1Mby1M Incubation Radar 2012: Hooduku, Houston, Texas

In late 2011, 1M/1M premium member Hooduku, a cloud and mobile application services company, saw an unduly large bill from one of its cloud providers but couldn’t see how to track the spending. Citing lack of controls on cloud spending as a cause, Hooduku decided to develop an internal solution to the problem. Earlier this year the company released Xervmon, a software-as-a-service (SaaS) based cloud cost management and analytics product that primarily focuses on cloud spending analytics.

Hooduku, founded in 2008, has primarily built its business offering professional services in the cloud industry. This year, they have launched a cloud cost management and spend analytics product that supports multiple providers across cloud stack and ISP. Based on customer need, the company provides configurable information on spending trends and cloud spending, and gives a detailed overall picture of spending across various services, along with actionable insights. The dexterity of Hooduku’s startup nature and small team has resulted in success in the global small and medium enterprises market, which is composed mostly of other startups and micro-SMBs. Hooduku’s solutions feature sophisticated yet affordable products that, in addition to a global customer base, have high appeal within the Indian market through a tiered subscription model.

Founder Sudhi Seshachala is a technology entrepreneur who brings more than 15 years of experience in software engineering, technology operations, and management. As current CTO, Seshachala has led several global Hooduku teams to deliver products and projects successfully, often well under budget. Co-founder and CEO Babu Jayaram is an entrepreneur with a strong background in business and a career in technology and industrial manufacturing startups spanning 20 years. Rounding out the core management team with more than 16 years of product management and engineering experience is Shesh Vasudevamurthy as CSO, an early employee of Andiamo Systems and founder of two past ventures of his own.

Seshachala’s 10 years of experience in developing integration and data aggregation products was the inspiration behind Xervmon when Hooduku’s spending overshot. Moreover, a knowledge of similar products helped him realize its potential. After contacting select professional service customers, the response was positive provided the product would cover customers’ chosen cloud/SaaS and ISP providers.

After first implementing the service for Hooduku, Xervmon was expanded to three other customers gathered through references from existing clients by leveraging Softlayer, Rackspace, and Amazon AWS. The product, Xervmon, was bootstrapped using Hooduku’s professional services business. Today Xervmon generates 20% of its revenue from a total of 50 customers. Though the product itself isn’t yet profitable, relationships forged with Amazon AWS, Rackspace, HPCloud, and several others in the making are constantly generating new users.

Whereas competing products are selective in their integration — CloudVertical covers only Amazon, Heroku, and VMware; Cloud Cruiser only HP Cloud; Newvem, UptimeCloud, and Cloudyn all only integrate with Amazon AWS; and solely Cloudability supports multiple cloud/SaaS vendors — Xervmon is built with far deeper integration in mind. Xervmon supports the following major cloud providers: Amazon AWS, Rackspace, HP Cloud, Softlayer, and ISP (Comcast, Time Warner), with Google App Engine, Windows Azure, and IBM SmartCloud currently in the works.

Xervmon incorporates not only analytics, but cloud and legacy IT to analyze resource expenditures in order to better assist customers in tracking daily spending.

The product is incrementally priced based upon company cloud spending, starting at a base price of $39.95 for spending of less than $10,000 and rounding out at $299.95 for spending of less than $100,000. Custom solutions are offered for spending over this amount; for spending of less than $5,000, Xervmon is free of charge. It is sold directly online, with additional sales made through partners, as well as part of a bundled product solution.

A $2 billion opportunity across the US, India, and China, IT management as a service is projected to grow by 44% to reach $9.85 billion by 2015. To this end, Xervmon targets the developed market in the US and Western Europe where both public and private cloud adoption is high. At the entry level ($200,000-$2 million in revenue per year) cloud spending is between $10,000 and $25,000 per month. For SME mid-tier in these markets ($1-$10 million in revenue/year), spending jumps to between $25,000 and $100,000 per month. An additional target is the APAC market, primarily India. Public cloud adoption there is predicted to be high betwen 2012-2015.

Hooduku is currently working toward a business development and partnership program to accelerate market penetration in both the US and India. No plans exist for exit; the focus now is on revenues, cash flow, margins, and most important, customers.

This segment is a part in the series : 1Mby1M Incubation Radar 2012