Traversal raises $120M at $1B valuation to build AI-powered site reliability engineering for Fortune 500

Speaker 2: How you doing? Welcome to the show.

Speaker 7: Good to see you both.

Speaker 2: Good to see

Speaker 1: you. Welcome back.

Speaker 2: Crystal clear audio. Sounds great.

Speaker 1: Yeah. Your team's cooking.

Speaker 2: Welcome to... Yeah.

Speaker 1: Good lighting, good audio, good hair.

Speaker 2: Gong has warmed up, but let's start with an introduction on yourself and the company.

Speaker 7: Awesome. Good seeing you both. So my name is Anish. I'm the CEO and co founder of Traversal. And at Traversal, we're building an AI site reliability engineer. So when your system goes down like a bank,

Speaker 1: you know, kind of a

Speaker 7: 100,000 people can't log in, we help try to figure out what broke and and how to fix it.

Speaker 1: Got it. Seems like might be important right now.

Speaker 2: It's super important right now. When did you start the company? Like, what's the journey to get to today?

Speaker 7: Yeah. I feel like the... We started the company in January 2024, so I come from a totally different world. I'm a I'm a researcher by training in in my heart. So I'm a professor at Columbia University. Wow. And a big part of why I decided to start Traversal as my cofounder is we felt the best research is now actually happening in companies. Mhmm. And the best companies are getting informed on AI research. So that was really what got us going. And then our research is in a very specific niche field called causal machine learning, so we've always... We've all heard this phrase like correlation isn't causation. Mhmm. So our whole study was how do you get these systems to think about cause and effect relationships from data and that turns out to be super important for this problem of how do you troubleshoot incidents because when something breaks, everything breaks. It's like an epidemic that's flowing through your system. And so finding root cause is like finding a needle in a haystack with fake needles everywhere. So that's that's how we got started and I'd say we met when we just did a series a about a a year and a half ago. After that, the problem turned to be way way way harder than we expected. We thought we'd be off to the races, but it just turns out to be a way way way more hard problem than anyone would expect, especially for like large companies. So I'd say we were working through the desert just trying to figure out how to get something to work since the a. We finally did, I'd say, about a year... Six months ago, and since then we've been scaling and it's been way more fun.

Speaker 2: And has the nature of that scaling been more Fortune 500 logos, bigger companies onboarding or just a huge volume of smaller companies, startups? Like, where has been... What... What's been driving the adoption and growth the most?

Speaker 7: Yeah. I think part of what was difficult when we started is that we got pulled by very large companies very early in our journey. So, like, companies like American Express or Sure. Or Pepsi. And this problem really shows up at scale. So when you have a company of that size, you have every tool under the sun, every observability tool under the sun. Mhmm. You have thousands of engineers, each of them with limited context. That fragmentation of people and tools and data is where the problem really shows up. And I think that's where also typically you can't just code something yourself. Have to go with a specialized solution. We started building for them right at the start, and so that's part of why it was so difficult from the start because of the scale we had to deal with. I'd say what we found is just usage really started uptaking with these companies

Speaker 1: Mhmm.

Speaker 7: And and the repeatability of what we're doing started really showing up. Yeah. We focused on them from the start of the Fortune five hundred, but now I'd say that that the pull from them is also here because they understand the the the difficulty of this problem, especially with now the coding agents are in place. They all have their favorite tools. They're all using them, but the CIOs are not really seeing the ROI because everything gets stuck. It's because they're all now really scared about is this gonna work in production? Is it gonna have... Am I gonna have a security incident, reliability incidents? So... Like,

Speaker 1: just just how on edge, like, these sort of Fortune 500 scale clients are around cyber right now? Because I I imagine, like, no one really feels safe, you know. You could be in you could be even in, you know, consumer packaged goods and and still on edge.

Speaker 7: Yeah. Yeah. I think I think, like, right now, every incident you have feels like a real heart attack to the entire company. Because you don't know, did I cause it? Mhmm. Am I getting breached by by some sort of frontier model that is acting like the way they shouldn't act? Mhmm. Is it some agents that some age pump... Someone is deployed within the company and they're over pumping my my database? So you never know whether it's a reliability a security issue because the symptoms show up in the same way. People can't log in, the slowness to my website, etcetera. And so that... That's what really puts people on edge because they don't know. And people are not writing the code anymore as well, so the context that these companies that happen... Have are dropping. So you put all these things together and everything feels like red alert every time. Mhmm. And it's exhausting for these, for these folks, especially with now Methos as well. Yeah. Right? Because if you... That so many more issues are... Pretty much every incident you have is a result of change. Sure. And a big source of change is patching. So every time you have a Methodist issue, you'll patch it. That patches the change. Typically, only thinking about the issue from a security perspective, not a reliability perspective. And so you... And so these these, again, fragmentation of purpose in context is linked to just way more incidents and and security is is a big source of that and also a big source of fear that these people are having when any sort of incident does happen.

Speaker 2: Mhmm. How how different does a relationship, a business relationship with Traversal look if you're Amex versus Pepsi or a bank versus a consumer company? I mean, I understand that Pepsi obviously has a lot of infrastructure, but being able to log in to Pepsi Rewards is not exactly as high stakes as spending Amex cards that you got access to. It's slightly different shape of a business problem. But are these companies buying from you on a consumption basis? Is it driven by the scale of their infrastructure or their employee headcount? Is it seat based? Like, how are you thinking about scaling your your your product to the size of company you're working with?

Speaker 7: Yeah. So what we find, even with Pepsi, for example, they're one of the largest supply chain organizations in the world. And so for them, when something breaks, it's typically in the factory

Speaker 2: Yeah.

Speaker 7: Where now they are, you know, their networking is not working, and then suddenly you have, you know, tons of Pepsi bottles that are getting to

Speaker 2: Yep.

Speaker 7: To, you know, a seven Eleven or something like that. So they have some serious incidents too that they... Know, or or uptime is really important for them as well.

Speaker 2: Mhmm.

Speaker 7: For us, the good news is the problem is the same from our perspective. You have to talk to the code. You have to talk to your your Datadog, your Splunk, whatever the telemetry is. And from our perspective, we sit on top of these systems and and investigate when any sort of abnormality happens. Mhmm. So it's all usage based pricing. They pay as you go for the number of investigations that are

Speaker 5: Oh, interesting.

Speaker 1: Are

Speaker 7: are are running. One thing that has changed, I'd say, is when we began, we very much focused on incidents. So we're like, that's the top of the house problem. That's the heart attack a company is having. Mhmm. Now I think what we've realized is... Probably my favorite quote when people talk about Traversal is they're calling the Code moment for SRE. Mhmm. I think what we're seeing now in the market is that people want a flexible platform, not like a point solution. Mhmm. And so they want you to be used the second code is being written to figure out is it gonna break in prod. Mhmm. Right? Then when alerts get created, can you tell me is it going to be an early warning system to something that's going to break? So they want you to kind of deal with these issues the second you can fix it versus waiting for something to happen. And and so it needs to be quite flexible in how it's used, and and so usage based is typically the most common way. And probably, actually, the biggest users of the product now are becoming the coding agents themselves.

Speaker 1: Oh, yeah.

Speaker 7: So they call Traversal all the time Sure. To figure out, hey, if I deploy this, is it gonna break something? Yeah. Is it gonna cause security exposure, etcetera? Yeah. And so that's actually quite interesting as that's been probably the one... The first class citizen almost now for for Traversal.

Speaker 2: Yeah. No. No. That's great. Will you raise some money? Much did Yeah. You

Speaker 1: Talk about the round.

Speaker 7: Yeah. So this is my favorite part of... We raised a $120,000,000 and a million dollar.

Speaker 1: One b. One b. Alright. Well, I just have one ask. Don't be a stranger. Okay? I don't wanna wait another year plus for you to come back on the show. It's too long. You guys are cooking now. So let's get, you know Yeah. Quick quick fast quick fast fall. At lee... At least. At least. At At least. But quarterly

Speaker 7: I'll be back whenever you have me. And this is my favorite part. I've been waiting for fifteen months, so this is my favorite pile. Awesome.

Speaker 1: Well, yeah. I'm glad you made it through the wilder ness and... Brutal. Anish's words, not mine. Oh, You said it's like you came on, it was exciting. Yeah. Guess that is true. Yeah. You made it through.

Speaker 2: You can sell Really really fast growth. It's really good.

Speaker 1: No. It's amazing.

Speaker 2: Billion dollars.

Speaker 1: Awesome, dude. Well, great

Speaker 2: to catch up. Have a great day.

Speaker 5: Thank you.

Speaker 2: We'll talk

Speaker 1: to Congratulations team on milestone.

Speaker 2: Goodbye. Let me tell you about the New York Stock Exchange. Wanna change the world? Raise capital at the New York Stock Exchange. Just do it.