UiPath: the revenue model behind the AI startup’s stratospheric growth.

UiPath has been called the fastest growing enterprise software company ever. The company has grown from ca. $1M revenue in 2015 to around $200M in Annual Recurring Revenue today! OpenOcean considered investing in UiPath in 2015. We decided not to invest, mainly because we failed to see that the company could scale rapidly. How wrong we were! More on that in my previous post on UiPath’s early strategic choices and growth drivers here.

In this second blog post on the growth of UiPath, Tom Henriksson, General Partner at OpenOcean, interviews Kulpreet Singh, the first sales leader hired at UiPath, and dives deeper into the strategy and methodology that resulted in the company’s stratospheric revenue growth from 2017 onwards.

Key growth factors

Tom: Kulpreet, thank you so much for taking the time for this discussion! How did you get to know UiPath and why did you decide to join?

Kulpreet: I got to know about Robotic Process Automation (RPA) and UiPath when I was consulting with one of the largest UK insurance companies who were looking to improve the efficiency and effectiveness of their operational processes. During this project, we evaluated various RPA tools and UiPath stood head and shoulders above the others in respect of speed of deployment, ability to work with diverse systems, responsiveness to client requests — all of which showed up in the business case.

Tom: When you joined UiPath in late 2016, what were the main reasons for the rapid revenue growth?

Kulpreet: First, general market dynamics were favorable, as RPA had really started taking off and UiPath could usually get meetings at CXO level with potential customers. This sped up adoption dramatically.

Second, the company also started to have a superior product compared to our main competitors, based on it’s modular and flexible technology and superior ease of use.

Third, as the company decided to invest in a local sales and support model from day 1, it was well set-up to meet and service key customer prospects in the key markets.

Finally, the RPA use case, and the UiPath solution is horizontal, so it’s more or less the same need and use case for customers regardless of industry.

Data-driven sales

Tom: How data-driven was UiPath in scaling sales at this time?

Kulpreet: Initially we were very little data-driven. We used data such as GDP in relation to basic factors to assess market potential. The company had very strong inbound interest, so we were mainly qualifying these requests and converting these as rapidly as possible.

Tom: This must have evolved over time?

Kulpreet: Yes, we are a much more data-driven company now of course. We hired a Chief Revenue Officer who has experience in scaling up organisations and he implemented comprehensive Sales Operations.

To decide on focus and improvement areas for sales, we continuously look at data such as:

- Sales lead times

- Upsell rates

- Sales productivity and performance

- Data on specific sectors and geos

- General funnel conversion metrics and the reasons behind these

- Variables which influence ARR

Now, our sales budgeting, target setting and prioritisation are definitely data-driven.

Sales model and tactics

Tom: How did you develop such an efficiently scaling revenue model?

Kulpreet: The model is a combination of factors:

1. The sales cycle is rapid for an enterprise sale, ranging from weeks to around four months. Customers almost always try out our software first, automating one basic workflow, in a POC, which enables rapid conversion.

2. We have a Playbook on hiring a strong local leader for each market. With the help of recruiters we identify, interview and hire top candidates only, around the globe, who then hire their own small teams. This kick-starts the local business and ensures the right culture. We oversaw this together with Daniel Dines, UiPath founder & CEO. So we have local sales teams in every geo, now in some 40 countries

3. With the short sales cycle, local teams can become cash-flow positive in 3–4 months.

4. We also have a strong upsell rate, fuelling the growth and customer profitability. We typically see our enterprise clients coming back for follow on purchases within 6 months of initial purchase and as they start realising the benefits, the scaling up starts around 6–9 months later which results in significant upsells.

5. Our renewal rates are running at almost 100%, which means that our sales and customer success teams can focus on helping clients scale up.

Tom: What has been the impact on sales in having a Developer community? What about UiPAth’s Academy?

Kulpreet: From day 1 of our journey, we were clear that an organisation of 30–50 or even 2,000 people would never have all the answers or the capability to address all of clients’ scenarios and needs. Therefore, we made our software available to anyone who wanted to use it, so they could play with it, and importantly get involved in influencing our roadmap. We have a community version available for free to any organisation with a turnover < $1m, or for individuals. We also have a trial version available for our enterprise clients so that they can try our platform on their own before they engage with us. This has resulted in a developer community of over 250,000 globally who are engaged with us and are helping us develop our roadmap.

Similarly, early in 2017, we realised that there weren’t many resources trained in UiPath globally and that was impacting our clients slowing down their ability to scale up RPA programs. Our solution to this was to put our entire training curriculum online as part of a Massive Open Online Course (MOOC), free of cost. This was a significant investment on our part as we had to create the entire program for an online audience, add relevant videos, projects, scenarios etc. and introduce formal certifications. This was what became Academy and now anyone in any part of the globe can get themselves trained on UiPath, at their own pace all free of cost.

Tom: Any final remarks to wrap up this (fabulous) story?

Kulpreet: With the Series D fundraising that we have just closed, we are now the most valued AI startup in the world (Editor’s note: a $568M financing at $7Bn valuation). It does feel strange to reach this level in the 3 years since I have been associated with UiPath, but it feels like we are just starting. Our product roadmap is focused on helping clients scale up and help make “A Robot for Every Person” a reality. We are at the beginning of the Automation First era and we are so excited to play a part in this endeavour which will redefine work for the next generation.