Last month, UiPath announced another mega round of funding. This time it was for $225 million at a $10.2 billion valuation. Alkeon Capital Management led the round and there was participation from Accel, Coatue, Sequoia Capital, Tencent, Tiger Global, Wellington, T. Rowe Price Associates.
In the RPA (Robotic Process Automation) world, UiPath is one of the leaders, possibly now the #1. Consider that the ARR (Annual Recurring Revenue) is at over $400 million.
But the success was far from guaranteed.
The company’s co-founders — Daniel Dines and Marius Tirca – initially focused on providing integration services for applications like Google, Microsoft, and IBM. But the business saw unimpressive growth.
By 2011, UiPath was actually on the verge of shutting down. But Dines and Tirca did not throw in the towel. They instead developed their own RPA platform. The main inspiration came from meetings with a BPO customer in India, which was using UiPath technology for automation.
At the time, of course, there were numerous other RPA companies like Blue Prism and Automation Anywhere. So then what were some of the approaches that UiPath used that catapulted the company to the top? What are the takeaways?
Well, here’s a look:
Business Model: Even in 2011, the SaaS model was gaining much momentum. It was rapidly becoming the standard in the business software industry.
Yet UiPath did not jump on the bandwagon. The company instead pursued a model that involved selling its software on a per-bot basis. The idea was that this would show the relative value of the technology versus the compensation for employees.
The per-bot business model also meant that UiPath was able to generate substantial revenues. True, the future of this strategy is not clear and there may ultimately be a change as competition takes a toll. But for the most part, the business model has still been quite effective.
Incremental Improvement: In Silicon Valley, there is constant talk about revolutionizing industries. But of course, this can be very scary for customers. They instead prefer stability. They also must deal with the inevitable pain of legacy systems. After all, it’s common for large enterprises to have mainframes and COBOL code running mission-critical functions.
So when UiPath offered screen scraping technologies, Silicon Valley scoffed at it. This was a commodity, right?
Perhaps so. But for customers, UiPath was solving some major pains and allowed for an easier transition with quick ROI.
After all, when it comes to large enterprises, the reality is that their legacy systems do not have adequate APIs. What this means is that the alternative for automation is the UI, such as with controlling the mouse and keyboard. The bottom line: screen scraping is really a silver bullet.
On-Premise Software: In Silicon Valley, if you talk about on-premise software, you will likely be ignored (and laughed behind your back!) The cloud is presumed to be the only solution.
But this is really a misconception. For UiPath, it realized that an on-premise solution was the better way to get results, especially since there was a need for deep integration. The company was looking at customer needs first, not a particularly technology.
Now it’s true that the cloud is becoming increasingly important. But for UiPath, the company is in a position of strength to leverage on this.
Partnerships and Education: UiPath understood that RPA requires a good amount of change management. Because of this, the company was smart to aggressively form partnerships with consulting firms. This not only helped to streamline implementations but was a good source of customer leads.
But UiPath went even further. That is, the company spent the resources to create a full-blown RPA academy, with both virtual and in-classroom instruction. The result is that adoption has been particularly strong with UiPath. Oh, and the certifications have become valuable for many people’s careers.