New Relic CEO sets observability strategy for the AI age

The executive that replaced Gary Steele as CEO at Proofpoint when Steele left for Splunk has now followed Steele's path from cybersecurity to the helm of an observability company.

Ashan Willy was appointed CEO at New Relic in December, a month after the completion of a $6.5 billion deal to take the company private by Francisco Partners and TPG. That was also a month after New Relic released an early access version of an application performance monitoring tool for AI.

Under Willy's leadership, that product -- New Relic Monitoring for AI -- became generally available in April with features such as response tracing, real-time user feedback and model comparison for AI applications. This week, New Relic launched a partnership with Nvidia to integrate it with the GPU giant's NIM microservices orchestration framework.

TechTarget Editorial sat down with Willy between this year's product updates to get a sense of his long-term strategy for the company, and to set the record straight on speculation in the industry about the company's hiring strategy and a rumored combination with Sumo Logic.

Let's start with where you came from. Proofpoint obviously gives you some experience in security. What perspective are you bringing from that to New Relic?

Ashan Willy

Ashan Willy: When I took over Proofpoint as CEO, it was a similar size to New Relic, and I was able to double revenue in [just under two] years by focusing on product and the customer experience of the product. That doesn't seem hard, but executing on that is important. New Relic's in a bit of the same place -- there's a lot of experiences I can bring in from that standpoint.

Editor's note: Proofpoint was also taken private by Thoma Bravo in 2021.

The security market is a fragmented market, which is similar to the observability market. Observability is more fragmented than security, which I could hardly believe when I first came here. Security was a $130 billion market with 6,000 vendors [in 2023, according to the "Global Security Market Size & Outlook, 2023-2030" report by Grandview Research]. In observability, the top five vendors have 36% of [market] share, which is the lowest of any major category [according to Gartner's "Market Share: All Software Markets, Worldwide, 2022" report]. In that security space, I was able to maybe un-fragment it, if you will, and move Proofpoint to the leader pack. I think I can do the same here.

Then the other thing is that at Proofpoint, we made security a big data problem. [Observability] is very much a big data space and with AI now you can make the product better. I went through that journey, and I'm excited to bring that here.

Private equity is often known for cost efficiencies and cost cutting, and I've been told that some of the growth and innovation units at New Relic were let go during the transition to a private company. Long-term, are you planning to reduce or grow headcount?

Willy: First, I can unconfirm those rumors. I certainly wouldn't have come if that was the case. In this space, you have to invest north of 20% of your revenue on R&D to compete. We will end the year with more people [there] than we began the year [with]; the moves I made were elsewhere. That's key.

I would put private equity in two camps. There's the traditional camp in private equity, [where] you buy companies to optimize value. The second camp is a growth camp. The partners that we have right now -- Francisco Partners and TPG -- this is their biggest investment. The only way they get anything out of it is growth.

New Relic shares a private equity partner with Sumo Logic, and that's led to speculation the two companies will be combined. Is there any truth to that?

Willy: That's a good question, and a common question. I've seen over 100 customers since I've come, and I would say about half of them asked me exactly the same question. That's not the case. Usually when they buy these companies, there are some cases where it's preordained that they will want to combine them. But in our case we work independently. Just to put a punctuation point on that, we're in different funds in Francisco Partners, therefore we have different investors [including TPG], so it'll be an independent investment outcome.

As far as that growth strategy, how will New Relic differentiate itself going forward from those top five players you mentioned that have the largest share of the market?

Willy: We're in the top five; we need to get more [market share] of the top five. The next big era is AI. The second thing that I feel is important is that you have to be on the right side of history. The companies I've been at -- WebEx, for example. In the early years, it was one of the largest cloud enterprise companies in the market. A big part of that was that they had moved into the cloud before anybody else in the space. New Relic [was in] the cloud [as a SaaS service] very early on, in 2008.

Then New Relic moved to a single platform, and the engineering work has been good. I did a lot of due diligence on the engineering work before I came here. They moved to a pricing model that -- just like when we went to subscription back in the late 2000s. This whole market is going to go to a [consumption-based pricing model] -- true consumption, not just, 'We charge you for overages.'

That journey had almost been completed. New Relic started about four years ago. We've done the hard work around the consumption model and moving to a platform. Now if we can use AI intelligently, we can drive some better outcomes, whether it's fast response times, predictive observability or cost controls.

If New Relic almost completed that move to single platform and is in that top five, why did it go private?

Willy: No bones about it: We weren't growing as fast as our peers. That's the main reason we went private. There are two reasons for that.

The first reason is, observability has moved beyond the IT practitioner to business buying centers. You hear people trying to link observability to business outcomes. You also have more [companies] that have embraced observability from different places, whether it's infrastructure, business metrics, etc. New Relic was very practitioner-focused, which meant it built great technology. But it needed to go beyond that.

The second one, which was more internally driven, was that the move to consumption pricing consumed a lot of calories. As other players will have to make this journey, it's going to consume calories. Now that we're private, it allows me to take a bit longer-term view on building New Relic.

New Relic and its competitors have been talking about AI the longest of any of the markets that I cover in IT ops. What's going to be different going forward with New Relic and AI?

As other players will have to make this journey, it's going to consume calories. Now that we're private, it allows me to take a bit longer-term view on building New Relic.

Willy: ML and AI was used a lot for anomaly detection. Those models are getting better. That gives you the ability to do predictive analysis. That's the step all of us are on, and then the idea is to generate responses as a result.

Now what I find in the response space, because I lived in the security space where this concept of SOAR -- security, orchestration, automation and response -- was around for a decade before it took off because it tried to solve broad-based cases. Now the idea is to solve some narrow cases deeply, and then you get a response that's more useful. That's where we're spending a lot of R&D right now.

We're also looking at new models. We do model monitoring, whether it's your own models or an LLM [large language model] -- we're in OpenAI, we're in [Amazon] Bedrock, all of them. … The advantage we have in that space is, we actually monitor the entire application, and we monitor the LLM calls as a part of the application. We're looking at that end-to-end experience, and the ultimate aim is to get better responses.

You talked about having conversations with customers. What do they tell you you're missing that you need to work on?

Willy: The first thing customers tell me is, 'Look, you have built a platform, [but] you have to let us know how you get to an observability maturity story with your platform.' We provided infrastructure; we added long-term log storage recently. About a year ago, we moved into vulnerability management and application security. There's some things that we've done in the platform itself to make people discover what we're doing.

The issue is, typically, if you're sitting in DevOps and you're doing your job, you may not want to be exposed to the rest of the platform, or you may not feel the need for it. The No. 1 thing that we're being asked when I talk to customers is, 'Hey, I know you do this. [Now tell] the rest of [my] organization.'

The second area in which we're putting a lot of effort is further enhancing the work that we're doing on the infrastructure side. More and more of our customers are running large, Kubernetes-oriented shops. We bought an eBPF company [named Pixie], and they want us to invest more there. We're going to make it easy to instrument, manage, configure and maintain all of that with not just one single pane of glass but also all in one go, including OpenTelemetry.

Given your background in security, what's your vision in that area for New Relic?

Willy: When you're [included] in [application] code, there's a lot of things you can do. Security is one of them. Most security vendors, when they get application information, they get it via APIs. That is way after the fact. The fact that we sit in code and can look at changes and anomalies in the code itself gives us a major advantage in terms of application security.

Just to be clear on this, because I see some of our competitors getting distracted with it: We will not get into the SIEM market. That's a complicated market -- a tough market -- and it's changing a lot. But in the SIEM market, you collect a bunch of log data and then you run some analytics to drive a response. Essentially you're going right of the [DevSecOps] chain after an attack or an incident has happened. Our view is, we can stay to the left on that chain. That's where we add value.

Beth Pariseau, senior news writer for TechTarget Editorial, is an award-winning veteran of IT journalism covering DevOps. Have a tip? Email her or reach out @PariseauTT.