to a cloud provider, in the end choosing AWS to test this new project.

There was a catch, however: Peterson’s budget was just $3,000.

Erik Peterson, founder, CTO, and CIS

“From my first experience with AWS — which is why I think CloudZero became the company it is — my thinking was, ‘I have a budget and I’d better stick to it, otherwise I’m going to be in trouble,’” Peterson says.

After much testing and ramping up to 1,500 EC2 instances while leveraging spot compute (a strategy before it’s time in 2009), Peterson was able to successfully complete the project with the limited budget. And soon, Veracode began moving more and more onto AWS.

It was an eye-opening experience for Peterson. He saw that the future was all about the cloud, but the limitless opportunities the cloud provided also created new challenges—particularly the possibility of ballooning costs.

“I learned the hard way in the rollout of AWS at Veracode that you take some of the smartest engineers you’ve worked with, and you give them this powerful tool, AWS, and if they don’t have guardrails and guidance, they will go off and do amazing things that cost amazing amounts of money,” Peterson says. “I like to tell people that we all have infinite scale now, thanks to AWS. But, unfortunately, we have not figured out how to get an infinite wallet.”

CloudZero is designed to address that problem by helping companies understand their spending and make smarter investment decisions that deliver value to their customers.

“We’re spending money because we want to deliver value, and get a return on that,” Peterson says. Before CloudZero, however, Peterson couldn’t obtain the kinds of insights that he needed. “When I looked around, I said, ‘Why is there nothing that helps me as a SaaS company understand what my cost per feature is, or my cost per product, or cost per customer? Why is there nothing that helps me track those metrics and helps the engineering team make good buying decisions?’ It just seemed like a no-brainer that something like that should exist.”

With such a business, it makes sense that CloudZero has been closely tied in with AWS since the startup was founded. Through AWS Activate, CloudZero was able to take advantage of thousands of dollars in credits, making it easy to test and iterate in the early. Peterson also points to working with AWS to perform a Well-Architected review early on as, “really helpful, as it forced us to think about our overarching architecture and how we wanted to build with a long term focus. This set us up to easily meet the requirements for SOC 2 compliance, which has been critical in winning business in our space.”

Today, CloudZero remains fairly small, with roughly 30 employees, but it is growing rapidly and has become a critical tool for SaaS businesses building on AWS. And as the company has scaled up, they’ve been able to take advantage of various other AWS programs along the way.

“We’ve been a member of the AWS Partner Network for a bit now, and we’ve fully embraced the Amazon Marketplace for all of our transactions. When we sell our product, it’s sold through the Marketplace, which just makes it really easy and clean for us to get a quick transaction with our customers,” Peterson says. “We’re also a member of the AWS ISV Accelerate program, allowing us to pitch and co-sell with other AWS partners.”

By using CloudZero to guide their buying decisions, companies can invest with more confidence, secure in the knowledge that they are spending wisely. “Most of our customers increase their AWS spend, because they feel better about the investment they’re making,” Peterson says. “Before they might think, ‘I don’t know what’s happening. I’m a little bit afraid of how this is all going to go.’ Now, however, they can actually go do those things with a little bit more confidence and grow faster.”