DevTools Brew #21: How Wiz Hit $100M ARR in 18 Months, 10 Key Lessons from Vercel COO, Building & Scaling MongoDB...
Dear friends, welcome to DevTools Brew #21!
A warm welcome to all the new subscribers who joined us recently.
If you're new here, my name is Morgan Perry, co-founder of Qovery, and every Saturday I share a roundup of the stories, strategies, and insights behind the successful devtool companies.
In this Issue #21:
📈 How Wiz Built a Must-Have Category and Hit $100M ARR in 18 Months
💻 From a Team of 25 to 450 and 75x in Revenue: 10 Key Lessons from Vercel COO
⭐ Star History Weekly Pick
🎙️ Building & Scaling MongoDB
I hope you will enjoy this new edition.
Let's dive in!
📈 How Wiz Built a Must-Have Category and Hit $100M ARR in 18 Months
Scaling a company from zero to a $100M annual revenue is no small feat. It's a journey filled with challenges, and things are bound to break along the way. One such success story is Wiz, the cloud security startup that became the world’s fastest-growing software company, increasing its annual recurring revenue (ARR) from $0 million to $100 million in 18 months.
Let’s delve into Wiz's journey to understand how they achieved category dominance and reached an impressive $100 million ARR in just 18 months.
1. How Wiz Built A Must-Have Category
The Power of Category Creation
Category creation allows companies to define a new category of services for a specific market, setting them apart from competitors.
Being a category creator provides opportunities to define important features and become the benchmark for comparison in the market.
However, category creation can be risky and uncertain, as it involves educating prospects about a new need or pain they might not be fully aware of.
Unintentional Category Creation
Wiz's story showcases that sometimes category creation can happen unintentionally while pursuing a product-focused approach.
By deeply understanding customer pain points and building a product that solves real problems, Wiz inadvertently created a new category.
Companies should prioritize delivering value to customers rather than aiming solely for category creation, as the latter may not always be a strategic goal.
Recognizing the Bigger Problem
Wiz's success came from recognizing that the issues with existing CSPM solutions were symptoms of a broader problem in cloud security.
By understanding the underlying need for collaboration between security and development teams, Wiz identified a more significant market opportunity.
Category creators must delve beyond surface-level problems to uncover the root causes that differentiate their offerings.
Prioritizing Customers #1 Problem
Identifying and addressing customers' most pressing pain points is crucial for resonating with the target audience.
By providing solutions to the most significant challenges faced by customers, companies create a strong emotional connection with their user base.
Solving the number one problem helps establish a loyal customer base and drives word-of-mouth referrals, which are invaluable for category creation.
Focus on End User Value
Prioritizing end users' needs and experiences is vital for long-term success and adoption of the product.
Ensuring the service delivers clear, actionable insights to developers establishes trust and encourages active engagement with the platform.
When end users genuinely benefit from the product, they become passionate advocates who promote the solution within their community.
Adapt Terminology for User Understanding
While categories can aid in positioning a product, companies should not get too fixated on specific terminology.
Tailoring communication to resonate with customers' understanding and preferences helps eliminate potential confusion and barriers to adoption.
Ultimately, the product's value should be clear and straightforward, regardless of the exact category or technical terms used.
Evaluating Category Creation
Deciding to pursue category creation should be based on real customer needs and market demands, rather than just a strategic choice.
Companies need to assess the risks and rewards associated with category creation and ensure alignment with their overall business objectives.
A thoughtful approach to category creation involves understanding whether customers will naturally embrace the new category and whether it aligns with the company's long-term vision.
2. How Wiz Navigated Breaks on the Path to $100M ARR in 18 Months
What Breaks through Growth?
People: As companies evolve, skill requirements and resource needs change. It's essential to understand that some employees who contributed to early achievements may not fit into the next growth stages.
Communications: Hyper-growth requires velocity and universal excellence. Establish communication methods and mediums that can support the fast-paced environment and adapt them as the company grows.
Best-laid Plans: While planning is vital, it's equally important to be flexible and understand that plans will break. Embrace change and learn from broken plans to create better ones.
Changing Perspective
Perspective on breaking points defines a company's culture. At Wiz, they view breaking points as opportunities for growth, learning, and improvement.
The team shifted their perspective from fearing change to embracing it with enthusiasm. Breaking points became a sign of growth and new opportunities.
Preparing for Breaking Points
Use Playbooks: Shape plans based on experiences but avoid dictating them solely based on personal experiences.
Failure is an Opportunity: Encourage a culture where failure is seen as a chance to learn and grow. Address negative reactions to opportunities for growth.
Pace vs. Quality: Balance the need for perfection with the need to move forward. Set clear expectations and use "unacceptable" situations as coaching opportunities.
Seek External Perspectives: Leverage your network for fresh viewpoints and diverse perspectives.
Push Boundaries: Challenge conventional thinking and go beyond the limits of the possible to achieve success.
Key Takeaways
Values and Mission: Never let your company's values and mission break. Define them early and reinforce them consistently as they serve as the common languages that unite your team.
Prepare for Anything: Anticipate and embrace the potential for things to break, and approach it with excitement for the opportunities it presents. Be curious, ask questions, and learn from every challenge.
Wiz's rapid journey to $100M ARR highlights the power of category creation through customer-focused product development. Embracing breaking points as opportunities for growth and learning enabled them to navigate hyper-growth successfully. Aspiring founders can learn from Wiz's approach by prioritizing customer needs, maintaining agility, and viewing challenges as stepping stones to innovation and industry dominance.
—> To get more, explore these two great articles How Wiz Built A Must-Have Category – And Hit $100M ARR in Only 18 Months published by OpenView and True Story: What Breaks Going from $0-$100M ARR in Less Than 2 Years with Wiz CRO Colin Jones published by Saastr.
💻 From a Team of 25 to 450 and 75x in Revenue: 10 Key Lessons from Vercel COO
You may have seen the news about Vercel's COO, Kevin Van Gundy, who has announced that he is stepping down as COO to become CEO of a Serie A company. During his time, they went from a team of 25 to 450, increased revenue 75x, and learned ten things for others experiencing hypergrowth.
Let’s explore his key lessons!
10 Key Lessons
1. Iteration velocity matters more than anything
You will mess up when moving fast, but the damage of moving too slow is far greater.
2. As a leader, your most important job is to be a coach, not to be the best at coding, selling, writing, etc.
You have to transition fast. Too many executives spend time trying to do their team's work.
3. Always be learning who you can trust to act independently. Enable them.
Your business will be too complex to keep everything in your head. Your primary output should be frameworks.
4. Embrace talking about pay and promotions.
Make sure your team is comfortable discussing compensation and career. The most damaging thing your company can experience is losing your best people over a few dollars.
5. Own the outcomes.
Don't blame others when things go sideways. Solving hard problems requires big swings. Your team will strike out a lot, and that’s okay. Let them know they need to keep swinging, and you’ve got their back.
6. Finish the swing
Hold your team accountable for iterating not just shipping version 1.0. Getting something out the door is fun, but it’s critical to measure how well that thing did.
7. Don't accept chronic behavior issues.
It’s easy to let small things go. Debug bad behaviors: find the cause and fix it. Your culture is informed by these norms and when you’re hyperscaling issues can replicate very quickly.
8. Continue to hold the standards high for who you hire and what you ship.
Don’t believe your own hype. Treat every single ship as precious.
9. Build deep trust with your leadership team and over-communicate.
People have a lot going on, so remind them you're in their corner frequently. Silence is often assumed to be negative.
10. Express gratitude.
Make sure they know you see the work they’re doing to build a company with you.
—> Initially published on Linkedin from Kevin Van Gundy’s post
⭐ Star History Weekly Pick
The Star History Weekly Pick is:
Mautic: “ The Open Source Marketing Automation Software.”
⭐️ 6k stars reached
Github: https://github.com/mautic/mautic
🎙️ Building & Scaling MongoDB (with Max Schireson, prev. CEO, MongoDB)
1:20: Max started his career at Oracle where he became frustrated with the limitations of relational databases. He then moved to MarkLogic where he discovered XML databases and the flexibility of that format got him excited about the potential for new databases. From there, he moved to MongoDB as CEO just as NoSQL started to take off. There, he was exposed to the distribution potential of open-source. With an open-source business, people used your product well before you sold it to them. The company was very early when he joined. There were 20 employees and $10Ks - $100Ks of revenue. However, they already had a fair amount of open-source adoption.
7:40: Technical support became incredibly challenging at MongoDB since users were so sophisticated.
11:50: The transition away from support as a business model was necessary as users were finding fewer issues with the product. Max walks through the shift towards an open core model bifurcating free and paid functionality.
13:40: Deciding between paid and unpaid features was challenging. They discovered that paid features were good for operating at scale, and while they could have made more money by charging for additional support, they felt that having the best free open-source product on the market should take priority.
17:50: They didn't focus on stars as a core metric as it is only a rough measure of momentum. Instead, they focused on things like Google Trends (how often people searched for MongoDB), how often someone would put MongoDB on their LinkedIn as a skill, and if MongoDB was posted on Indeed in job recs.
22:20: Marketing and community came in the form of grassroots efforts and informal presentations. These included 'Mongo Days' where they organized engineering events across the country. Developers liked the honest and genuine nature of how MongoDB was sold to them with the sales team using phrases like “people use Mongo because the alternatives suck”.
25:30: MongoDB used an incremental approach to monetization (support then additional product functionality). They could have prioritized monetizing more sooner but instead focused efforts on the open-source.
27:15: A piece of advice from Max to open-source founders: focus on production workflows for monetization where you'll see real volume.
29:50: Open-source works best in a cloud delivery model. If someone downloads your open-source and uses it on-prem, it’s hard to track and fix issues since you don’t know who all is using the software (in a cloud model, you can fix issues for everyone at the same time).
32:05: Open-source can be seen as just a distribution method, but cloud products can have other great distribution methods.
36:15: A common mistake when building an open-source company is focusing on open-source adoption OR monetization instead of both.
38:20: Open-source licenses are important to protect your IP. MongoDB had a specific license that restricted how developers could use the product, which was risky since it added friction, but it didn’t end up hurting adoption for them.
43:10: At MongoDB, the greatest ‘growth hack’ was having a great product experience from the get-go; implementation was quick, and users saw value very early.
—> Full episode here
It’s already over! If you have any comments or feedback, you can reach out to me on LinkedIn or Twitter.
Thanks for reading,
Morgan
Please share DevTools Brew with your friends, and subscribe