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Achieving Product-Market Fit That Allows You to Build Billion Dollar Unicorns: Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 6)

Posted on Wednesday, Jan 14th 2015

Sramana Mitra: This time around, are there any surprises in the product market fit process? You repeated the same process, I imagine.

Gaurav Dhillon: The same thing but with a twist. With Informatica, the timing was spot on. The change was happening in a big way. Year 2000 was coming. From the time we raised venture capital in 1995 to the time we got to $50 to $60 million in revenue in 1999, our timing was spot on. With SnapLogic, our timing was a little bit early. We had built out this technology. We had SnapLogic running on AWS in 2008. That’s like seven years ago. Enterprises weren’t there yet.

If you look at SaaS at that time, SaaS was a mid-market phenomenon. Among people using SaaS today, the majority of revenues and by far, the vast majority of profits for SaaS companies are coming from the enterprise. In fact, Workday is an enterprise-only SaaS company. They don’t even sell to mid-market. Their average deal size is probably $2 million. All these things were just coming out at that time. I think we were slightly early. Of course, we had the technology.

I think you and I spoke about the SnapStore and the containerization of data. Hadoop wasn’t yet a big deal like it is now. People weren’t really looking to upgrade their integration. They haven’t bought other enterprise Saas like Workday or even internal SaaS like ServiceNow. The drivers for success were not in that volume there at SnapLogic circa 2010 as they were for Informatica circa 1995. I think the learning here was we have to really think about which piece of the market to focus on.

When I stepped in as the CEO, it was clear to me that a lot of the people I know are on the enterprise side. So, we focused on the enterprise. Secondly, we built out a true Platform-as-a-Service. This was strategic. It was painful because we had to upgrade our product, which was more of a virtualized product. We had to rebuild the platform into a true PaaS—something that runs on premise and in the cloud. I would give credit to some of the investments and thinkings from Horowitz who really helped me think about how to architect this in a way that would be beneficial to the cloud. No software, hardware, or versioning, yet be secure, scalable, and reliable. In realizing that we really needed to meet a higher level of stakes, we now made through a time when timing was phenomenal. We tripled last year. I never did that at Informatica. We doubled, but we never tripled.

Sramana Mitra: Let me double-click on a couple of points that you made there. Timing was not right when you were getting this off the ground. We are talking what? 2010?

Gaurav Dhillon: This is late 2009, early 2010.

Sramana Mitra: You didn’t have the timing right. Did you however have very early adopter customers?

Gaurav Dhillon: We did and many of them are still with us. We had success with smaller companies like Lyka and others. We didn’t have the Adobes, Astra Zeneca, or GE yet. They came in over the past year. They are now buying Workday. We always had Salesforce in various chunks, but now you’re seeing it happen in all the major verticals where people are “cloudifying” the enterprise. We have repeatable process around how to cloudify the enterprise and how to make sure that you have one view of the company even as you’re swapping out your HR software.

Sramana Mitra: What did you do financing-wise with SnapLogic?

Gaurav Dhillon: We’ve raised more capital than we did the last time around. We raised capital from Horowitz. Then, we raised a subsequent round with Ignition and we just did another round recently. In total, we’ve raised about $60 million of capital and have, in a sense, been able to build a platform that has unique capabilities in terms of ease of use and scalability that has helped us to upgrade and displace many of the legacy integrations and installations of TIPCO and Informatica.

Sramana Mitra: We are now in January 2015. You raised the last round last October, right?

Gaurav Dhillon: Right.

Sramana Mitra: The total is $60 million?

Gaurav Dhillon: That’s correct.

Sramana Mitra; Tell me what are some of the most significant strategic moves you made with SnapLogic? You said you tripled revenue-wise. What are the levers you are pushing that are driving that kind of growth?

Gaurav Dhillon: I would say one very important thing to keep in mind is culture building. People don’t talk about it. You talk about products and customers. Frankly, what had happened at SnapLogic is the creation of a durable culture as we went through our product-market fit and as we sweated out some of the market timing issues around our enterprise platform. I would say that’s probably durably the longest term impact you can have in the life of a company. We’re about 100 people now. When you’re about 100 people, the culture sets. I would say perhaps underneath the covers, there is this way of doing things with SnapLogic that has formed over these past three years.

Secondly, we have matured an enterprise Platform-as-a-Service that does integration of apps and data in a fantastic way with hundreds of snaps, endpoints, and connectors. I’d say the third one is the repeatable motion around cloudification of the enterprise. There is somebody buying in Salesforce or somebody is adding Salesforce in a meaningful way. Therefore, I am thinking about questions like should I use the same old integration products from my modern SaaS or should I think of upgrading my integration as well.

On the app integration side, I would say a good 80% of business that we have is around people bringing in SaaS and realizing the need to upgrade the integration technology. I believe over time probably maybe half of our business is customers really imagining their data warehouses away from just data warehousing but towards a Hadoop enterprise data hub with analytics and data science. We are seeing tremendous opportunity there because SnapLogic’s product is built to scale out in a way that legacy products can’t.

Secondly and probably most importantly for the analytics and Big Data side, we have the capability to handle unstructured data in a way that legacy products can’t. Most ETL products are like that. Now, we have web data. We have Internet of Things. They are not relational. They’re unstructured. Having built SnapLogic in that way gives us a tremendous advantage in the world of Hadoop. We have this concept of SnapReduce where you can run SnapLogic integration on top of Hadoop. That is possibly just going vertical right now as enterprises are seeking to have industrial strength Big Data projects.

This segment is part 6 in the series : Achieving Product-Market Fit That Allows You to Build Billion Dollar Unicorns: Gaurav Dhillon, Founder of Informatica and SnapLogic
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