What It Feels Like to Run a $1 Billion Startup
AppDynamics, which became a startup worth $1 billion in July, finished the year with $150 million in bookings (revenue under contract), CEO and founder, Jyoti Bansal tells Business Insider.
And the company, founded just under seven years ago in April 2008, is still growing at a blinding pace, he says.
"If you look at the enterprise tech space, we are one of the fastest growing companies in there, especially at our size. All of our VCs tell us we are the fastest growing company in their enterprise portfolio in many, many years," Bansal says.
AppDynamics has raised about $205 million from venture capitalists including Greylock Partners, Lightspeed, Kleiner Perkins, Institutional Venture Partners, Battery Ventures and others, including the $120 million round in July that made it worth $1 billion.
The company's bookings came in at nearly double what it did last year, he said, although Bansal declined to tell us a specific revenue amount.
But he did say he's landing bigger and bigger fish, reeling in more than 20 customers this year that signed deals worth more than $1 million. The company now has 1,600 customers, doubled from the year before, which includes some of the world's biggest banks and tech companies. Customers include Barclays, JetBlue, Expedia, and Cisco.
AppDynamics made a name for itself in a field called "application performance monitoring." It watches extremely large and complicated software apps to give companies feedback on how those apps are behaving. They use AppDynamics to fix problems and to gain insight into what their customers are doing with their apps.
"We're watching about 100 billion transactions a day now, like opening a bank account, booking flights, watching movies, buying songs online," Bansal explained.
AppDynamics is definitely "on the IPO path," too, although Bansal wasn't talking dates yet. We'd guess late 2015 or early 2016, though he refused comment when we pressed him on our guess.
A 'scary' ride
Bansal tells it's been a wild, wonderful and "scary" ride growing a company from $0 to $1 billion valuation under seven years.
This is his first startup and he did it on his own, with no co-founders.
Born in India, Bansal arrived in Silicon Valley straight from college with a degree in computer science and $150 in his pocket. Although he came from a middle-class family, he proudly never asked for another cent from his father beyond that $150, he tells us.
He worked at a series of startups which gave him the bug to start his own. The AppDynamics idea was based on Google. Just like Google wanted to index every page on the internet, he wanted "watch every line of code" in the world.
"When you go on a startup journey, at every stage you could just fail. It is a scary journey. It's like playing a hard video game. The first time you play level one, you figure it out over time. Then at level 2, or level 3, it feels like the earlier levels were easy," he laughs.
Just me and $5.5 million alone in a room
As a sole engineer with a very technical idea, his level 1 was pounding the pavement on Sand Hill road trying to find investors.
"It took about 4 to 5 months to raise capital. At some point I nailed it. It was $5.5 million and just me in a room. Next, I needed to build a team and that looked much scarier than raising the capital," he told us.
Each next step was equally daunting, he says. He knew he needed customers as beta testers. He found them by "pure old-fashioned cold calling. And, as an engineer, that was a hard thing to learn," he said. He literally just sent people messages on LinkedIn, asking them to look at his project and give feedback.
"Over time I figured out there was science to the emails. If I sent a message to 50 people, 5 will respond just to give me feedback. If I was trying to sell them something, only 1 would respond," he says.
But, he says, the first five people who responded, all from huge companies liked Priceline, Electronic Arts and Netflix, became his first five customers.
The next level in his video-game startup adventure was hiring salespeople. The level after that was expanding the product to cover more types of programming languages. Then building a whole new product that pushed the company in a new direction, the $25 billion, big data/business intelligence market, letting companies analyze business trends by watching how people use their apps.
Along the way he had to give up things like interviewing every employee. He was hiring too fast. His workforce grew from 200 people to 600 in the past 18 months, he says.
An odd moment of revelation
And then came the moment when he realized he had done it. He had built a thriving company. "I ran into someone in the office I had never seen before. It felt really odd," he said.
It was followed by an even weirder revelation. "When you are a small company, you work together with people closely and they feel open to telling you anything. At some point, if I'm in the elevator with someone, some people are nervous to talk to me. I'm a pretty humble guy and that seems pretty strange."
So how does it feel to build your first startup from $0 to $1 billion in about 7 years?
Scary, odd, strange, and really exciting.