Adaptive Insights | Interview with its Founder & Chairman – Rob Hull
In Palo Alto (CA), we meet Founder and Chairman of Adaptive Insights, Rob Hull. Rob shares his story how he came up with the idea and founded this company 11 years ago, how the current business model works. On top, Rob provides some advice for young entrepreneurs.
The transcription of the interview is included below.
Martin: Hi, today we are in beautiful Palo Alto with Rob from Adaptive Insights. Rob, who are you and what do you do?
Rob: Hello and thank you. I’m Rob Hull from Adaptive Insights, I’m the founder and chairman and I started the company, it’s been about 11 years ago. And we are the leading provider of SaaS, CPM, BI (business intelligence) solutions for the marketplace.
Martin: And what made you start this company?
Rob: This was my sort of own frustration as a CFO. So I was a CFO looking for a better way to manage my business and looked out at solutions that were in the marketplace at the time and decided there wasn’t a good solution in particular, there wasn’t a software as a service based solution that would really help me to better manage my company. And decided I’d go off and do something about that.
Martin: And how did you start? So did you just started building you minimum valuable products, so this is how somebody would call it today, or did you raise some money in the first place and then set up?
Rob: It’s a great question, actually. I started a company, I should say we started a company, really in sort of a reverse process that I think many people would go about today, in other words, we raised money before we had ever built product. So, with concept deck I was able to raise money from local venture capital firms, and with that then built a team, built a product and then began to go to market. So, a little bit of reverse of what I think you see a lot more of today, which is lots of time being spent building products, testing market and kind of getting proof before actually getting on and raising money.
Martin: Rob, tell us a little bit about the business model of Adaptive Insights. How does it work?
Rob: Sure. So, Adaptive Insights is a software as a service product, essentially software delivered via the cloud, from our data centers, subscription based model, so people pay for, anywhere from 1 to 5 year subscription, paying cash up front. That cash flow helps to fund operations nicely, so that’s always been a strong point of the business model for us. We sell the customers both direct and indirect through our partner channels. So we’ve got our own sales team, and it works very closely with customers, as well as with our partners. Then, a partner channel of about 200 partners around the world, probably including a number of different folks like NetSuite, for example, who manufactures and resells Adaptive as its own planning product, and then a whole suite of partners around the world.
Martin: And when you started, did you started with the very minimum product, like only one part of the, sort of speak, big suite that you have now?
Rob: Yeah, so the company was originally called Adaptive Planning and our focus was on the planning product. What we initially set out to accomplish was to help people essentially create a better system of record for all things forward looking: forward looking planning, models, and analysis. From that forward looking perspective, we’ve then continued to expand out into a much more complete product suite, that helps really the office of the CFO look both historically at what’s happened in the business, manage some processes that are happening currently in the business and use all of that to inform and then create forecasts, budgets, scenario analysis around what’s going to happen in the future.
Martin: And do you perceive yourself as a competitor to SAP or is it more that like you’re, let’s say, on a parallel running to SAP?
Rob: So, SAPs obviously got a very broad set of products and we do compete with certain SAP products, particularly around this area of corporate performance management and BI (business intelligence), at the same time we’re complementary. Complementary in the sense of the core SAP ERP engine, is something that we can connect to, exchange data with and therefore sort of sit alongside very nicely, from that essentially extracting information to help consolidate and provide context around what’s happened historically, provide some discussion and dialogue, and then utilize that information to them look forward. And so, there is both complementary as well as competitive nature.
Martin: And do you also use some kind of predictive analytics, kind of tools, for this planning and budgeting process?
Rob: I wouldn’t say necessarily predictive analytics, that’s not necessarily the type of tools, or very statistical regression analysis types of things. That’s not yet something we’ve got deep into, our business is more modeling based, and I would say predictive analytics is something to be looked for in the future from us.
Martin: And what have been the major obstacles when you started the company? Is there anything that you said this was super hard?
Rob: Sure, I think if I was to do it over again I’d probably build more product before raising money. Fund raising, we’ve also been through, let’s say, couple of things. I think that what would I do differently, I would build products and then raise some money. Why? I think it gives you a little bit more insight, it gives you a little bit more leeway at a time when you’re trying to figure things out. Then, when you’ve got investors expecting progress, and those two things can be at times a bit contentious. Other things that have been challenging, we’ve been doing this for 11 years, there’s been up and down economic cycles globally as well, and so when in 2008, 2009, there was a pretty big global down term, certainly we saw the impact of that on the business. Interestingly for us, that actually forced us to become much more rigorous financially, and with, it’s always been very, financial planners, as our products, so one of the things we pride ourselves on is being in control of our business, but we were forced to make some decisions around how to really get lean during those times, in a way that actually brought the company the cash flow break even and sort of demonstrated that we had control over the business model. And so coming out of that really set us up for an even stronger growth path, raised some capital coming out of that and then from there have really been able to invest in the business and demonstrate the control that we have over both our go-to market and sales and marketing strategy, as well as continued progress on the product development side.
Martin: Rob, let’s talk briefly about the corporate strategy. So, what is your perceived competitive advantage of Adaptive Insights and how do you plan to build up on that?
Rob: Sure. Many of our competitors are obviously sort of legacy on premises types of software. So, one obvious differentiation for us is the fact that this is software as a service delivered in the cloud. But if you take a step back from that, there’s a couple of things that tend to differentiate us. One, it’s that we have very strong focus on customer satisfaction. And that comes out in the software itself, how does it manifest itself in software, it manifests itself as easy to use UI, very consumer like UI for business applications. Easy to understand, easy to learn and then easy to manage and maintain. I think that the value proposition that we’ve put out, what you get for the cost that you pay, is also a very significant advantage for us. Ultimately, with software as a service applications, and in particular as you help the finance organization, one of the things that we’re helping with is to remove IT as a barrier to finance actually solving a business problem. And so instead of finance in needing to manage and change things within its business, needing to then rely on IT to help them with underlying software in order to get to a business solution, they are able to actually get to a business solution themselves. This is technology that they can manage, that they can maintain, they’re very comfortable with. And as a result, finance becomes much more nimble, they become much less dependent upon IT, and ultimately, by helping to really greatly improve the efficiency of the planning process, the reporting process, the analysis process, I’m really, we’re sort of putting time in the hands of the finance organization. What does that mean, it ultimately means that they can spend that time on value added strategic initiatives, and not just sort of tactical, data management issues. Those are the kinds of things that typically our customers come to us and say this is really the value that we see and so, helping the office of CFO elevate itself into a more strategic roles is a key benefit.
Martin: Is there some other competitive advantage that you would like to create in the future? That you see that would totally make sense… I mean, one thing is, as I perceive it, is some kind of integration process, when you put one of the products, then you integrate some others so you get more and more share of the CFO sphere, so to speak. Is there some other competitive advantage?
Rob: I think that’s a good one and one I probably didn’t talk about and that’s that what we’ve done with the product suite over time has essentially build a seamless product suite. And what that means is, the customer doesn’t need to do anything if they buy one product and then buy another product to somehow create the connection between them. It’s literally a matter for us of turning things on and then they will work seamlessly together. So that complete product suite and essentially more complete view of solution that can be provided to customers is definitely a competitive advantage. I think another advantage and something that we’re trying to differentiate ourselves a bit with is our ability to do broad integration across any different system. So, essentially, what we’re trying to create is a single point of view on the company, and to give finance, and then other members, the executive team, this holistic view of what’s happened in the past and what’s going to happen in the future. And to do that we know we need to rely on other systems and data from other transactional systems of record. But there are a lot of disparate systems, so to the degree our integration platform can help to bring all that data into one place, and again allow finance to manage those integrations without a lot of IT involvement, really helping to move forward the conversation and focus on what’s happening in the business, take it away from hey I’ve got this big technical problem that I’m trying to solve in integrating data.
Martin: Let’s talk about the market development. Can you give us some numbers in terms of market size or market growth for the, for example, budget and planning software as a service? In the US, worldwide…
Rob: Sure, I mean ultimately we see this is about a 20 billion dollar market. There is kind of two sides of that market. It’s the market that is already buying products like Hyperion or Cognos, and what we’re seeing today is more and more of those customers that have a solution, that are disenchanted with that solution, that are becoming customers of ours, they’re making the move off of old, on premise legacy solutions and into a new creative software as a service solution. That’s one big part of the market. But really the bigger part of the market today is almost a greenfield opportunity of customers that are in Excel. They’re in Excel, they’re using Excel for it. Still, I know, and as surprising as that sounds, you’d be shocked at how many customers are, from small to very large, multibillion dollar enterprises, managing the planning process, a lot of the reporting process, a lot of the data collection process through simple spreadsheets. The opportunity for us has always been how do we help people understand that spreadsheet is great as a personal productivity tool, miserable as a collaborative, corporate application, and that there is a good solution that is an alternative to that, that’s both cost-effective, as well as similar in look and feel, and so easy to use and easy to adopt.
ADVICE TO ENTREPRENEURS
Martin: You have learnt a lot, I guess, over the last 11 years. Can you share some of your learnings, maybe mistakes or advice for other young entrepreneurs?
Rob: We talked a little bit about financing. I think again if I had to do it differently, I’d probably build product first, and then come back to financing a little bit later. There’s always a delicate balance between how are you going to do that if you don’t have capital to get it done, but I do think it puts you as the entrepreneur in a little bit more of a controlling position around. Again, understand, make mistakes, figure some things out early on, and then be able to bring people in, raise money and at that point, I think, that the key thing is making sure that you’re well capitalized and that you’ve got enough money to truly fund growth. For us, I think two other key factors in the success of a company is a strong focus on customer. We are dedicated to customer’s success, from the moment we start talking to customers, and so it’s evident in our sales and marketing process, it’s evident in our product delivery process, in the implementation and services and the support and training that we provide, it’s even evident in how our finance organization interacts to do billing. Our goal is to make sure that our customers are constantly successful. And I think that entrepreneurs today need to not lose sight of the fact that ultimately your business is about your customer, especially in this kind of the economy now where so much is moving towards more of a subscription based economy, you’re not sort of paid once and can walk away, you’re developing an ongoing relationship with customers.
I think that every business is built on really strong and solid employees. And so, hiring great people right from the beginning and constantly looking for strong fit, both in terms of their values around customer success, strong fit obviously functionally, and then ultimately having people who you know will help to create the right culture. The culture that says hey, I really want to be at work every day, I like the people that I’m working with, I’m passionate about the problem that we’re solving for our customers, and work is work, but ultimately I actually get a lot out of this. I’m learning something, I’m growing, I’m challenged every day, and I’m helping our customers to do something that I think is meaningful.
Martin: Has there been any situation where you said there, I was making a lot of mistakes, I don’t know, in hiring, or in product creation, or something like this, and where you can set apart some of learnings or lessons?
Rob: I think that one thing that we did that you look back on and maybe say probably not the right path was at one point to take a fork down the open source path. Why was that not necessarily right for us? Well, two things come out of that. With open source we essentially had software that could then be downloaded and installed on premise. And so you start to mix the software as a service model with an on premise model. And what I think you’ll quickly see is that they are very different models from the business perspective and they imply very different things for your organization and for your customers. So, for that reason alone, I wouldn’t move down that path. I think what also became very evident to us is we’re selling to finance. That’s our customer. Finance doesn’t want to get in and tinker with code. So the fact that it was open source and that code could be contributed, never really became all that important to our customer base. We’re not selling to an IT audience. I think the learning there is understand your market, who are you selling to, what makes them tick, understand what drives value for them, and what doesn’t and turns out coding software doesn’t really drive a lot of value for the finance. So we got ourselves back out of the open source avenue.
Martin: Thank you very much, Rob, for your time.
Rob: Thank you, I appreciate you coming all this way.