Behind the Galloping Unicorn

Unicorns have mostly been about tech-driven consumer start-ups where valuations cross the billion-dollar mark on the back of a very promising idea. The enterprise software industry has always been marked by staid growth. But UiPath, an NYC-headquartered company, with its roots in Romania, bucks that trend.

UiPath is not only a unicorn; the company tripled its valuation in six months. In March 2018, the company raised $153 M at a valuation of $1.1 B, and in September 2018, the company got additional $225 M in Series C funding at a valuation of $3B. UiPath is a leading vendor in the RPA (robotic process automation) segment, which is a hyper growth segment in the enterprise software space. The company claims to be the fastest growing enterprise software company in history.

The company’s footprint in the automation industry was acknowledged with several honoring titles: a global Leader and Star Performer in RPA (Everest Group), and — based on superior technology — as RPA industry leader (Forrester). Following these up, in 2018 the Everest Group’s PEAK Matrix report on RPA named UiPath a Leader and Star Performer, making it the only vendor to receive the distinctions two years in a row. Subsequently, UiPath has been recognized as a Leader in The Forrester Wave: Robotic Process Automation, Q2 2018 in June 2018.

UiPath calls itself the fastest growing enterprise software vendor. The company has been open about declaring its revenues at very milestone (see Box- UiPath Business Performance and Revenue Growth). Between 2016 and 2017, the company grew more than 10X in annual recurring revenue (ARR) when we ended 2017 with $43.5 M and by July 2018, UiPath more than doubled ARR by hitting $100M. Around mid-November 2018, the company crossed $150M and it would be soon announcing year-end revenue for 2018.

Daniel Dines was in India for the 2^nd UiPath Developer Conference held in Bangalore on January 18.

In an interaction with Dataquest during his earlier visit to India few months back, Daniel Dines, Founder and CEO, UiPath spelled out the company’s strategy, vision, and growth plans. Excerpts: 

RPA is a very hot segment in enterprise software. UiPath’s rise has been notable. How would you describe the growth of the company? 

RPA is not only hot in terms of market activity, but it is also evolving rapidly. On these tailwinds, UiPath is a company that has demonstrated growth and speed. In a little over two years, UiPath is way past $100 M in annual recurring revenues, has grown to over 1200 employees with over 22 offices, has more than 1500 enterprise and govt customers, and has a developer community that is more than 200,000 members. Our performance adds to the credibility of the company and fuels further growth. We could easily be the fastest growing enterprise software company in terms of revenue and people in history.

But you started the company way back in 2006 and then you have a spurt of growth in the last two years. What made you persist for so long?

I really don’t know. Of course, we did not start with RPA. But the philosophy with which we started is very aligned with that.

And what is that?

Be good at making things simple and powerful by eliminating the needless. Let me give you a bit of background. We started off in Bucharest, Romania, an unusual place for an enterprise software product company. I always wanted to be an entrepreneur, but I didn’t start at the age of 17 or something like that. My passions were literature, history, philosophy, besides technology. My biggest dream was to become a novelist, but I realized that it is too difficult to make a mark.

Now let me come to the philosophy I was talking about. I am a lazy guy; I would call my laziness a good trait. I try to build simple things that simplify complex stuff because there is no patience to analyze. Besides, being a novelist at heart, I had a good sense of bringing the mind and heart together……the two sides of the brain as they call it. So, if I built software it had to be something that created its impact by simplifying something complex. This was the guiding philosophy.

Taking it a little further, RPA helps free humans from repetitive tasks that are mundane and boring. In that sense, there has to be a bot for every human.

How did you get into software? What was your initial product idea? 

I moved to the US when I was 28 to work for Microsoft in Seattle. After spending five years in the US, I got a sense of what it takes to make it big in enterprise software. I moved back to Romania and co-founded a company with Marius Tirca, who is currently the CTO, primarily thinking that it would be cheaper to develop software there. We began by developing SDKs for companies such as IBM and Microsoft.

But I realized that such considerations are not really the best way to build a business. It takes much more than that. There was no customer insight, another key component for success. We had quite a bit of struggle for eight to nine years until mid-2015.

UiPath was created in 2015 on the foundation of the 10-year old Romanian software outsourcing company DeskOver. We worked on computer vision technology and drag-and-drop designing which are now at the heart of UiPath’s platform capabilities. UiPath robots can see the screen and understand relationships - just as human vision does. We began orienting resources into training and orchestrating software robots back in 2012, and one year later the company initiated its first RPA journeys, starting with Sutherland.

Upon concluding our first partnerships with global BPO and consulting companies such as Cognizant, Capgemini, Symphony, and Genfour, UiPath closed in 2015 an initial seed round of investment from Earlybird ’s Digital East Fund, Credo Ventures, and Seedcamp.

Interesting. What was the core value proposition?

The core value proposition was that UiPath was a platform for enterprises to rapidly deploy software robots that perfectly emulate and execute repetitive processes, boosting business productivity, ensuring compliance and enhancing customer experience across back-office and front-office operations. This is what we now call as Enterprise RPA.

We continue to accelerate the product roadmap, particularly with innovations that integrate machine learning (ML) and AI algorithms.

You mentioned that the BPO (now called BPM) industry in India was instrumental in UiPath’s initial success in India. Were there any other sweet-spots for you?

Yes. The global captives in India provided us with great growth opportunity because RPA directly helped them do more with less. Just as the BPO industry and global captives were a springboard for our growth, Japan presented us a very different opportunity where the UiPath platform fit like a glove. In Japan, there are significant challenges due to an aging population.

UiPath is supporting the banking and finance industry by helping them cut costs by 25 percent to even 50 percent in some cases. At present, UiPath in Japan is working with 70% of the largest banks in the country. As an example, Sumitomo Mitsui Banking Corporation which is forecast to save $500 million in costs by 2020.

I would also like to point out that these experiences helped us discover important geographies such as India and Japan that would be critical to our growth.

You also moved the company’s headquarters to the US.

In 2015, after getting the first round of funding, we also decided to shift our headquarters to New York to be closer to the world’s largest global businesses.

Was that to get the attention of the VC community?

It might have helped, in hindsight, now that we are well-funded. But more importantly, we thought moving to the US for two reasons: a) it was essential to be near the Fortune 500 companies, our potential customers and b) we need great leadership talent from the best of the companies in the enterprise software industry. You will get an idea if you look at my top team.

What else do you think is needed to grow to be a leader?

Early on, we had got in touch with our first enterprise customer which was a European insurance company. It taught us a lot about the importance of sales and customer focus. A great sales team to push growth and the need to be wholly aligned with customers was the strategy, and we had to have a structure to do it.

We needed to turn ourselves from a tech-oriented company to a customer-focused one. We had to internalize it, not merely talk about it. What UiPath is today is the product of discussions with thousands of people. Here again, since I am not a very good speaker, I was a better listener, which greatly helped. Speaking more is lost opportunity to learn, I would say. Our strategy was to invest very heavily ahead of the market.

How did the funding rounds go?                    

To develop a world-class product and to build core customer relationships, you need resources to surround the customer. This requires good funding and we were fortunate with that. The seed round was followed by a series-A $30 million funding in, and in March 2018 by a series-B funding where UiPath raised $153 million becoming a unicorn company, with a valuation of $1.1 billion. Both rounds were led by Accel and saw participation from the first investors. The 2018 funding was also backed by co-contributors CapitalG (former Google Capital) and Kleiner Perkins Caufield & Byers.

To get successive rounds of funding we had to demonstrate growth and our track record here was consistent. In 2015, we had $1M in ARR (annual recurring revenue) with 30 people. In 2016, we had $5M with 100 people; we closed 2017 with $45M and 500 people. At the end of H12018, we have crossed $100M with 1000 employees.

The spurt in growth happened in 2017. Reflecting on 2017, it was undoubtedly the year of global growth for UiPath, with teams scaling up and new locations opening around the world.

So, how do you see things shaping up in the future?

We are serious about being a leading enterprise software company, the leader in this space, and in potential opportunities. There is rapid convergence happening in digital technologies, automation, and AI. It is a market that is continually evolving and taking new shape. We will be ahead of the curve.

Our guiding principle would remain the same— make things simple by eliminating the needless. One more point. We believe in making automation skills easy to access. At UiPath, we call it democratizing RPA. We do it by providing RPA tools and training for free. We currently have a global thriving RPA developer community of more than 200,000 members, well on its way to democratize RPA and support the digital business revolution.