MuleSoft is recognized as one the largest enterprise acquisitions in history — the integration platform was acquired by Salesforce in 2018 for $6.5 billion. It’s hard to believe, but this stellar company actually came from tough beginnings. According to CEO Greg Schott, when he joined in 2009, the company was a bit of a “fixer upper.” MuleSoft had just laid off nearly half of its staff, leaving just 20 people in the company. “We had about $1.5M in revenue and we were selling Mule as an open-source enterprise service bus (ESB) with an enterprise edition,” Greg describes. “It had the beginnings of a strong management team and a little bit of money in the bank that was going to last us about a year and a half.”
So how exactly did an open-source tool called Mule (which btw, took the “donkey work” out of integration) become the MuleSoft it is today — all 6.5B dollars of it? I chatted with my good friend Greg about the company’s unlikely comeback at our 1to100 conference. He was quick to point out that the integration space was one of those massive market opportunities available for the taking — “nobody had really figured out how to crack the nut on it.” He also identified three key drivers of MuleSoft’s rise: a product pivot, bigger enterprise deals, and forward-looking team construction.
Product pivot — Build towards an ambitious thesis
To give a sense for the magnitude of the challenge, Greg says that there was “$700 billion in [integration] pain that we could address… it was the biggest unsolved IT problem of all time.” MuleSoft’s original vision was to solve integration issues with a flexible platform approach that eliminated the need to build specific software for every connectivity problem.
MuleSoft’s starting principles were generally headed in the right direction, but they hadn’t successfully hit significant market traction. When Greg joined MuleSoft in 2009, it was still unclear how MuleSoft was going to address the challenge; the company was “pivoting around quite a bit at the beginning.” At that point it was all about survival — “keeping the lights on” with the original product, while MuleSoft identified a new direction to take.
MuleSoft’s bold product pivot was informed by some key factors. Greg and his team were able to successfully 1) identify an impending market shift (the massive move of software to the cloud) 2) construct a thesis in anticipation (APIs would become the dominant integration protocol) and 3) build a product ahead of the inflection point (the massive growth of SaaS tools)
MuleSoft presciently built out a paid cloud platform known as AnyPoint and continued to accrue connectors to more and more SaaS integrations. “We got religion around APIs” says Greg. “That’s when things started really clicking — as SaaS got massive and as APIs became kind of a protocol. We just skated to where the puck was going on all of that.”
Bigger enterprise deals — Move up-title, not up-market
To grow their revenue, MuleSoft didn’t actually change their target customer set. In contrast to the usual up-market ambitions of enterprise companies, MuleSoft’s primary challenge wasn’t chasing bigger customers. “We were always selling to the big enterprises,” says Greg. “J.P. Morgan was one of our first customers.” But the enterprise engagements MuleSoft had been getting were small, tactical sales.
In order to grow its ASP, MuleSoft needed to change what and how they sold. First, they made their new subscription platform “something that was bulletproof” that enterprise companies could bet mission-critical operations on. But getting increasingly bigger deals required up-leveling more than just platform functionality. MuleSoft had to fundamentally upgrade how it sold its value proposition — from selling solid integration capabilities to getting buy-in from senior execs on a transformative vision of connecting the enterprise. “To be able to actually sell to the CIO and talk about transforming the clock speed of their businesses,” says Greg, “that took years of us getting the motion and the muscle to be able to do that.” The hard work paid off. Says Greg, “When I first joined, we were selling $10 to $30,000 deals and now we have many customers that are north of $5 million annual subscription revenue.”
Team Construction — Hire for the future (at least six months out)
A big part of MuleSoft’s success was the company’s ability to recruit great talent. As a CEO, Greg naturally gravitates towards building a company around people and culture — this included a close handling of hiring at MuleSoft. “I dug in there and that was my thing,” he says looking back. Greg’s focus on culture and hiring paid off, although Greg admits he wished he’d hired a talent lead even sooner to keep himself more broadly focused.
The first important feature of Greg’s hiring strategy was finding new, hungry talent: “I’m a big fan of hiring the up and comers…top caliber candidates who are on their way to greatness” he says. “Because I found that a lot of times, you hire people that have already been there, maybe they don’t have the fire in the belly anymore. Maybe they’ve got a set way of doing things and they’re not willing to change.”
Read more at https://insights.nextworldcap.com/from-rocky-start-to-6-5b-acquisition-how-mulesofts-ceo-turned-it-around-db44f4712b33