By Ariel Blum
Just a few years ago, if you wanted to set up a business to sell books or baby furniture online, you’d have to buy a bunch of computers, build a data facility, wire everything up and make sure it was all kept cheerfully chilly.
Today, all you have to do is go to a website like Amazon.com, which will sell it all to you virtually. That’s opened the door to a burgeoning industry of optimization consultants for the many firms relying on Amazon Web Services’ hardware and infrastructure. One of the most intriguing of these is Israel’s Newvem, started by serial entrepreneur Zev Laderman.
Newvem is different from other cloud consultants with names like Cloudability, Cloud Vertical and Cloudyn, because it not only provides advice but taps into your interface with Amazon to monitor what you’re doing. Staying on top of your data usage in real time can result in big savings, explains Laderman.
Laderman likes to talk about TMI (“too much information”) and TLE (“too little expertise”) as key inhibitors to effectively managing the new world of cloud computing.
In the same way that the electricity company doesn’t tell you how to save money by turning the lights on and off at certain times, Amazon won’t tell you when you’d save money switching from three small computers to one big computer or when one of your machines has extra capacity that could be utilized more efficiently. Newvem watches out for that.
“It’s very easy to turn something on for an hour and leave it on when you only needed it for that one hour,” Laderman says.
Newvem doesn’t actually flip the switches for you; rather, the company provides the information you need through its website dashboard along with a wealth of “best practices” culled from experience. As Laderman puts it: “We provide the content and knowledge and simplify that information into what’s actionable.”
New and disruptive
Newvem is clearly in the right place at the right time. In its first half year of beta, Newvem racked up about 1,500 users, 20 percent of which are “big” accounts, says Laderman.
“We’ve made over $50 million in efficiency recommendations in how to use Amazon better to our customers’ benefit.”
The company was a gold sponsor at Amazon’s Re:Invent conference in Las Vegas in November 2012 for Web Services customers. Some 6,000 people attended the show, “all potential customers,” Laderman says, which is why half of Newvem’s 20-person staff flew to the event.
“It was spectacular,” he adds. “All the excitement and magic of something that’s new and disruptive. We were overrun at the show.”
Helping customers save money usually comes with a price tag of its own, but for Newvem’s small users – businesses with up to 50 computers at Amazon – the service is free. “We don’t charge anything until users reach a level of what would be about $500,” Laderman explains.
After that, pricing can sound pretty cryptic to the layman: $.01 per hour of the resource monitored. The technical details of how that’s calculated are best left to the geeks. The bottom line is that annual fees to Newvem start at a few thousand dollars a year for medium-sized businesses and go up into the “hundreds of thousands,” according to Laderman, for businesses with hundreds of server boxes at Amazon.
Newvem will also begin selling extra paid services for advanced analytic modules. These will run another $1,500 and up per month and will be available in the coming months.
A new way of managing systems
Laderman, 52, was born in Colorado and moved to Israel with his family in 1972. He’s been back and forth since then, graduating from Stanford Business School in 1992 and working as an executive at Oracle in 1999. He’s been in Israel full time since 2009.
Laderman has been behind such companies as Aduva, acquired by Sun in 2006 for between $10 million and $30 million, and rich media website maker Wix, which is still running strong with a total investment to date of $43 million.
His other startups include Fashioholic, SteelEye Technology and BI Science. But it wasn’t until Newvem that Laderman decided to take an active management role. “I’ve been in the IT industry for 20 years,” he says, “and I saw a real opportunity for change here.”
Newvem has raised “only” $4 million, but it’s still in its early stages; the company’s product launched in beta at the beginning of 2012.
Very often new startups that can’t pick out a name put the word “new” in the title – Newco” is a standard placeholder for early stage websites. But Newvem means more.
“We didn’t want to have ‘cloud’ in the name like everyone else,” Laderman explains. His partner and CTO Ilan Naslavsky is from Brazil and “nuvem” means cloud in Portuguese. That web address was taken, but Newvem – with “new” in it after all – wasn’t. “It’s a ‘new’ way of managing systems through analytics and usage,” he says.