New Relic acquires CodeStream to provide chat in developer environments, inks Microsoft IDE partnership

·6 min read

New Relic, the observability platform, has made an acquisition and is launching a new service on the back of it to bring a new dimension into bigger strategy to bring developers and operations closer together. It has acquired CodeStream, an application that works within integrated developer environments to let developers write related notes to each other alongside the code itself.

New Relic has integrated it already with New Relic One, its full-stack data analysis platform covering metrics, events and logs, and will be launching a new service within that called New Relic CodeStream. It is also announcing a partnership with Microsoft to integrate the new product into its own IDEs and other chat and collaboration products such as VS Code, Visual Studio, Teams and GitHub.

Terms of the deal have not been disclosed except that it was "competitive" according to Peter Pezaris, the co-founder and CEO of CodeStream. CodeStream was part of the Y Combinator Winter 2018 cohort, it had raised around $3 million and was/is being used by tens of thousands of developers, including people at Microsoft, Hearst, Atlassian, Zenefits and a number of others.

(It also already worked, as an independent startup, with Visual Studio and VS Code, along with JetBrains. It also supports pull requests from GitHub, BitBucket and GitLab, issue management from Jira, Trello, Asana and nine others, observability from New Relic One and Pixie, and provides code discussion that ties it all together, integrated with Slack, MS Teams, email and in-editor notifications. It seems that all of this will continue to be supported with the Microsoft integrations becoming deeper.)

New Relic has 14,100 customers, while New Relic and CodeStream shared 750 joint customers prior to acquisition.

The deal underscores a few trends in the world of DevOps. First, there is some consolidation underfoot, and New Relic, positioning itself as a platform, is looking to bring more functionality into its toolset.

That would also have meant potentially a more challenging sell for CodeStream over time, too, since customers naturally might want to buy observability and communication tools together, as well as see their functionalities become closer over time.

"Working with New Relic was a no-brainer because of the strategic alignment we saw between our two companies," Pezaris told TechCrunch. "I am fortunate to have worked with the same team of founders for the past 26 years, having founded, built and sold four companies in that time. In every case, we have been able to scale more quickly and unlock more value within the larger company, so this is a particularly exciting time for us.

"Our team also felt an alignment with New Relic’s values and determined that we could actually accelerate our mission by joining forces with New Relic -- aligning with the resources, team and customer base that New Relic has built-in. Our team at CodeStream was also very impressed with the New Relic One platform, and felt that our solution could make it even better for developers to not only extend code collaboration but also unlock the power of telemetry data and observability right in the IDE."

CodeStream also fits into that consolidation mix by giving New Relic an important entry point into the second trend that this deal touches on.

That second trend is that collaboration is the name of the game these days in enterprise software. That also very much goes for developers, who are working across disparate geographies and often spaces of time on projects, and need better ways of communicating their thinking and additional notes to each other now and in the future.

As Romain pointed out when covering CodeStream's integration with VS Code, a number of applications now feature "conversation" channels for those creating content to talk in more detail in the margins about what is going on, and Slack (or another equivalent) should not have to be the default component for that, and that especially counts if you can build something that specifically suits users' needs more specifically.

In the case of the new launch today, New Relic says that those interested in trying out the service can sign up for New Relic One for a free trial. The CodeStream product allows users not only to write notes to each other in the margins of the code, but to create a stream that will let those reading jump directly from a chat note to the line of code in question.

The third trend is the ongoing expansion of DevOps as a salient category in enterprise software. The move to bigger projects, more developers, new IT architectures and technologies and new security and other challenges has all led to a gradual elevation of developers as a critically important component of how organizations are run and how they grow.

That has in turn led to an ever-growing business for services built to cater to them. New Relic, citing estimates from Redpoint, says that the observability market alone has a total addressable market of $35 billion and is seeing double-digit growth annually.

“Developer workflows are the backbone of all modern companies, and observability as an engineering practice presents a future where these essential developer workflows are fueled by data -- not mere opinion,” said New Relic CEO Bill Staples in a statement. “To accelerate this shared mission to make observability a data-driven daily practice for every engineer, we are bringing production telemetry and collaboration tools to where developers create and flow — the IDE. By launching New Relic CodeStream and joining forces with Microsoft, we are excited to deliver a truly developer-centric experience to millions of developers across our shared communities.”

"DevOps is fundamentally about tightening the orchestration between developers and operations folks," added Buddy Brewer, GM of New Relic, in a note to TechCrunch. "Which is why CodeStream stood out to us. As the leading company working to tackle code collaboration for developers, they’ve made it their mission to get technical teams understanding and communicating more efficiently about their code. With CodeStream, developers can discuss their code right in their development environment and save those discussions to build a referenceable, evolving knowledge base. Normally, developers would engage in a clunkier process of copy/pasting specific lines of code into Slack, Teams, or whatever chat function they are using, and explaining the context and their question, which creates a ton of friction and time loss across teams."

This is also the rationale behind why Microsoft is teaming up with the company, although to me it does leave a question hanging, which is whether Microsoft will try to get more directly involved in this aspect of developer services itself over time. It would make sense, considering how many environments where it is going to be integrating this particular solution.

“Developers are essential to helping organizations in every industry accelerate the use of new capabilities. Our goal at Microsoft is to provide a wide range of services to address the real-world needs of customers,” said Scott Guthrie, executive vice president, Cloud + AI, Microsoft, in a statement. “With partners like New Relic, it's exciting to see comprehensive integration support with New Relic CodeStream, spanning multiple Microsoft platforms and products: VS Code, Visual Studio, .NET, GitHub, Microsoft Teams and Azure DevOps, to name a few. Tighter collaboration between development projects and improved connections between existing applications are just some of the benefits New Relic CodeStream will provide to the developer community."

Update: We originally reported that "the combined company will have 750 businesses as customers." For clarity, New Relic has 14,100 customers, while New Relic and CodeStream shared 750 joint customers prior to acquisition.

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