May
05
2021
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Timescale grabs $40M Series B as it goes all in on cloud version of time series database

Timescale, makers of the open-source TimescaleDB time series database, announced a $40 million Series B financing round today. The investment comes just over two years after it got a $15 million Series A.

Redpoint Ventures led today’s round, with help from existing investors Benchmark, New Enterprise Associates, Icon Ventures and Two Sigma Ventures. The company reports it has now raised approximately $70 million.

TimescaleDB lets users measure data across a time dimension, so anything that would change over time. “What we found is we need a purpose-built database for it to handle scalability, reliability and performance, and we like to think of ourselves as the category-defining relational database for time series,” CEO and co-founder Ajay Kulkarni explained.

He says that the choice to build their database on top of Postgres when it launched four years ago was a key decision. “There are a few different databases that are designed for time series, but we’re the only one where developers get the purpose-built time series database plus a complete Postgres database all in one,” he said.

While the company has an open-source version, last year it decided rather than selling an enterprise version (as it had been), it was going to include all of that functionality in the free version of the product and place a bet entirely on the cloud for revenue.

“We decided that we’re going to make a bold bet on the cloud. We think cloud is where the future of database adoption is, and so in the last year […] we made all of our enterprise features free. If you want to test it yourself, you get the whole thing, but if you want a managed service, then we’re available to run it for you,” he said.

The community approach is working to attract users, with over 2 million monthly active databases, some of which the company is betting will convert to the cloud service over time. Timescale is based in New York City, but it’s a truly remote organization, with 60 employees spread across 20 countries and every continent except Antarctica.

He says that as a global company, it creates new dimensions of diversity and different ways of thinking about it. “I think one thing that is actually kind of an interesting challenge for us is what does D&I mean in a totally global org. A lot of people focus on diversity and inclusion within the U.S., but we think we’re doing better than most tech companies in terms of racial diversity, gender diversity,” he said.

And being remote-first isn’t going to change even when we get past the pandemic. “I think it may not work for every business, but I think being remote first has been a really good thing for us,” he said.

 

May
04
2021
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Evening Fund debuts with $2M micro fund focused on investments between $50K and $100K

We tend to think of venture capital in tens or hundreds of millions, even billions of dollars, so it’s refreshing to find Evening Fund, a new $2 million micro fund that focuses on small investments between $50,000 and $100,000 as it seeks to help young startups with early funding.

The new fund was launched by Kat Orekhova and Rapha Danilo. Orekhova, who started her career as a math professor, is a former Facebook data scientist who has been dabbling in angel investing and working with young startups for awhile now. They call it Evening Fund because they work as founders by day and investors by night.

She says that she wanted to create something more formal to help early-stage startups get off the ground and has help from limited partners that include Sarah Smith at Bain Capital, Lee Linden, general partner at Quiet Capital and a long list of tech industry luminaries.

Orekhova says she and her partner invest small sums of money in B2B SaaS companies, which are pre-seed, seed and occasionally A rounds. They will invest in consumer here and there as well. She says one of their key value propositions is that they can help with more than just the money. “One way in which I think Rapha and I can really help our founders is that we give very specific, practical advice, not just kind of super high level,” she told me.

That could be something like how to hire your first designer where the founders may not even know what a designer does. “You’re figuring out ‘how do I hire my first designer?’ and ‘what does the designer even do?’ because most founders have never hired a designer before. So we give them extremely practical hands-on stuff like ‘here are the competencies’ or ‘what’s the difference between a graphic designer, a visual designer, a UX designer and a researcher,’ ” she said. They go so far as to give them a list of candidates to help them get going.

She says that she realized while she was at Facebook that she wanted to eventually start a company, so she began volunteering her time to work with companies going through Y Combinator. “I think a lot of people don’t know where to start, but in my case I looked at the YC list, found a company that I thought I could be helpful to. I reached out cold and said ‘Hey, I don’t want money. I don’t want equity. I just want to try to be helpful to you and see where that goes,’ ” she said.

That lead to scouting for startups for some larger venture capital firms and eventually dabbling in financing some of these startups that she was helping. Today’s announcement is the culmination of these years of work and the groundwork she laid to make herself familiar with how the startup ecosystem works.

The new firm already has its first investment under its belt, Dala, an AI-powered internal search tool that helps connect users to workplace knowledge that’s often locked in applications like Google Suite, Slack and Notion.

As though Evening isn’t enough to keep her and Danilo busy, they are also each working on their own startups. Orekhova wasn’t ready to share much on that just yet as her company remains in stealth.

Apr
29
2021
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Vectra AI picks up $130M at a $1.2B valuation for its network approach to threat detection and response

Cybersecurity nightmares like the SolarWinds hack highlight how malicious hackers continue to exploit vulnerabilities in software and apps to do their dirty work. Today a startup that’s built a platform to help organizations protect themselves from this by running threat detection and response at the network level is announcing a big round of funding to continue its growth.

Vectra AI, which provides a cloud-based service that uses artificial intelligence technology to monitor both on-premise and cloud-based networks for intrusions, has closed a round of $130 million at a post-money valuation of $1.2 billion.

The challenge that Vectra is looking to address is that applications — and the people who use them — will continue to be weak links in a company’s security set-up, not least because malicious hackers are continually finding new ways to piece together small movements within them to build, lay and finally use their traps. While there will continue to be an interesting, and mostly effective, game of cat-and-mouse around those applications, a service that works at the network layer is essential as an alternative line of defense, one that can find those traps before they are used.

“Think about where the cloud is. We are in the wild west,” Hitesh Sheth, Vectra’s CEO, said in an interview. “The attack surface is so broad and attacks happen at such a rapid rate that the security concerns have never been higher at the enterprise. That is driving a lot of what we are doing.”

Sheth said that the funding will be used in two areas. First, to continue expanding its technology to meet the demands of an ever-growing threat landscape — it also has a team of researchers who work across the business to detect new activity and build algorithms to respond to it. And second, for acquisitions to bring in new technology and potentially more customers.

(Indeed, there has been a proliferation of AI-based cybersecurity startups in recent years, in areas like digital forensics, application security and specific sectors like SMBs, all of which complement the platform that Vectra has built, so you could imagine a number of interesting targets.)

The funding is being led by funds managed by Blackstone Growth, with unnamed existing investors participating (past backers include Accel, Khosla and TCV, among other financial and strategic investors). Vectra today largely focuses on enterprises, highly demanding ones with lots at stake to lose. Blackstone was initially a customer of Vectra’s, using the company’s flagship Cognito platform, Viral Patel — the senior MD who led the investment for the firm — pointed out to me.

The company has built some specific products that have been very prescient in anticipating vulnerabilities in specific applications and services. While it said that sales of its Cognito platform grew 100% last year, Cognito Detect for Microsoft Office 365 (a separate product) sales grew over 700%. Coincidentally, Microsoft’s cloud apps have faced a wave of malicious threats. Sheth said that implementing Cognito (or indeed other network security protection) “could have prevented the SolarWinds hack” for those using it.

“Through our experience as a client of Vectra, we’ve been highly impressed by their world-class technology and exceptional team,” John Stecher, CTO at Blackstone, said in a statement. “They have exactly the types of tools that technology leaders need to separate the signal from the noise in defending their organizations from increasingly sophisticated cyber threats. We’re excited to back Vectra and Hitesh as a strategic partner in the years ahead supporting their continued growth.”

Looking ahead, Sheth said that endpoint security will not be a focus for the moment because “in cloud there is so much open territory”. Instead it partners with the likes of CrowdStrike, SentinelOne, Carbon Black and others.

In terms of what is emerging as a stronger entry point, social media is increasingly coming to the fore, he said. “Social media tends to be an effective vector to get in and will remain to be for some time,” he said, with people impersonating others and suggesting conversations over encrypted services like WhatsApp. “The moment you move to encryption and exchange any documents, it’s game over.”

Apr
21
2021
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As UiPath closes above its final private valuation, CFO Ashim Gupta discusses his company’s path to market

After an upward revision, UiPath priced its IPO last night at $56 per share, a few dollars above its raised target range. The above-range price meant that the unicorn put more capital into its books through its public offering.

For a company in a market as competitive as robotic process automation (RPA), the funds are welcome. In fact, RPA has been top of mind for startups and established companies alike over the last year or so. In that time frame, enterprise stalwarts like SAP, Microsoft, IBM and ServiceNow have been buying smaller RPA startups and building their own, all in an effort to muscle into an increasingly lucrative market.

In June 2019, Gartner reported that RPA was the fastest-growing area in enterprise software, and while the growth has slowed down since, the sector is still attracting attention. UIPath, which Gartner found was the market leader, has been riding that wave, and today’s capital influx should help the company maintain its market position.

It’s worth noting that when the company had its last private funding round in February, it brought home $750 million at an impressive valuation of $35 billion. But as TechCrunch noted over the course of its pivot to the public markets, that round valued the company above its final IPO price. As a result, this week’s $56-per-share public offer wound up being something of a modest down-round IPO to UiPath’s final private valuation.

Then, a broader set of public traders got hold of its stock and bid its shares higher. The former unicorn’s shares closed their first day’s trading at precisely $69, above the per-share price at which the company closed its final private round.

So despite a somewhat circuitous route, UiPath closed its first day as a public company worth more than it was in its Series F round — when it sold 12,043,202 shares at $62.27576 apiece, per SEC filings. More simply, UiPath closed today worth more per-share than it was in February.

How you might value the company, whether you prefer a simple or fully diluted share count, is somewhat immaterial at this juncture. UiPath had a good day.

While it’s hard to know what the company might do with the proceeds, chances are it will continue to try to expand its platform beyond pure RPA, which could become market-limited over time as companies look at other, more modern approaches to automation. By adding additional automation capabilities — organically or via acquisitions — the company can begin covering broader parts of its market.

TechCrunch spoke with UiPath CFO Ashim Gupta today, curious about the company’s choice of a traditional IPO, its general avoidance of adjusted metrics in its SEC filings, and the IPO market’s current temperature. The final question was on our minds, as some companies have pulled their public listings in the wake of a market described as “challenging.”

Why did UiPath not direct list after its huge February raise?

Apr
21
2021
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AppOmni raises $40M for tools to secure enterprise SaaS apps

Enterprises are adopting an ever-wider range of SaaS applications to work and interface with customers, and that is proving to be a major security concern: It’s not just the prospect of phishing, credential stuffing and other malicious tricks to get into systems that are a worry, but the fact that more applications mean more attack surfaces, and more integrations between apps mean more inadvertent holes that get exposed in the process.

And that is leading to a surge of interest in security applications that can help. Today, a startup called AppOmni — which has built a platform to help monitor SaaS apps and their activity, provide guidance to warn or block when things might go wrong and fix problems when they do occur — is announcing some funding to fuel its growth.

The startup has raised $40 million in a Series B round led by Scale Venture Partners, with Salesforce Ventures and ServiceNow Ventures, as well as previous backers ClearSky, Costanoa Ventures, Inner Loop Capital and Silicon Valley Data Capital also participating.

The funding is coming on the back of a huge year for AppOmni. The company grew 900%, co-founder and CEO Brendan O’Connor told TechCrunch, and it has managed to stay at 100% customer retention — that is, AppOmni has yet to lose a single customer since it was founded.

The company today integrates with more than 100 connectors, platforms used by developers and IT teams at companies to manage the apps that their businesses use, such as tools like Splunk and Sumo Logic. Through this, AppOmni is able to aggregate and normalize event data around those apps, in addition to deeper monitoring in cases where it can integrate with apps themselves (those integrations to date include some of the most popular apps that enterprises use today, including Salesforce and Slack, Zoom, Microsoft 365, Box and GitHub).

As O’Connor describes it, the sheer number of apps that enterprise teams use and adopt has made managing security around them very complex. Partly because of how SaaS is set up for usage by as many people in and outside the organization as possible (to make the apps more useful), AppOmni estimates that some 95% of enterprises “overprovision” permissions for external users.

On top of that, some of the biggest problems occur indirectly, specifically when applications are linked together, creating a flow of sensitive data. AppOmni says that some 55% of companies have sensitive data living in SaaS systems that has been inadvertently exposed to the anonymous internet, sitting there completely unguarded, in this way. (See Zack’s story here for a recent example of how this can play out.)

This is an issue, he said, that is unique to SaaS, which he describes as different architecturally to any software that companies might have used in the past. “There is no operating system, no network that is exposed to customers,” he said.

The idea is that AppOmni provides a dashboard to make that monitoring much less murky. “One of our customers described using AppOmni as being akin to turning a light on in a dark room,” O’Connor said.

O’Connor and his co-founder, Brian Soby (the CTO), have firsthand knowledge of the challenges of securing SaaS applications: both spent years at Salesforce — with O’Connor the company’s SVP and “chief trust officer”, a role he left to join ServiceNow as its security CTO, before leaving there to co-found AppOmni with Soby.

It’s partly that track record, along with AppOmni’s own track record, that has given the startup the attention that it has from investors. Interestingly, Scale came to know AppOmni not over a coffee or a pitch deck, but as one of those satisfied customers, which eventually led the VC to offer to invest.

“Scale Venture Partners became an AppOmni customer in 2020. We know firsthand how powerful and differentiated the AppOmni product when it comes to protecting our sensitive SaaS data, and we’re excited to now be both a customer and an investor,” said Ariel Tseitlin, a partner at Scale Venture Partners, in a statement. “AppOmni’s 9x growth last year, driven by the acquisition of customers across a wide range of industries, proves that AppOmni is the market leader in the increasingly important SaaS Security Management market. We expect the momentum to continue in 2021 and beyond as companies accelerate their shift to cloud applications to support their larger remote workforces.”

The company has raised $53 million to date, and it is not disclosing valuation.

Apr
20
2021
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Laiye, China’s answer to UiPath, closes $50 million Series C+

Robotic process automation has become buzzy in the last few months. New York-based UiPath is on course to launch an initial public offering after gaining an astounding valuation of $35 billion in February. Over in China, homegrown RPA startup Laiye is making waves as well.

Laiye, which develops software to mimic mundane workplace tasks like keyboard strokes and mouse clicks, announced it has raised $50 million in a Series C+ round. The proceeds came about a year after the Beijing-based company pulled in the first tranche of its Series C round.

Laiye, six years old and led by Baidu veterans, has raised over $130 million to date according to public information.

Leading investors in the Series C+ round were Ping An Global Voyager Fund, an early-stage strategic investment vehicle of Chinese financial conglomerate Ping An, and Shanghai Artificial Intelligence Industry Equity Investment Fund, a government-backed fund. Other participants included Lightspeed China Partners, Lightspeed Venture Partners, Sequoia China and Wu Capital.

RPA tools are attracting companies looking for ways to automate workflows during COVID-19, which has disrupted office collaboration. But the enterprise tech was already gaining traction prior to the pandemic. As my colleague Ron Miller wrote this month on the heels of UiPath’s S1 filing:

“The category was gaining in popularity by that point because it addressed automation in a legacy context. That meant companies with deep legacy technology — practically everyone not born in the cloud — could automate across older platforms without ripping and replacing, an expensive and risky undertaking that most CEOs would rather not take.”

In one case, Laiye’s RPA software helped the social security workers in the city of Lanzhou speed up their account reconciliation process by 75%; in the past, they would have to type in pensioners’ information and check manually whether the details were correct.

In another instance, Laiye’s chatbot helped automate the national population census in several southern Chinese cities, freeing census takers from visiting households door-to-door.

Laiye said its RPA enterprise business achieved positive cash flow and its chatbot business turned profitability in the fourth quarter of 2020. Its free-to-use edition has amassed over 400,000 developers, and the company also runs a bot marketplace connecting freelance developers to small-time businesses with automation needs.

Laiye is expanding its services globally and boasts that its footprint now spans Asia, the United States and Europe.

“Laiye aims to foster the world’s largest developer community for software robots and built the world’s largest bot marketplace in the next three years, and we plan to certify at least one million software robot developers by 2025,” said Wang Guanchun, chair and CEO of Laiye.

“We believe that digital workforce and intelligent automation will reach all walks of life as long as more human workers can be up-skilled with knowledge in RPA and AI”.

Apr
20
2021
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Announcing our TC Sessions: SaaS virtual event happening October 27

Software-as-a-Service (SaaS) is now the default business model for most B2B and B2C software startups. And while it’s been around for a while now, its momentum keeps accelerating and the ecosystem continues to expand as technologists and marketers are getting more sophisticated about how to build and sell SaaS products. For all of them, we’re pleased to announced TechCrunch Sessions: SaaS 2021, a one-day virtual event that will examine the state of SaaS to help startup founders, developers and investors understand the state of play and what’s next.

The single-day event will take place 100% virtually on October 27 and will feature actionable advice, Q&A with some of SaaS’s biggest names, and plenty of networking opportunities. $75 Early Bird Passes are now on sale. Book your passes today to save $100 before prices go up.

We’re not quite ready to disclose our agenda yet, but you can expect a mix of superstars from across the industry, ranging from some of the largest tech companies to up-and-coming startups that are pushing the limits of SaaS.

The plan is to look at a broad spectrum of what’s happening in with B2B startups and give you actionable insights into how to build and/or improve your own product. If you’re just getting started, we want you to come away with new ideas for how to start your company and if you’re already on your way, then our sessions on scaling both your technology and marketing organization will help you to get to that $100 million annual run rate faster.

In addition to other founders, you’ll also hear from enterprise leaders who decide what to buy — and the mistakes they see startups make when they try to sell to them.

But SaaS isn’t only about managing growth — though ideally, that’s a problem founders will face sooner or later. Some of the other specific topics we will look at are how to keep your services safe in an ever-growing threat environment, how to use open source to your advantage and how to smartly raise funding for your company.

We will also highlight how B2B and B2C companies can handle the glut of data they now produce and use it to build machine learning models in the process. We’ll talk about how SaaS startups can both do so themselves and help others in the process. There’s nary a startup that doesn’t want to use some form of AI these days, after all.

And because this is 2021, chances are we’ll also talk about building remote companies and the lessons SaaS startups can learn from the last year of working through the pandemic.

Don’t miss out. Book your $75 Early Bird pass today and save $100.


Apr
19
2021
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The Klaviyo EC-1

E-commerce is booming as retailers race to transform their brick-and-mortar footprints into online storefronts. By some counts, the market grew an astonishing 42% in 2020 in the wake of the COVID-19 pandemic, and estimates show that online spending in the U.S. will surpass $1 trillion by 2022. It’s a bonanza, and everyone is figuring out this new terrain.

Consumers are likely familiar with the front-end brands for these storefronts — with companies like Amazon, Shopify, Square, and Stripe owning attention — but it’s the tooling behind the curtain that is increasingly determining the competitiveness of individual stores.

Klaviyo may not be a household name to consumers (at least, not yet), but in many ways, this startup has become the standard by which email marketers are judged today, triangulating against veterans Mailchimp and Constant Contact and riding the e-commerce wave to new heights.

Founded in 2012, this Boston-based company helps marketers personalize and automate their email messaging to customers. By now, most people are intimately familiar with these kinds of emails; if you’ve ever given your email address to an online store, the entreaties to come back to your abandoned cart or browse the latest sale are Klaviyo’s bread and butter.

It may seem obvious in retrospect that email would grow to become a premier platform for marketing, but this wasn’t the case even a few years ago when social ads and search engine marketing were the dominant paradigm. Today, owned marketing and customer experience management are white-hot trends, and Klaviyo has surged from a lifestyle business to a multi-billion dollar behemoth in just a few short years. Its story is at the heart of the internet economy today, and the future.

TechCrunch’s writer and analyst for this EC-1 is Chris Morrison. Morrison, who previously wrote our EC-1 on Roblox, has been a writer and independent game developer covering the video game industry and the marketing challenges that come with publishing. As an analyst and a potential user, he’s in a unique position to explain the Klaviyo story. The lead editor for this package was Danny Crichton, the assistant editor was Ram Iyer, the copy editor was Richard Dal Porto and illustrations were created by Nigel Sussman.

Klaviyo had no say in the content of this analysis and did not get advance access to it. Morrison has no financial ties to Klaviyo or other conflicts of interest to disclose.

The Klaviyo EC-1 comprises four main articles numbering 9,700 words and a reading time of 43 minutes. Let’s take a look:

  • Part 1: Origin storyHow Klaviyo transformed from a lifestyle business into a $4.15B email titan” (2,600 words/10 minutes) — Explores the rise of Klaviyo from a database for e-commerce data into a modern email powerhouse as it successively learned from customers and bootstrapped in the absence of funding from accelerators and early VCs.
  • Part 2: Business and growthHow Klaviyo used data and no-code to transform owned marketing” (3,000 words/12 minutes) — Analyzes Klaviyo’s recent growth and how marketers increasingly focus on owned marketing channels and customer experience management.
  • Part 3: Dynamics of e-commerce marketingMarketing in 2021 is emotional and not just transactional” (2,200 words/9 minutes) — To fully understand Klaviyo and this new world of martech, this article contextualizes how and why marketers are increasingly trying to personalize and build deeper emotional bonds with their customers outside of social media channels.
  • Part 4: Lessons on startup growthDrama and quirk aren’t necessary for startup success” (1,900 words/8 minutes) — Founders shouldn’t have to keep learning the same lessons over and over again. Klaviyo offers a number of tried-and-true tutorials to understand how to build a competitive startup and not get bogged down in finding product-market fit and scaling.

We’re always iterating on the EC-1 format. If you have questions, comments or ideas, please send an email to TechCrunch Managing Editor Danny Crichton at danny@techcrunch.com.

Apr
19
2021
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How Klaviyo transformed from a lifestyle business into a $4.15B email titan

Startups are stories of feverish dreams and obsessive fears. Short of hearing it from the source, a glimpse into the inbox of a founder would be the best way to experience the travails they endure on the way to building a business. A customer finally makes a purchase, a VC invests or walks away, an employee signs their offer letter — all of the major and minor milestones of a startup are communicated via that now-ancient medium of email.

Current Klaviyo users may be surprised to hear that email was not a part of the initial product.

Email’s ubiquity is only part of the story, though. It’s also a symbol of freedom: The last social platform that remains relatively open and free from the clutches of a single monopoly owner. It’s a market rife with entrenched incumbents, but one that simultaneously continues to invite founders to find some new take on this venerable communications channel and make it better for everyone.

That was the mission that Andrew Bialecki and Ed Hallen undertook when they founded Klaviyo back in 2012. What they perhaps didn’t bank on was just how long of a route they were about to take — or how many rejections they might find in their own inboxes from accelerators and VCs who never thought a new generation of email service providers could make it.

So they bootstrapped, kept things lean. They debated canceling dinners to pay the bills when customers churned. And along the way, they built a special startup that is today valued at a whopping $4.15 billion. Klaviyo is the story of how two scrappy, inexperienced entrepreneurs set out to build a lifestyle business — and ended up creating an email titan.

Racing to the starting line

Klaviyo’s origin story sounds a bit like the generic advice given by every book on entrepreneurship. Andrew Bialecki — he goes by AB — had a need that no existing company filled. So, he started a company to address that need.

It began with what he calls a side hustle: a website devoted to cataloging the dates and locations of running races. Bialecki had the technical chops to build it, but the data wasn’t already available online and he needed race organizers to provide it. That, in turn, meant he needed to let them know his site existed and constantly follow up to make sure they were using it.

“I realized I’m on the phone with people and it’s never going to scale. After a while, I was working on that while I was at another startup, and I said I have two options here. Either I can go all-in on road races, or all-in on the problem: ‘How do we help these businesses connect with the people using their software or products?’” recalls Bialecki.

By then, he already had a co-founder in mind. Bialecki had been a student together with Ed Hallen at MIT, but the pair actually met while working at Applied Predictive Technologies (APT), a Washington, D.C. tech consultancy.

“I’d read all those books on, hey, when you’re looking for someone to start a business with, you want someone with similar values who’s also complementary,” says Bialecki. “I’d known he was kind of interested in starting a company, and we had really complementary skillsets. I loved the engineering and design and product, and he was a big product guy too, but was used to working with customers and clients.”

An email company that didn’t (initially) do email

Current Klaviyo users may be surprised to hear that email was not part of the product that emerged. Instead, Bialecki and Hallen built a database to collect all the e-commerce data that was falling through the cracks.

“Once we really talked to a lot of e-commerce people, it was clear there were long-standing problems,” says Hallen.

Bialecki adds, “There are facts you know, like their name, their email address, their favorite color or something they told you about their birthday. But some of the harder stuff was, jeez, how many times has this person visited my website, bought something from me, what products did they buy and how is that trending over time? Were they a really frequent customer that dropped off the face of the Earth?”

As they spoke to customers, the founders realized that handling customers’ data and making it useful to them was going to be critical to Klaviyo’s success. It just so happened that gathering data matched well with their experiences working at APT.

“We had a ton of experience stitching together data sources,” says Hallen. “We took that expertise and put it as our foundation. What’s the most broken, largest market, and let’s really tie data to it, not as an afterthought.”

Klaviyo’s two co-founders Andrew Bialecki and Ed Hallen in July 2012. Image Credits: Klaviyo

What that required, in practical terms, was spending the initial months building a custom database to store the disparate data types that come up during e-commerce transactions — events, documents and object data models. Conor O’Mahony, who joined the company in 2018 as chief product officer and departed this month to become an advisor, says that the company’s early time investment in its database laid the foundations for its later success in scaling up.

Apr
19
2021
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How Klaviyo used data and no-code to transform owned marketing

Email is the communication medium that refuses to die.

“Eventually, every technology is trumped by something new and better. And I feel that email is ready to be trumped. But by what?” wrote the venture capitalist Fred Wilson in 2007. Three years later, he updated readers that other forms of messaging had outgrown email. “It looks like email’s reign as the king of communication is ending and social networking is now supreme,” he said. (To be fair to Wilson, his view was nuanced enough to continue investing in email tech.)

Despite the competition, Klaviyo didn’t just break into the market — it has also achieved an unusual level of excitement and loyalty among marketers despite its youthful history.

Investors weren’t alone — marketers have also spent years anticipating the next big thing.

“It was SMS, it was YouTube, it was Instagram. Before that it was Facebook, then it was Snapchat and TikTok. I kinda feel like individually all those things are fleeting. I think people found: You know what? Everyone still opens their emails every day,” says Darin Hager, a former sneaker entrepreneur who is now an email marketing manager at Adjust Media.

Email has an estimated four billion users today and continues to grow steadily even as mature social networks plateau. Estimates of the number of nonspam messages sent each day range from 25 billion to over 300 billion.

Unsurprisingly for a marketing channel with so much volume, there’s voluminous competition to send and program those emails. Yet, despite the competition, Klaviyo didn’t just break into the market — it has also achieved an unusual level of excitement and loyalty among marketers despite its youthful history.

“If you’re not using Klaviyo and you’re in e-commerce, then it’s not very professional. If you see ‘Sent by Constant Contact or Mailchimp’ at the bottom of an email by a brand, it makes it look like they’re not really there yet,” Hager said.

How did Klaviyo become the standard solution among email marketers?

In Klaviyo’s origin story, we delved into part of the answer: The company began life as an e-commerce analytics service. Once it matured to compete as an email service provider, Klaviyo benefited from the edge given by its deeper, more comprehensive focus on data.

However, that leaves several questions unanswered. Why is email so important to e-commerce? What are the substantive differences between Klaviyo’s feature set and those of its competitors? And why did several large, well-funded incumbents fail to capitalize on building an advantage in data first?

In this section, we’ll answer those questions — as well as laying out the significance of COVID-19 on the e-commerce market, and how newsletters and AI figure into the company’s future.

A positive Outlook on email’s longevity

Email is one of the oldest tech verticals: Constant Contact, one of the most venerable email service providers (ESPs), was founded in 1995, went public in 2007 and was taken private in 2015 for $1 billion. By the time Klaviyo started in 2012, the space was well served by numerous incumbents.

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