Doping for the Internet. Linz-based Dynatrace is building… | by Giulia Di Pietro | Dynatrace Engineering | June 2021
Linz-based Dynatrace creates software that detects and corrects errors in computer systems. Despite several exits and an IPO in New York, founder Bernd Greifeneder is leading the future of this “unicorn” from Linz as CTO.
This story was originally written by Stefan Tesch for Gewinn.at.
He likes to jet across Lake Attersee on his sailboat. “From 20 knots, it gets quite narrow,” jokes Bernd Greifeneder about his territory, 1.3 kilometers wide at its narrowest point. His sporty riding style on the water also provokes: “You are constantly wet and you capsize. But anyone who now thinks parallels can be drawn to Greifeneder’s career is wrong. With the start-up he founded in 2005, he has everything but capsized. Spoiler alert: Just under US $ 15 billion in market value today on the New York Stock Exchange. And therefore well above the magic threshold of the billion, above which we can call ourselves a unicorn.
In order to understand, as a non-IT specialist, what Dynatrace does, we go back to its founding history. Greifeneder studied computer science at JKU Linz and was shocked during the dotcom boom “that almost every online store has collapsed with ten or more concurrent users.” So without hesitation he invented a program that scrutinizes every user interaction – from the click on the website to the heart of the server. Dynamic Tracing (from which the company name is derived) was born. In the past it would show IT staff where the problem was, but now it fixes it automatically. Thanks to artificial intelligence.
And it’s no longer the small online stores that use Greifeneder’s solution, but the big fish. Starting with the financial sector with Mastercard and Bank of America, in Telekom with AT&T and Vodafone, but also retail, Nestlé, Starbucks as well as Airbus and Exxon Mobil. “From a hundred servers, customers no longer have an overview of the connected systems and how,” says Greifeneder, summarizing why in the days of cloud computing, hardly anyone can exceed their “doping “.
A vivid example is SAP. The German IT giant has installed Dynatrace on more than 100,000 (!) Of its servers, on which it manages e-commerce solutions. “Whereas previously we were only involved in diagnosing problems, today we support companies in their digital transformation,” explains Greifeneder. “We champion automation and don’t want customers wasting IT or software specialists on child care computers. In other words, Dynatrace is up and running for major customers within 24 hours, with no further human intervention required.
At least at the customer’s site. After all, around 1,000 employees are responsible for the further development of the software product at Dynatrace. Managed by CTO Greifeneder from Linz. Strategically managed by CEO John Van Siclen in Boston.
Only one year after the creation of the company, the first investor joined Dynatrace: the American venture capital fund Bain Capital Ventures. Three years later, Bay Partners of California joined the group and both owned two-thirds of the company after the second round of financing with around US $ 13 million. Just two years later, in 2011, US mainframe specialist Compuware swallowed Dynatrace for US $ 256 million. Greifeneder’s co-founders, his wife Sok-Kheng Taing and Hubert Gerstmayr, came out at this time.
He stayed. “It was never about money. It was about making something happen that would benefit others, ”replied Greifeneder. “We humans are guided by evolution and want to propagate our genes. I do it intellectually, ”he says.
He showed energy and enthusiasm over the following years when Dynatrace was integrated into Compuware as a separate division under the command of Greifeneder. “One of the most expensive things about scaling software is creating direct sales,” he recalls, after spending a lot of money at the time – at his own expense. . Compuware was a company with a totally different culture than Dynatrace. The company name changed to a product name. Despite the culture shock, sales have doubled year on year. A turbo-internationalization that a start-up would not have been able to afford otherwise.
But even within Compuware, Dynatrace still had the brand image of the start-up. With two more acquisitions of Compuware, Greifender continued to build its original baby as a virtual CEO. “I was able to redevelop the vision of Dynatrace. A second version of Dynatrace has been created, ”he says. Much of “its” 150 software developers have conducted future strategic research to establish Dynatrace as the market leader in corporate IT surveillance.
Austria has always been at the center of the product vision and this is where the core Dynatrace team continued to write code. Then came the shock moment in 2014. US private equity investor Thoma Bravo acquired Compuware for $ 2.5 billion and found Greifeneder’s startup methods a dumb idea. “The investor specializes in buying companies that have a good product but ineffective leadership,” Greifeneder analyzes. Thoma Bravo was not used to waiting a period of time between investment and production like a typical VC.
But the computer surveillance business, i.e. Dynatrace, was the reason for the acquisition. Thoma Bravo, who among other things owns a share of the pie in the McAfee antivirus group, wanted to use it to also fish in this IT pond, and took the “rest” of Compuware (Mainframe Environment) as an accessory. Greifeneder therefore took center stage and even got the new owner to let Dynatrace reinstate itself as a company. “With this release, we are back to the original agility, despite our 1,000 employees. “
Greifeneder, by the way, went through all the stages while remaining in his position as CTO. The CEO was and still is American John Van Siclen, whom he appointed to this post in 2008 (when Dynatrace was still majority-owned by its founders). “We have a brilliant partnership. We trust each other blindly and across the pond, ”says Greifeneder. This is because Van Siclen “sits” at Dynatrace’s head office in Boston.
“In the early years of the company’s existence,” Greifeneder recalls, “I did everything tactically and strategically across the pond as CEO. From hiring to product development to sales. Much of this has happened through intuition. “When we had 70 employees, I realized you had to understand his talent.” In other words, management and expansion in the United States was in better hands with Van Sinclen then. Greifeneder admits that he did not have the experience at the time to transform such a start-up into a large construction. Side note: “But my wife had eclipsed the top sellers by then with her selling power.”
When the construction of Greifeneder “really took off” during the reign of Thoma Bravo, the next step in the company’s history quickly followed: the 2019 New York IPO, which brought in about a half – billion US dollars. And this on annual sales of $ 546 million in 2020, a good quarter more than the previous year. “We can always offer more to the customer, because our product is constantly being developed and can do more,” says Greifeneder, who himself owns a few thousand shares in the company. For example, they recently entered the application security (application security) market, which was an obvious next step due to their expertise in cloud technology.
An average customer pays $ 100,000 to $ 1 million per year to Dynatrace on a subscription model. “We still have much larger clients with us, but hardly any smaller ones,” said Greifeneder, illustrating the direction of the business. Of the 2,500 customers worldwide, 40% are in the United States, 30 in Europe and the “rest” in Asia and South America. Because of the “Great Firewall”, China is not very well represented in the customer portfolio.
The situation is different in the western world. There is a symbiotic relationship with the Amazon (AWS), Microsoft (Azure), and Google cloud oligopolies. After all, their goal is to get businesses to move their IT systems to their clouds. And since this migration brings a lot of the complexity (and therefore the propensity to errors) all at once, the Dynatrace self-healing monitoring solution fits perfectly.
Greifeneder’s programming skills are no longer quite appropriate, as he puts it: “My team doesn’t allow me to do that anymore,” he jokes. Therefore, he codes small microcontrollers at home with his children. “That’s when I realize I still really appreciate him.”
(Translated into English by Giulia Di Pietro)