What is the slot
Thousands of companies are operating in the Israeli high-tech industry with the aim of conquering the global market. Many of them compete for the same slot, but each has its own unique story. The “slot” section of Globes compares tech companies from Israel and the world, provides the context in which they operate and presents the main trends in the field.
Start-ups love “blue oceans” – virgin markets with little competition in which no clear lead has yet been established. “Competition is for losers,” says venture capitalist and investor Peter Thiel. According to him, competition is only detrimental to profits, something that should be avoided.
The software and systems monitoring market is the complete opposite of a virgin market. In the field of monitoring, also called Observability because it provides customers with visibility of what is happening in their systems, there are some huge and established players. Splank, founded in 2003 and traded at a value of $ 16 billion, is considered the oldest player in the market.
A younger company that was once considered the favorite of Wall Street investors is Data Dog, which was founded in 2010 and is worth $ 32 billion. Even though Data Dog has been around for over a decade and records annual revenues of more than $ 1 billion, it still grew by 70% last year. At the end of 2021, Data Dog acquired the Israeli start-up Ozcode, on the basis of which it operates a development center in Israel.
Logaz EO is undergoing changes
Despite the many players, systems monitoring is a huge field and every company needs its services to make sure that its activities are conducted properly. So even a small niche perception within it can be significant. It is also a constantly changing market, which opens up opportunities for new players to enter.
The two main Israeli start-ups currently operating in the monitoring market are Logz.io and Coralogix. The two companies, previously selected for Globes’ list of promising start-ups, began their journey in the world of log analysis – text files that computer systems automatically emit and indicate faults and problems.
Lugaz EU was founded in 2014 by Tomer Levy (CEO) and Assaf Yigal. Since being selected to Globes’ list of promising start-ups in 2019, it has undergone significant changes. Large corporations This is a fundamental change that has required the transition from automated sales through the site to working with salespeople on multi-billion dollar deals.
In 2021 Lugz E.. Or had to make an even bigger change. The company has since its inception relied mainly on open source tools developed by the Dutch company Elastic for collecting and analyzing logs (known collectively as ELK Stack). These are beloved and super popular tools with millions of downloads and IoZ packaged them in a convenient wrapper and added to them capabilities and ability to operate in larger volumes.
But last year Elastic decided to no longer allow organizations to continue to ride on its open source software following a dispute over the issue with Amazon. As a result, Logaz EU currently uses OpenSearch – an alternative software led by Amazon based on the latest open version of Elastic.
These changes, it seems, had a significant impact on society. For example, the company’s workforce growth has stalled in recent years and today Logaz EO employs about 250 people, more or less the same amount as in 2020. In an interview with Globes in August 2020, CEO Levy estimated that within two or three years the company will reach 500-700 employees, a goal that seems far away at the moment.
At the investment level, too, Logaz EO has not raised new funding since 2020. This figure is particularly surprising since 2021 was a record year for investments in Israeli start-ups, during which funds were generously distributed by the funds.
Corlogix is branding itself as a low-cost player
Korlogix was also established in 2014 and went through crises and a change of CEOs until it found its niche in the highly competitive monitoring market. Her to the kind of low-cost player if you will.
Monitoring can be an expensive business as it requires storage and indexing of large amounts of data coming from the customer’s various systems. Corlogics claims that it can reduce this by tens of percent for customers by performing an initial mapping of the information, even before it is stored in the cloud. Thus only the important data is stored and indexed, which lowers costs and improves performance.
Corlogix is still a smaller company than Logo EO in terms of manpower, but it is on a rapid growth trend, at least according to the visible data. The company currently employs 185 people, three times as many as the only 60 it hired in September 2020. In addition, in the last two years it has raised about $ 200 million from investors, of which $ 142 million was raised last week. In total, since its inception, Korlogics has raised $ 238 million, compared to about $ 120 million for Logz Eo.
Developing for additional services and products
In order to build a significant company, the two Israeli start-ups are trying to offer more products and services, in addition to analyzing the logs. On the face of it, Logz Island. Or is at a more advanced stage of development. The company reports that in addition to log analysis, it has expanded to analyze matrices (numerical technical and functional metrics), usage traces (which provide process flow information), and identify cyber attacks.
However, the fact that Logaz EO can no longer use Elastic’s popular open source engine can be a significant problem. Today, Elastic itself also offers services managed by its open source, another threat to Logaz EU.
Bottom line: Both start-ups require a very differentiated offer to the customer in order to compete with the giant players operating in the worlds of monitoring. According to the visible data, which does not always tell the whole story, it seems that Corlogix is in a stronger momentum at the moment.