monday.com
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LinkedIn is the reason Apple made the M1 chip
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
This week was good fun not only because we had the whole team together to record, but also because we are still basking in the endless glory of our winning a Webby earlier this week. Frankly we are still shocked. But happy-shocked, like when you get a new toy and it is covered in static electricity.
Anyhoo, we had a packed show with much, much left on the floor as we tried to shoehorn the week into our time slot. Here’s what we got into:
- The world of connections: Fave raised $2.2 million to connect fandoms, Somewhere Good raised $3.75 million to build feedless micro-communities, and both Spokn ($4 million) and Spot ($5 million) are hoping to use the spoken word to connect companies and their staffs. Honestly we think that the overall connection-community world is super exciting.
- Piano, one of those startups we actually have the luck of using, raised $88 million for analytics, subscription and personalization tools. We get into why the round makes sense, and why one investor stood out more than the others.
- Corporate media: Coinbase is building out a media-ish org (Alex wrote about it here on his personal blog; Scrawler.co has more on the matter), and with TheSkimm hoping to find a corporate home and The Hustle doing the same, we had to dig into the matter. Our take is that content marketing is a response to expensive social advertising. And that it’s fine. And that it is not news.
- Shoutout Forbes and its new union effort. Well done.
- Uptrust raised $2 million, which let us talk about the venture-sized opportunity in fighting the billions of dollars wasted on useless mass incarceration.
- And then we chatted about the public markets. Monday.com’s IPO is filed, Marqeta’s IPO is filed, Squarespace’s direct listing is done, and more. It’s hectic out there for late-stage startups.
The show flew by, much like our days recently, simply because it was so fun and jam-packed with news. And we got to make jokes about our listeners and Monday.com PR timing, so what else could we ask for? Talk soon!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday morning at 7:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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Fast growth pushes an unprofitable no-code startup into the public markets: Inside Monday.com’s IPO filing
At long last, the Monday.com crew dropped an F-1 filing to go public in the United States. TechCrunch has long known that the company, which sells corporate productivity and communications software, has scaled north of $100 million in annual recurring revenue (ARR).
The countdown to its IPO filing — an F-1, because the company is based in Israel, rather than the S-1s filed by domestic companies — has been ticking for several quarters, so seeing Monday.com drop the document on this Monday morning was just good fun.
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The Exchange has been riffling through the document since it came out, and we’ve picked up on a few things to explore. We’ll start by looking at the company’s revenue growth on a historical basis to see if it has accelerated in recent quarters thanks to the pandemic. Then, we’ll turn to profitability, cash burn, share-based compensation expenses and product vision.
We’ll wrap at the end with a summary of what we’ve learned and also make sure to check out the company’s marketing spend, because I’m sure you’ve seen its digital ads.
It’s a lot to chew through, so no more dilly-dallying. Into the numbers!
As always, we’re starting with revenue growth because it’s still the single most important thing about any venture-backed company.
Revenue adds are accelerating
This is great news for the startup, its employees and its investors. From 2019 to 2020, Monday.com grew its revenues from $78.1 million to $161.1 million, or 106%.
From Q1 2020 to Q1 2021, the company’s revenues grew from $31.9 million to $59 million. That’s about 85% growth. So, by what measure do we mean that the company’s revenue growth is accelerating? Its sequential-quarter revenue growth is picking up. Observe the following:
Image Credits: Monday.com F-1 filing
From Q2 2019 to Q3 2019, the company added around $4 million in revenue. From Q2 2020 to Q3 2020, that number was $6.1 million. More recently, the company’s revenue added $7.6 million from Q3 2020 to Q4 2020, which accelerated to $8.8 million from the final quarter of 2020 to the first quarter of 2021. Of course, from an ever-larger base, the company’s growth rate may decline. But the super clean and obvious expanding sequential revenue gains at the company are solid.
The fact that it added so much top line in recent quarters also helps explain why Monday.com is going public now. Sure, the markets are still near record highs and the pandemic is fading, but just look at that consistent growth! It’s investor catnip.
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Monday.com surpassed $130M ARR before the remote-work boom
As efforts to flatten the spread of COVID-19 pushes employees from their offices, remote work is undergoing a surge in popularity.
Well-known remote-work-friendly companies like Zoom have seen a rise in usage, while Slack has already reported that it is successfully converting new users into paying customers, which is pushing up its growth rate.
The pandemic is creating economic and social upheaval, but for a specific cohort of software companies that help distributed teams work together, it’s proven useful in business terms. But even before the outbreak of the novel coronavirus, execs from a standout project management company swung by TechCrunch HQ to chat with the Equity crew about their business and growth: Monday.com.
What does an interview with Monday.com’s Eran Zinman (co-founder and CTO) and Roy Mann (CEO) have to do with COVID-19? Well, if remote-productivity-friendly services Slack and Zoom are seeing usage spikes amidst the changes, Monday.com is likely benefiting from similar gains. And during our chat with the company’s brass, the pair told TechCrunch that their company had crossed the $130 million annual recurring revenue (ARR) mark by mid-February. Add in a COVID-19 usage boost and perhaps Monday.com (which doesn’t have a free tier) is seeing its growth accelerate.
Previously, Monday.com announced that it had reached the $120 million ARR mark, and TechCrunch had inducted it into the $100 million ARR club earlier this year.
Revenue expansion was not our only topic. We also chatted with the pair of execs about customer acquisition costs and how to a run a SaaS business without terrifying burn. The Monday.com crew had more news up their sleeve, like when they expect the unicorn to become cash-flow positive.
We’ve excised a larger-than-usual chunk of the interview for sharing, as there’s a lot to take in:
After the jump, we dig a bit deeper into the obvious IPO candidate
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Monday.com 2.0 workflow platform lets companies build custom apps
Monday.com, announced version 2.0 of its flexible workflow platform today, making it easier for customers to build custom apps on top of Monday.
Company co-founder and CEO Roy Mann says his product is a multi-purpose and highly flexible workflow tool, aimed mostly at medium-sized businesses. “It’s process management, portfolio management, project management, CRM management, hotel management, R&D management. It’s anything you want because we give you the building blocks to build whatever you want,” he said.
With the release of 2.0, the company is offering a code-free environment to take these building blocks and build custom applications to meet the needs of any organization or team. This can include workflow elements to set up a process inside Monday or integrate with other apps or services.
In fact, the new release includes over a hundred prebuilt automation recipes and code-free custom-automations along with more than 50 integrations with other apps, allowing project managers to build fairly sophisticated workflows without coding.
This example shows a company building a custom app to manage a hotel. Screenshot: Monday.com
The company is also opening up the Monday platform to developers who want to build applications on top of the platform. Mann says this is just the start, and the plan is to eventually add a marketplace for these apps.
“The first step will be we’re opening [the platform to developers] up in beta. [Initially], it will be for their own use and for their customers, and then we will open it up pretty soon for them to offer those apps [in a marketplace]. That’s obviously the direction,” Mann said.
With $120 million in ARR and 100,000 customers, the company has quietly gone about its business. It has 370 employees, mostly based in Israel, and has raised $273 million, according to Mann. Its most recent investment came last July — $150 million on a lofty $1.9 billion valuation.
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Kicking off 2020 with 4 new members of the $100M ARR club
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today we’re adding four new names to the growing $100 million annual recurring revenue (ARR) club. The firms — Sisense, SiteMinder, Monday.com, and Lemonade — add diversity to our current group of yet-private companies which have reached the nine-figure recurring revenue threshold.
Our goal in tracking the companies in this high-flying cohort is to keep tabs on the private firms (often unicorns, it should be said) that could go public if needed. While not every unicorn will or could go public, companies with nine-figure ARR have a clear path to the public markets provided that their economics are in reasonable shape.
And we’ve seen some remarkably efficient companies meet the mark, including Egnyte with just $137.5 million raised, and Braze, with only $175 million on its books. For growth-oriented, venture-backed companies, those are efficient results.
But let’s add a few more members to the club today. Please meet our new centurions, centaurs, or whatever we end up calling them.
Sisense: more than $100 million ARR
Sisense is a business intelligence company that merged with Periscope Data earlier this year. The combined firm has raised just over $200 million, according to Crunchbase, with the lion’s share of that landing in Sisense’s column (about $175 million).
What’s notable about the combination is that the two firms were public about saying that, when brought together, they would have combined ARR of $100 million. That was back in May. Today, Sisense has crested the $100 million mark by itself, according to an interview with TechCrunch. With Periscope added to the mix the company’s total ARR is naturally higher.
Sisense had a few original goals according to CEO Amir Orad, including helping businesses “take complex data and bring it together to get insights.” Its second focus is helping companies “take complex data sets and build [them out] as an analytical application in their products,” he said.
Periscope came into the picture when Orad and the smaller company’s CEO Harry Glaser (now Sisense’s CMO) started talking as friends about their respective markets. According to Orad, Glaser outlined a new sort of organization being built inside some companies that “were not traditional BI teams” or “traditional product teams,” but instead brought together “data engineers and data scientists and very capable individuals who [wanted] to make sense of [the] data sitting in the cloud.” Periscope had built “a very impressive business” supporting those new organizations, with “many hundreds of customers,” Orad said.
That meant that Sisense’s pair of focuses were somewhat two of out three, making the corporate combination an obvious bet.
Regarding what changed as Sisense grew, cresting the $50 million ARR mark and later the $100 million ARR mark, Orad told TechCrunch that what differed was “scale,” saying that at its size “what you do impacts more people, more individuals, more companies, [and] more customers.” (I have interesting notes on how the two companies managed their combination from a culture perspective, let me know if you’d like to read them.)
SiteMinder: AU$100 million ARR
The first Australian member of the nine-figure ARR club is SiteMinder, which we’re letting in on a technicality; the firm’s ARR figure is in Australian dollars, which works out to around $70 million USD. However, its growth curve appears steep so we’re not too worried about including it a little early from a domestic dollar perspective.
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Monday.com raises $150M more, now at $1.9B valuation, for workplace collaboration tools
Workplace collaboration platforms have become a crucial cornerstone of the modern office: workers’ lives are guided by software and what we do on our computers, and collaboration tools provide a way for us to let each other know what we’re working on, and how we’re doing it, in a format that’s (at best) easy to use without too much distraction from the work itself.
Now, Monday.com, one of the faster growing of these platforms, is announcing a $150 million round of equity funding — a whopping raise that points both to its success so far and the opportunity ahead for the wider collaboration space, specifically around better team communication and team management.
The Series D funding — led by Sapphire Ventures, with Hamilton Lane, HarbourVest Partners, ION Crossover Partners and Vintage Investment Partners also participating — is coming in at what reliable sources tell me is a valuation of $1.9 billion, or nearly four times Monday.com’s valuation when it last raised money a year ago.
The big bump is in part due to the company’s rapid expansion: it now has 80,000 organizations as customers, up from a mere 35,000 a year ago, with the number of actual employees within those organizations numbering as high as 4,000 employees, or as little as two, spanning some 200 industry verticals, including a fair number of companies that are non-technical in their nature (but that still rely on using software and computers to get their work done). The client list includes Carlsberg, Discovery Channel, Philips, Hulu and WeWork and a number of Fortune 500 companies.
“We have built flexibility into the platform,” said Roy Mann, the CEO who co-founded the company with Eran Zinman, which is one reason he believes why it’s found a lot of stickiness among the wider field of knowledge workers looking for products that work not unlike the apps that they use as average consumers.
All those figures are also helping to put Monday.com on track for an IPO in the near future, said Mann.
“An IPO is something that we are considering for the future,” he said in an interview. “We are just at 1% of our potential, and we’re in a position for huge growth.” In terms of when that might happen, he and Zinman would not specify a timeline, but Mann added that this potentially could be the last round before a public listing.
On the other hand, there are some big plans up ahead for the startup, including adding a free usage tier (to date, the only thing free on Monday.com is a free trial; all usage tiers have been otherwise paid), expanding geographically and into more languages, and continuing to develop the integration and automation technology that underpins the product. The aim is to have 200 applications working with Monday.com by the end of this year.
While the company is already generating cash and it has just raised a significant round, in the current market, that has definitely not kept venture-backed startups from raising more. (Monday.com, which first started life as Dapulse in 2014, has raised $234.1 million to date.)
Monday.com’s rise and growth are coming at an interesting moment for productivity software. There have been software platforms on the market for years aimed at helping workers communicate with each other, as well as to better track how projects and other activity are progressing. Despite being a relatively late entrant, Slack, the now-public workplace chat platform, has arguably defined the space. (It has even entered the modern work lexicon, where people now Slack each other, as a verb.)
That speaks to the opportunity to build products even when it looks like the market is established, but also — potentially — competition. Mann and Zinman are clear to point out that they definitely do not see Slack as a rival, though. “We even use Slack ourselves in the office,” Zinman noted.
The closer rivals, they note, are the likes of Airtable (now valued at $1.1 billion) and Notion (which we’ve confirmed with the company was raising and has now officially closed a round of $10 million on an equally outsized valuation of $800 million), as well as the wider field of project management tools like Jira, Wrike and Asana — although as Mann playfully pointed out, all of those could also feasibly be integrated into Monday.com and they would work better…
The market is still so nascent for collaboration tools that even with this crowded field, Mann said he believes there is room for everyone and the differentiations that each platform currently offers: Notion, he noted as an example, feels geared toward more personal workspace management, while Airtable is more about taking on spreadsheets.
Within that, Monday.com hopes to position itself as the ever-powerful and smart go-to place to get an overview of everything that’s happening, with low chat noise and no need for technical knowledge to gain understanding.
“Monday.com is revolutionizing the workplace software market and we’re delighted to be partnering with Roy, Eran, and the rest of the team in their mission to transform the way people work,” said Rajeev Dham, managing partner at Sapphire Ventures, in a statement. “Monday.com delivers the quality and ease of use typically reserved for consumer products to the enterprise, which we think unlocks significant value for workers and organizations alike.”
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