Blue Dots Partners

Philippe sat down with Greg Schott, who was Chairman and CEO of MuleSoft before Salesforce.com acquired the company in May 2018 for $6.5 billion. Recently, Greg became EVP, Emerging API Initiatives at Salesforce. Our discussion took place at the top floor of the beautiful Salesforce tower, the tallest building in San Francisco. As the son of a naval aviator, Greg was driven to be hard working and entrepreneurial from an early age. He took the company from 23 employees to nearly $300 million in revenue and a successful IPO.

Can you describe the fastest revenue growth situation you have ever been involved with?

MuleSoft was the highest growth company I have been involved with, at a 70% CAGR over the past five years.

When I joined MuleSoft in 2009, there were 23 people. The company started as Mule ESB, which was an open source offering an enterprise service bus in the SOA (service-oriented architecture) space. While the SOA platforms had not lived up to the hype and were beginning to flounder, we knew that the integration market was immense, to the tune of $700B and we just needed to find a way to solve that problem more efficiently. Four years ago, we coined the term “API-led Connectivity” and two years ago we began to define the category as “Application Networks.”

We generated $58 million in sales in 2014, grew it to $110 million in 2015, $188 million in 2016 and $297 million in 2017. We began trading on the New York Stock Exchange on March 17, 2017. We had over 1,000 customers and 841 employees as of December 2016.

While I am a fairly cautious person, given the size of the market and the value we were delivering to our customers, we knew we had to lean into the opportunity. We had clear sight to $1B in revenue and, while some leading financial analysts thought we were running the company “too hot” we managed to grow very fast, at scale, without the wheels coming off – but they certainly got wobbly from time to time.

What was the most daunting growth challenge you faced and the actions you took?

Our biggest challenge was to maintain the size of the field organization as demand for our product continued to increase. It was hard to recruit salespeople who can sell infrastructure software and we only hired the best people across the company. Recruiting the wrong account executive would cost us $1.5M in bookings for the first year, plus the renewals for 3 years or more. In short, a $5M mistake.

To grow from $10M to $100M, it was about the culture, the product and the field machinery. We needed and found an exceptional leader to build our field organization. Sure, he could help sell, but more important, he knew how to hire an exceptional team, how to build the machine and was highly strategic.

What advice would you give to a CEO to accelerate the growth of his/her business?

It is important to look at the fundamentals of the business: the TAM, the unique value proposition and, in the early stage, the product-market fit, although I have often seen many false positives with product-market fit. Some companies see early sales traction with early adopters and scale up their field organization, only to find that they aren’t ready or tuned for the mainstream market.

There is also a key question about processes: what do you automate and when? We call it “paving roads” at MuleSoft. At some point, to scale, you need to automate processes, on the other hand, if you do it too early, it’s expensive and the process may change dramatically. Also, knowing which road to pave is tricky. For example, functions sometimes try to automate processes to make their jobs easier, but to the detriment of the company as a whole. That’s “paving your driveway” and you really haven’t done what’s right for the business as a whole.

We stayed scrappy so we could put every dollar into the business. For example, everyone flew coach and we shared hotel rooms at our company meetup. It’s not only about saving money, it’s about establishing a mindset of being hungry and driving ROI for every dollar. Over nine years, we consumed just over $100M to build a business worth $6.5B. We were pretty capital efficient.

Recruiting exceptional Muleys was by far the most important aspect of how we built MuleSoft. We had four core values:

• Make it Awesome.
• Be Fearless.
• Be an Owner.
• Be a Good Human.

We had a highly rigorous hiring process and a very high bar for talent – looking for people who fit our core values and who had proven track records of achievement. I interviewed every final round candidate until we reached 500 people. I interviewed 800 people that year. It’s not because I’m a great interviewer, but it set the tone for the importance of getting the right people on the bus.