Smartsheet has raised an additional $52.1 million in Series F funding to accelerate its investments in products, infrastructure and sales and marketing.
While those plans sound similar to those of any tech company post-funding round, scratch below the surface and you'll see Bellevue, Wash.-based Smartsheet plans to take this funding to turn it into a major player in the digital workplace space.
Betting on Ease of Use
CEO Mark Mader wants to make Smartsheet the reference point for any vendor looking to enter the enterprise collaboration management and automation space.
The management and automation elements are the most significant here. Many other vendors operate in the enterprise collaboration space but, according to Mader, Smartsheet is the only one focused on accessibility — in terms of ease-of-use — and making productivity more … well ... productive and less time consuming.
“The concepts [of accessibility and productivity] have been around for decades. The problem we are dealing with is how you enable the median information worker to unlock the possibilities they present,” Mader said.
“The solutions have been around for a long time, but if only highly technical people can use them, it really limits their potential impact."
The company learned this from experience. After witnessing low adoption and retention rates following the initial software launch, the company made the difficult decision to redesign the product from the ground up in 2010, to simplify the user interface and experience.
That risk paid off, with an uptick in adoption, increased funding rounds and increased revenue.
A $52M Investment in Smartsheet
Today’s funding round was led by existing investors Insight Venture Partners with Madrona Venture Group, Sutter Hill Ventures, and joined by a new investor, Summit Partners.
Smartsheet funding rounds grew from relatively small increments early on — $2.6 million in a Series A in 2007, for example — to its last funding round in 2014, when it raised $35 million. Today's funding brings the company's total funding to date to $120 million.
Smartsheet was founded in 2005 to provide enterprise-ready cloud apps for work management and collaboration as SaaS.
The company now has nearly 600 employees spread between Bellevue and Boston, pulling in $70 million in revenue last year and a 60 percent revenue growth yearly over the past five years straight.
But that’s not enough for Mader, who envisages a future as the dominant force in enterprise collaboration automation and management. Mader said:
“We see this as an opportunity to go from a $100 million company to a much much larger business. We want to keep that very hight growth rate."
The three top areas for investment will be:
- Sales and marketing investment: Smartsheet will double the size of its sales organization this year
- Investing in R&D: In addition to building its feature set Smartsheet will be developing its data operations and moving beyond the US next year
- Heavy investment in engineering: This means hiring the best and the brightest to design innovate and delivery capabilities.
This last point is becoming an increasingly serious problem for vendors.
“The biggest problem for a software company is talent. There is no shortage of ideas and requests from clients. But it really comes down to whether you can build your team fast enough to meet the demand and fresh market opportunities,” Mader said.
“We don’t have factories, we have people. You must have a compelling vision, stability in terms of attracting talent and keeping it. That is the number one determinant of trajectory. It comes down to people and software. The big cats face the same challenges. That’s another area where raising money is important.”
Riding the Digital Workplace Wave
The Smartsheet product is really coming into its own now as the digital workplace focus on collaboration becomes more ingrained for enterprises.
Businesses use Smartsheet to assign tasks, track project progress, manage calendars, share documents and manage other work through what looks to be an easy-to-use spreadsheet-like user interface.
More importantly for its future development, the product provides an open API that allows businesses to connect to external products and repositories. Mader states, though, that APIs are not enough.
“We are trying to go beyond just providing an open API: we are looking at whether people can use it or not. Take our Salesforce connector for example. It offers a drag and drop-point-and-click option set up that enables us to marry our platform to Salesforce which is used by 100,000s of companies.”
"So, the vehicle is not just an open API, but it is consumable. It’s not just ‘hey there it is’ — we are also giving you the roadmap to make it happen. There is a general market perception that goes along the lines of if its open, it is useful. That is not the case."
Smartsheet Is Staying the Course
According to Mader, Smartsheet has no intention of moving into aligned technology areas, something many vendors do when they start getting bigger.
“We have mapped enterprise collaboration across four principle dimensions. The first is authoring and document creation, the second one is in the EFSS [Enterpriser File Sync and Share] space and the third one is the communications one. There is also management and automation.
“We have said, ‘let’s not confuse things and dilute our efforts by trying to be a communications player, or an EFFS player, or a document creation player.' By doing that and by being very clear it enables our partners to commit because they don’t feel threatened.
“If we said we are an enterprise collaboration suite provider and we are can provide anything and everything you want, Microsoft wouldn’t talk to us, Salesforce wouldn’t talk to use, Slack wouldn’t talk to use. It’s a very clear strategy about dominating the category."