Posted on Tuesday, Feb 17th 2015
Goldman Sachs study published last month estimates the global SaaS market to grow to $106 billion by next year, translating to a 15% growth over the year. Here is an interesting story of MuleSoft, an integration platform provider for multiple SaaS-based enterprise applications that is expected to join the Billion Dollar Unicorn club soon.
San Francisco-based MuleSoft was founded in 2006 by Ross Mason whose
professional life began by running software for clients in an insurance company. Soon, Ross shifted from the insurance sector to the technology function of the banking sector where he spent four to five years. It was during this time when he began working on a technology to connect systems. Back in 2003, the project cost €30 million and 18 months and made Ross realize that while the architecture and concepts of the software were sound, the execution of the project was difficult and complex even for developers. Ross also came across a master’s graduate paper by Matt Welsh which talked about staged event-driven architecture that could be used to build high-scale web services. All of these events led to the creation of the back bone of MuleSoft.
As MuleSoft puts it, their company’s name came about from the “integration
donkey work” that their platform was created to escape. They wanted to create a platform that combined the benefits of the strength of a donkey with the speed of a racehorse.
MuleSoft was able to get a huge amount of traction, including paying customers, for its OpenSource software well before the company raised its first round of financing from Hummer Winblad.
Today, MuleSoft is one of the most widely used platforms to
connect multiple SaaS offerings with enterprise applications through either a cloud-based platform or an on-premise enterprise software. They are known for their Anypoint platform that helps organizations solve the problem of integrating multiple applications, data sources, and APIs in a seamless manner. The platform also offers additional features such as enabling them to get a single view of their customers and employees, ability to connect SAP and enterprise data to the new Saleforce1 Mobile App, deliver new apps, enable mobile employee productivity, and also connect with Microsoft’s cloud offerings.
One of the trickiest things in a freemium business model is converting free users to paying customers. MuleSoft has done a terrific job of designing a product that converts at the rate of 5% from free to premium. This number, for the uninitiated, is in the highest range of freemium conversion rates.
MuleSoft began as an open source model under the name Mule Source. They then transformed to a license fee-based business model where they earn revenues from the services provided for support, consulting and training to the organizations. MuleSoft’s financials are kept confidential, but revenues have recorded steep growth. They reported a 91% growth in revenues for the year 2013 and recorded a stellar 108% growth for the third quarter of 2014. The rising valuations and an impressive customer list, which includes names such as Unilever, Walmart, GE, Master Card, and Cisco clearly suggest the strength of the organization’s products.
MuleSoft has been venture funded so far with $130.5 million in funding from investors including Morgenthaler Ventures, Hummer Winblad Venture Partners, Lightspeed Venture Partners, SAP Ventures, Bay Partners, New Enterprise Associates, Salesforce, Meritech Capital Partners, Cisco, and Salesforce.com. They raised their last round of funding in March 2014. The $50 million round was led by Meritech Capital Partners, Cisco, and Salesforce.com and valued them at more than $800 million. In
2013, MuleSoft was valued at nearly half of that. Analysts believe that MuleSoft may be looking to go public soon. The company has neither confirmed nor denied these plans.
Recently, Ross was my guest at the
248th 1M/1M roundtable. You can listen to the recording here:
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book,
Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures. This segment is a part in the series : Billion Dollar Unicorns
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