Workato Revenue, Valuation & Funding (2024)

hello everybody my guest today is Vijay tella he is the creator and one of the founders of a company called a work Auto he's of the creation of market leading integration technologies for over 25 years before work Auto he was the CEO of kik a consumer video communications company acquired by Skype he helped create two multi-billion dollar integration products before that he's also part of the team that created the world's first middleware platform TI be the information bus if you guys need a jog down memory lane there act technic tron software systems which was required by routers plc in 1994 he's also the founding on the founding team and SVP of engineering of TIBCO through its IPO as chief strategy officer he then helped launch Oracle's fusion middleware platform in 2005 Vijay are you ready to take it to the top yes of course all right I always know when a bio has lots of acronyms in it you must be impressive right that's how it works oh well all right tell us tell us more about a work Auto it's the company doing how do you make money so you know we are a integration software company you know the the you know companies out there are used you know there's using a lot of apps you know large companies have over a thousand apps you know there's an explosion of sass in every corner of a business and the challenge with all of that Nathan is that the information about your customers and your business is splintered and split across so many different apps so you don't have a really complete or consistent view of what's happening with your business with your customers or Coty's products you know helps you connect all these apps together and automate your processes that cut across all these apps elastic dar��o zapier segments how do you beat all these guys yeah I think it's a very big market there is you know some of the tools that you talk about are really you know focused on sort of the small business segments and are suitable for just moving data between applications a and B right you know where kados heritage comes from you know companies like TIBCO and technical all that you may be referred to earlier you know there's a you know this it really refers to enterprise-grade integration for you know for connecting it's sort of you know these mission-critical like applications in large companies you you know like for example like when you are like integrating like a you know Dropbox with Instagram and they say photo coming in on Instagram with Nathan tagged in it and you miss tagged Nathan or you kind of you know tagged it twice and put the photo in twice into a Dropbox folder it's it's still fun you know but not so in enterprises where you know all of these integrations and automations and workflows need to be super robust and very reliable and secure and all that so like were kado is like an enterprise version of integration tools not it so what would you say the average customer is paying you per month I know you go from about 600 bucks up to 2500 bucks a month and probably much higher yeah much you know even much higher I mean I think it's we have fortune 500 companies that are know paying a 6 and 7 figures you know but you know the problem is very broad you have comedy if I forced you into an average though just before I move on what would you say the average customer is paying you per month you know we're not you know we're not sharing that Nathan but we have a you know we you know we support a range of customers from line of business and sort of mid-sized companies to enterprises that sort of give me a general range I understand you want to keep it vague but generally between what and what just to slim it down a little bit well I think you know we have enterprise plants at 60k and you know line of business plants that go up you know to 30 K it sort of in a month or a year for that's pretty year that's the starting the enterprise plans start at 60 K a year and then like I said we have you know we have companies that pay us six and seven figures per year and then we have line of business which are more departmental purchases that you know go up to 30 K or so it's sort of in that range okay that's okay good so we'll say kind of fair to say $30,000 a CV on average that's about 2500 bucks a month that's a good kind of sweet spot for you guys it's probably trending up from there but okay and and give me now that we understand kind of the code that's kind of a sweet spot cohort you said it's trending up so are you intentionally trying to move up market increase expansion revenue I think expansion has been having written naturally for us we have you know we have a you know companies that start on work odd Oh like within months they have hundreds of integrations going and they're connecting you know hundreds of apps so there's expansion within existing customers that is happening is that your number one pricing lever by the way number of connections there's I think it'd be priced by features as well as number of connections that's correct so then the more projects you think of it the more integration projects you do the more you play what kado interesting give me more of the backstory here so you have a well-documented history and kind of heavy this heavy tech space when did you start this company and and why yeah I said that's a really good question so you know yeah as you mentioned our background in the space goes back a long time you know I you know we invented the integration software at this company called Technic Ron and then which became TIBCO which became public and then we started the middle of a group in the middle where product line that Oracle but you know in between you know I was CEO of a consumer video company called quake it was a mobile video application that do 220 million users and it got acquired by Skype in 2011 that's right I think I remember you guys cuz you relied heavily on Facebook's API and then they shut you off well no they didn't shut us off but we were the first people that you know that basically you know like launched with the Facebook Mobile SDK was that your most effective customer acquisition strategy and the cheapest for you though was through Facebook's SDK it was actually Facebook the Apple App Store we were the top paid apple app in the Apple App Store for many months okay so we were you know we had and we were preloaded by you know carriers like you know Verizon Sprint and quick and DoCoMo onto like millions of phones Samsung and Nokia so they all pre-loaded us so we had like growth coming in from you know through the social media companies carriers as well as okay you know handset make maker so much to how much Skype end up paying for the company they they paid 150 million okay 150 and how much had you raised uh we had raised fifteen okay so I assume this made you it was it was a significant was it this the most significant financial event of your life to that point or no not not really I mean it was the you know there's a third one for me you know we had always it the most significant or no no a person you had no you had larger successes before that in terms of exiting companies that's correct interesting you obviously got your investor's money back and then some of those so it's a good it was a good event how does a guy like you stay motivated after you've create so much wealth yeah and that's a really good question goes back here you know your earlier question or why we started this right so we have a long background in this space so one thing that happened Natan is when I got out of like we were part of Skype and you know after I did my time and got out of there and I looked at what was happening in in the world of software what I saw was that there's just been a huge consumerization trend and you know in the enterprise space you know especially with SAS and the cloud-based apps and the business users sort of driving that this kind of transformation that's going on and you know what I saw was the integration tools that were that was required to make all these apps work together and connect together remain complex and technical they they they they kind of moved to the cloud and form or you know but not in the spirit of it meaning it you still needed to be like a developer or a technical guy to kind of use these integration tools that's the whole dis business transformation the cloud apps are being driven by business people that don't know what XML is or what JSON is and so on so uh the thing that we saw was we saw maybe the one of the biggest gaps in enterprise software is the ability for these non-technical business users to be able to connect all their apps and automate all their systems and large scale you know in a very dynamic environment so we saw like a really big vision what year was this by the way when were you watching this you know this was in you know 2011 and 2012 we were looking at this whole space and what we saw was we needed to bring the consumers you know like approach you know the things that we learned that quick and you know how you build and grow consumer products that type of an approach was really very much needed in the enterprise integration space and so it was really you know bringing together a background a long time dragged on in integration space for the consumer background that that made something they work how to pause and who's we how many founders I have four found we have four founders okay that's a tough conversation to have how do you figure out who gets what equity at the beginning you say listen I've sold a bunch of companies I get 80% you three split the 20 other guys like you know like the rock stars in you know they were the sort of smartest guys have I've worked with in the integration space company they're still all at the company you know one of them was a very early person that clearly AWS and one of them ran products that could go after I left I mean these guys are I wouldn't be doing this without them okay this remains behind the company so 2012 four of you guys to get together it sounds like really intelligent people you've scaled to where you are today how many customers are you serving now today yeah we have what 21 thousand organizations that are that have signed up on workout about eight hundred eight to nine hundred a month are signing up each month okay now you said that very specifically I think that was a free organization number how many of them are actually paying uh you know we have I mean you know definitely more than what what you know again I think we're not like you know sharing that out Nathan but I think we you know we see organizations in a work hard how do is is used by teams so you have a customer success team in a large company or a finance team and you know when the licensing with work Otto can be done at the team level or they can actually roll it up to an entire company and a lots of organizations within the team can roll up under that so you know you know we're you know so we can you have above a thousand paying paying organizations is that fair to say yeah okay okay right around there okay good that's how I understand talk to me about growth and reason I'm asking this question specifically is because you said you brought growth from the consumer space and lessons from quick into this named one lesson that was applicable both to consumer and you've used you feel like exceptionally well at work Auto no absolutely you know this you know the scope of this integration problem is so large there are so many you know like you know you know hundreds of thousands of companies and like so many different groups within these companies and it's so many different apps to connect the scope of it is so large that we took a github like approach to integrations so we have in a work Oddo is basically like a github for integrations we have about twenty two hundred twenty-five thousand public integrations you know we call these things recipes you know this recipe is this core concept invitado this is this is Google sheets to Instagram or Gmail to whatever the unit the different is Salesforce the more typical scenarios are like Salesforce and they say P next suite Google sheet you know these kind of things right if you want in you know integrate Instagram you probably go to like the other tools that you were mentioning earlier it's more business or enterprise apps that we we connect right so we about 225,000 public recipes on what kado or public integrations that anybody can pick up as a starting point to connect their apps right and about seventy five percent of people that are creating integrations on were kado start with one of these community recipes so that this community-based approach to solving and enterprise problem you know directly came out of our experience in the consumer space interesting churn is always a critical component of any kind of SAS company what is your turn today and how do you manage it yeah I I think the turn you know where is you know it's you know turn and and and enterprise customers is basically almost nothing you know in smaller businesses we do see churn especially when people do integrations like to kind of do a campaign you know and they need to you know do integration for a couple of months and then you know and when the campaign is done they need to stop so we see we you know we're not against sharing some of those the numbers but we we see you know like in in large companies it's larger companies being very strongly expansion oriented we just like cubics you know okay so ignore ignore gross and net logo churn talked to me about revenue churn or revenue retention where to get that there you know we're what we're doing really well there Nitin but again I'm not you know I can't let you say you're doing really well without backing it up with data your data guy give me give me something there what do you mean you're doing really well you know in in the in the segments that we focus on midmark and enterprise it's you know if we see you know it's you know the churn is net very positive meaning you know our expansion you know we're you know we you know typically dude the same amount of new revenues with existing customers from 12 months ago then you know like when we have a the revenue base we start with with a set of customers we do as much with them in the following year as we did you know tool and so we know our expansion business you know we're a platform company we're like your you know you you it's it's uh you know when your vagina I'm sorry I want to clear this up so if your current customer base over the past twelve months I think what I just heard you say is that any revenue that you lose in the next twelve months you more than make up from other customers in that same segment upgrading is that accurate you know quite a bit more than that I mean it's like in yes I mean like a significantly more than a like talking ten percent fifty percent 100 percent it's it's it's you know it's at least fifty percent and it's higher when it goes to larger companies I got it got it so so net net revenue expansion is greater than 50 percent ear okay yeah interesting the existing customers it talk to me about acquisition obviously your recipe component you probably have some recipes store with SEO and SEO play that helps but talk to me about cat what are you spending to acquire these organizations which you've got you know 21,000 of yeah I you know I I don't have the numbers you know in front of me but it's you know our you know our care to our you know to revenue to CAC ratios or Bella what once we're good well over what you know you know you know so Nathan we are like we don't share out this revenue these numbers with anyone so I'm not you know like yeah J sorry the reason I should have you listen to the show before no I have okay this show drives incredible in that amounts of new ARR to companies that come on and so one of the trade-offs is you share lessons with hard numbered data and in exchange my audiences exposure to your tool and so that's part of the trade off here so I understand if you want to give specific numbers but helping us in tying lessons you're teaching us with some kind of range it is really helpful and that's really all I ask so when you say something like your LTV to CAC ratio is really healthy but then you say it's greater than you know one you know the situation B Company has been around for four or five years or you know you know a lot of our customers have you know a lot of our revenues we've been ramping our revenues fast so or how fast it's like are you talking 100 cent year-over-year growth or more well we grew 300% last year in 2017 so you know the the LTV is you know is you know or you know if we're still early you kind of talk about LTV because like you know we don't see that it's really you know much more about expansion but what we are saying is that you know in the segments that we are focusing on midmark an enterprise the the you know we are you know we're you know both new and expansion revenues are you know kind of like more than what we spend how quick how quickly do you like to get your money back on CAC what's your pay that period you like to optimize for you know we like to you know we we we make that up in the in the I think the the key thing that we focus on is like revenues over sales of an upper quarter over sales and marketing expenses to the previous quarter and B yes efficiency ratio yeah that's the sales efficiency ratio though give me the payback I'm curious about payback but I mean do you try and recover costs in the first 12 months 24 months 6 months we didn't within you know within 12 months okay good so I mean that's great and you said you're you know generally an average first year a CV is around 25 30 grand the reason I'm kind of like you know holding back a little bit on that nathan is that like you saw me we've been like young company that's going fast so the LTV you know you're able to talk a lot better about LTP with more years of history with this yes sir Bubba J payback period has nothing to do with LTV payback period is a function of CAC and a CV yeah right so I mean I understand what you're saying about LTV LTV can really lie to you if you're just plugging numbers into excel sheet but I'm just talking about numbers you already have which is CAC and how quickly get the money back that's all ya know that's that's you know between a year okay that's great and have you raised I assume you raised capital V bootstrapped we've raised about 17 million total about 10 million from ourselves and about you know the the you know the number one and two SAS companies Salesforce and work their investors and so it's a longtime Silicon Valley we see Khan Storm ventures that's greatest or both all those guys are obviously great guys and gals segments right now doing about twenty million bucks in terms of AR are are you larger than them uh you know again we're not I'm not going to you know talk to that you know generally speaking you said you have above a thousand organizations paying and you said at minimum they're paying thirty grand a year or twenty five hundred bucks a month that's put you at about 2.5 million bucks a year or thirty million annually I mean those are just your numbers multiplied is that generally accurate Minh you know no I'm not going to comment on that Nathan okay well are one of those numbers you told me earlier not accurate either the thousand or the $30,000 a CV yeah I mean the III think those are generally accurate but those are those are things that have been going up and I talked about the segments that we are you know that we're we're the the ACB for the segments that we have focused on right which is the mid-market Enterprise why does it make you nervous to say you're doing you know more than 25 million bucks and seeing these numbers out you know it's you know it's that yes strategic VJ strategically helped me understand that what makes you nervous about doing that it's a I think people are gonna you know it's I think people you know you know we we like you know sort of being private and be you know sort of you know sort of making determination of our like you know what kind of strategy approach we take and change you know change paths and plants and things like that and putting so we you know like that's one of the benefits of being a private company and we know we want to take advantage of that sure I mean look one of the things is and one things I have to hit on is I mean we see so many press releases go out there full of PR jargon so someone says we went from one dollar of air our to three dollars of air our hey we grew 370 over a year means nothing right and and so one of the things I do with this show on purpose is to try and cut through that kind of stuff and get to real numbers and credit frankly your success I mean it's incredible what you've built you've had a lot of success in the past you've learned a bunch of lessons you're pulling that into this company so the more numbers you can share the more value it is from my audience but but I understand that yeah but but I also understand your your interest in keeping things vague as well for competitive reasons so talk to me more about team today where you guys at in terms of team size we are around 80 people most of us and I mean not I mean the headquarters is in Palo Alto but about two-thirds of the team is remote okay so so okay interesting mostly remote and where are you growing most right now break down that team for me I you know we're growing most in the US and you know we're also you know growing in Asia and Europe mm-hmm I meant sorry engineering sales marketing support yeah I think our sales and marketing is definitely growing faster but you know and then engineering we were traditionally you know very engineering and product focus for the first two or three years and that's been shifting last couple of years are you spending right now bunch of money on paid stuff or is it mostly branded content you know content marketing things like that you know it's we haven't we don't do much paid stuff it's it's a it's it's a it's much more you know we get a lot of our leads in through partners and referrals from existing customers so it's been pretty organic you know we have 82 you know we you know sort of every day around like you know 66 you know 60 does have any you know groups sign up you know to try us out and a lot of that is pretty you know pretty word of mouth or through partners like Salesforce workday ServiceNow swag you know as and and and and sort of you know other customers bj before marketing is also a big part of it I mean we when people are looking for us looking for certain apps and you know for certain types of solutions we show up yeah your last fundraise when was that about a year ago or sorry you fundraising right now no are you profitable where we you know we're operating well within our power so at this point that you know that's all I'm gonna say with that if you kill your variable marketing its expenses are you profitable you could easily pull that lever if you needed to we can pull that trailer if we need to interesting great last question before we wrap up with the with the famous five what year you think you'll break fifty million bucks an air are well I mean we do it this year you know I think you know we're looking to do that do it you know within the next one to two years yeah come on over J that's when you get to stand on a soapbox and say we're gonna kill it this year we're gonna we're gonna blast past a man ya know that you know those of you listening those of you watching you're going Nathan's trying to be all energetic images just like engineer boom boom boom boom boom but I love it but yeah it's good stuff let's wrap up here with the famous five number one what's your favorite business book I'd say it's the hard thing about about hard things by Ben Horowitz you know it's a good one number two is there a CEO you're following or studying right now uh you know I've followed a couple of people like Thomas Korean from Oracle and Vivek who is my old CEO at TIBCO okay number three besides your own what's your favorite online tool for growing the business for growing the business you know we we use a lot of you know we are big consumers of technology here from Salesforce to you know intercom to all kinds of tools you know talking about company to us oh yeah just like what you use personally to help grow you grow the company you know I think you know for me the it's not tools that I use to grow the company right it's a it's its strategy and the team yes our agenda the question is just name a tool that you use daily that helps you keep everything organized yes I think I use a you know like Pomodoro timers to organize my own time what's it called the Pomodoro timer ah yeah Pomodoro timer here very good and you know and I use this tool called self-control when I need to likely be logged on and not be distracted by all the news and sports and politics and everything else that's good number number four how many hours of sleep to get every night about 7:00 that's good and what's your situation married single you have kids you know married with two kids okay two kiddos and Howard are you a J me I'm 53 53 okay last question what he was your 20 year old self new well I wish they I wish they would be you know I know when I was 20 I was very impatient for results and outcomes but on everything I did you know III would encourage that person to focus and enjoy the process that is else will come there you guys have it from a J be more patient he's had a lot of success now working on work otto an enterprise version of some of the more consumer oriented folks that helped really create the plumbing for the new cloud infrastructure that is growing so rapidly by connected apps many many different recipes they have loads of folks using him over 21,000 organizations well over a thousand that are actually paying you know a CV first year call it 30 grand on average so you can do the math figure out generally how they're doing 300 percent year-over-year growth in 2017 which is great seventeen million dollars raised 50% net annual revenue expansion super healthy their team of 80 in about one third in Palo Alto the rest remote going rapidly less than 12 month payback period so pretty they're efficient they're with cash founded in 2012 avec thank you for taking us to the top thank you Thank You Nathan