>>from the bellagio hotel in Las Vegas >>it's the >>cube >>covering Ui >>Path Forward four brought to you >>by Ui Path. >>Welcome back to las Vegas. The cube is live with you. I Path forward four at the bellagio lisa martin with Dave Volonte. We're gonna be talking about you I Path integration suite, we have a couple of guests joining us here. Mark Jeannie is here the GM of Ui Path, formerly the co founder and Ceo of cloud elements and Peter Villeroy also joins us Director of Global I. T. Automation practice at UI Path guys welcome to the program. >>Thanks lisa. Great to hear. >>So Mark, let's go ahead and start with you. The Cloud elements acquisition was done in about the last six months. Talk to us about why you chose to be acquired by Ui Path and where things are today. Some big announcements yesterday. >>Yeah absolutely. So yeah if you go back six months ago um you know we have been in conversations with you I Path for for quite a while and um you know as we were looking at our opportunities as an api integration platform. So cloud elements just to step back a little bit um was a leader in helping companies take a P. I. S integrate applications together and bed that into their into their apps and um you know I Path approached us about the combination of what's happening in the automation world and you know these these have been a society as the marine Fleming from I. D. C. Mentioned this morning integration and DARPA have been separate swim lanes and what we saw and what you I. Path approaches with was ability to combine these together and really be the first company to take and take ui automation and seamlessly connected together with A. P. I. Automation or api integration >>Peter What's been some of the feedback? We know you guys are more than 9000 customers strong now we've had a whole bunch of amount yesterday and today. What's been the feedback so far on the cloud elements acquisition? So >>there's a huge amount of interest. We've had very positive feedback on that lisa the combination of Ui driven automation and A. P. I. Uh Native Integrations is is key especially to the I. T. Leadership that I work with. Um some of whom have traditionally compartmentalized you ipads platform in the Ui space and legitimately think about their own internal processes as being having very little to do with the user interface right. And so combining Ui driven automation together with uh api integration really helps too pick them up where they are and show them the power of that kind of a hyper automation platform that can deliver value in a number of spaces. And you guys ever >>see the movie Blindside? All right. You know what I'm talking about with joe. Theismann gets hit from the blind side and then his career is over and and that's when people realized oh my gosh the left tackle for right handed quarterback is so important and it's subsequent drafts when somebody would pick a left tackle like a good left all the rest went and that's what's happening in in the automation business today. You guys took the lead, you you set the trend. People said wow this is actually going to be a huge market. And then now we're seeing all this gonna occur. And a lot of it from these big software companies who believe every dollar of software should go to them saying hey we can actually profit from this within our own vertical stacks. So what do you make of all the M. And A. That's going on in particular? There was one recently where private equity firm is mashing together a long time R. P. A vendor with a long time integration firm. So it looks like you guys, you know on the right >>side of history in this regard. Your thoughts. Yeah. Absolutely. I mean if you think about automation right you've got to obviously help people do their jobs better. But if you're going to automate a process and a department you needed connect the applications that they use that those people use otherwise you can't accomplish it. And where ap is fit in as is automation and ui automation has become more and more mission critical and it's become bigger and bigger part of enterprise I. T. Wants to get involved. And so enterprise gets involved and what's their stack. It's api based their technology stack is how you connect back is through api so more and more companies are seeing what you I path saw is that if you're gonna automate every process and every department for every person you need to connect to every application that they're using and that's why this is now becoming right. Three companies now just recently have done these types of acquisitions of bringing an integration platform in and combining them together are trying to combine them together. >>All mps are not created equally as we know. Some are sort of half baked lot of them. Many of them don't have decent documentation so there's sort of a spectrum there. How do you, how do you think about prioritizing? How do you think about the landscape? Do you just kind of ignore the stuff that's not well documented and eventually that will take care of itself. How should we think about there have always >>been layers of integration right. Especially working with the ICTy organizations. So you've got our native integrations would make it easy to drag and drop activities and then you've got the A. P. I. Is that we can consume with various activities. That area has really grown through the acquisition of cloud elements and then you've got that third layer where when all else fails, you go on to the user interface and interact with the application like a human does and what you see is that our our interaction with college elements really enables a great enhancement of that lower base level um which is mildly interesting to the lines of business very important. I Yeah, for sure. >>So the reason I asked that question is I was talking to one of your customers this big ASAP customers said I love you ipad. The problem I have is I got so many custom mods and so it's just you know orally documented and I can't I wanna put automation in there but I can't. So to those parts of the tech stack become like the main frame of you know what I mean? And just sort of they live there and they just keep doing their thing but there's so much innovation that pops up around it. How do you how do you see that? >>Well that's part of the agility that comes with the platform like you ipads is that you can interact with the very clean uh swagger documented restful aPI s and you can interact with SCP on their proprietary ages old A. P. I. S. Um Those are things that we've traditionally done decently well, but again through this acquisition we could do that on a grander scale um with bidirectional triggering and all the goodness that you >>solve that problem today that your customer and this is a couple of years ago, you can solve that problem with cloud elements. Is that right? >>Yeah, absolutely. The the ability to integrate too these enterprise platforms like ASAP you need multiple tools to do the job. Right. So ui automation is great but if you've customized ui significantly or other things like that then the A. P. I can be a great structure for it and other cases where um that api provides a resiliency in a in a scale to it that um opens up new processes as well to those corporate systems. Right? So the balance of being able to bring these two worlds together is where you can unlock more because you got >>east west automation >>that's very good overhead and now >>you're going north south with cloud elements is deeper. Right, >>bottom line from the VP of its point of view, the more that can be done from a machine to machine communication the better. So sure. >>What's the opportunity for the existing cloud elements customers to take advantage of here? >>Yeah, absolutely. Um We've continued to support, brought our customers over with us. Uh Part of our customer base has actually been a significant number of software customers. Uh cos S. A. P. S. One of them doc you sign gain site, you know, so household names in the world of software as well as large financial services institutions like US Bank and Capital One and american Express, all of them had that common need where um they wanted to have an api centric approach to being able to connect to customers and partners and leverage our platform to do that. So we will continue to support that extend that. But we see opportunities where again we couldn't automate everything for our customers just threw a PS And uh you know for example one of our major financial services institutions were working with wants to take um and provide a robot for their uh customers and commercial payments to be able to automatically kick off in A. P. I. And so that seamless integration where we can combine that automation with robots leveraging and kicking off a P. I. S automatically takes us further into automating those processes for those >>customers. So you guys six months right. Uh talk about how that integration api integration company better gone smoothly. But what was that like you guys are getting the knack of M and a talk about that, what you learn maybe what you would do differently to even accelerate further, How'd it go? Uh >>That's the best answer from you having been on the >>acquisition side. Um Well we how well it went is six months later, which I think is really unheard of in the technology world, we're introducing our combined offering you I Path integration service that essentially takes what cloud elements built embeds it right into automation. Cloud studio in the Ui Path products. We and uh it's been a global effort. Right? So we had the Ui Path team was based in Hyderabad Denver and Dallas and then we've got um Ui Path engineers working with that cloud elements team that are in Bucharest Bellevue and bangalore and with the miracles of zoom and uh that type of thing, never meeting anyone in person, we were able to integrate the product together and launch it here today >>six months is a fast turnaround time frame was how much of that was accelerated by the, by the fact of the global situation that we're in. >>Yeah, well you know in some respects that that helped right? Because we um um we didn't have to waste time traveling and we could hop on zoom calls instantly. We spent a lot of time even over zoom making sure there was a cultural fit. You I path has a, you know, not only the humble, bold and type of values but it's a very collaborative environment, very open and collaborative environment as Brent can attest to. And that collaboration, I think in that spirit of collaboration really helped us feel welcome and move quickly to pull this together. And also >>the necessity is the mother of innovation right. Uh you ipad traditionally being popular in the CFOs organization were becoming the C I O s best friend and the timing was right to introduce this kind of capability to combine with what we traditionally do well and really move into their picking up like I said the customer where they are and leading them into that fully end to end automation capability and this was integral. So it wasn't time to kick the tires but to get moving >>and my right, there's a governance play here as well because I. T. Is kind of generally responsible for governance if you make it easier for them to whatever governance systems they're using >>governance privacy >>security that now you can just connect. They don't have to rip and replace. Is there an angle there? >>Sure, yeah. So nothing is more important than I. T. Than than control and governments and change management and half of the uh conversations we're having out there on the floor are around that right um uh ensuring that all of the good governance is in place um and we have a lot of the uh integrations and frameworks necessary to help that through your devops pipeline and doing proper ci cd and test automation um and you know introducing that integration layer in addition to what we already have just helps all of that to uh move more smoothly and bring more value to our customers. >>Mark talk to me about some of the feedback from customers that you mentioned, doc Watson. S A P probably I imagine joint customers with you. I path now there you're working together, what's the what's in it for them? >>Yeah, no the feedback has been tremendous. Right, so um api automation is not new to you. I path but customers have been asking for more capability. So one of them is in that governance area that we were just talking about, right, the ability to create connections centrally enable them disable them. Right? You got mission critical corporate applications. You want to be able to make sure that those applications are being controlled and monitored. Right? So that was one aspect. And by bringing this as a cloud based service, we can accomplish that. Um the other area is that this eventing capability, the ability to kick off workflows and processes based on changes to corporate applications, a new employees added in workday. I want to kick off a process to onboard that new employee and that triggered eventing service has been really well received and then um yeah, so that I'd say with the ability to also create new connections more simply was the third big factor. Uh we created a standardized authentication service. So no matter where you are in the UI Path product line, you get a consistent way to create a new connection, whether it's a personal connection by a business user too, you know, google docs or Microsoft office or your C O E R I T. Creating a connection to uh an important corporate system. >>How about the partner? I know you guys had partner day here leading into forward for they must be stoked about this gives you a lever to even add new partners. What was those >>conversations like? Yeah, yeah, no, absolutely. The partners are excited about those same features but um they're also excited about something in our roadmap which we expect to be previewing early next year and that's a connector builder. So the ability for partners to uh more quickly than ever create their own connectors. That'll work just like first party connectors that we ui Path build and add them into catalogs, share them in the market place. So there's new revenue opportunities, new opportunities for partners to create reusable assets that they can leverage and yeah so um lots of things, lots of work to continue to do, right? It's only been six months and uh but that's that's gonna be a big initiative going forward. >>So integration service as you mentioned, announced at this conference, we know that that's the first step obviously accomplished as we also talked about very quickly in a six month time period. But what does the future hold for api automation and integration service? >>So um one of the key areas just continue to expose the integration service um more broadly in the Ui Path product portfolio. Now that we have this service, more Ui Path products will be able to leverage it. Right? We're starting off with studio and orchestrator but that we can all use and share that common common capability. Um The other is to make access to complex business systems easier. So you think about it right. A uh to get a purchase order from net suite might take five or six api calls to do. Well, a citizen developer doesn't know what those five or six things you have to do. So we'll be creating these business activities or just get me open purchase orders that will work seamlessly in the studio product. And behind the scenes. Well, chain together those 56 aPI calls to make that a simple process. Right? So taking the integration service and making it even more powerful tool for that citizen developer than nontechnical user as well. So that's >>development work you're going to do. >>That's what we're gonna do as well as enable partners to do as well. So it's a key part of our road map over time. Because >>yeah I mean the partner pieces key because when net suite changes how it you're creating that abstraction layer. So but that's value add for the partners. >>Absolutely. And they have that domain expertise, right. They can create assets, leveraging the UI path automation capabilities but also bring their knowledge about A. S. A. P. Or workday and those oracle ebs and those core business systems and then combine that together into assets that enhance integration service that they build and I can I can share with their customers and share with our market >>because the work workday developer is going to know about that well ahead of time. No, >>it's coming and they know better than we do. Right. That's their business. That's what they know really well. >>Nice nice value at opportunity, peter >>One of the things that you iPad has been known for is its being very and I've said this on the program the last two days, that's being a good use case for land and expand. You guys have 70% of revenue that comes from existing customers. Talk to me about the cloud elements acquisition as a facilitator of because you kind of mentioned, you know, we're used to be really in bed with the cfos now we're going to see us and we've heard from a number of your customers where they started in finance and it's now Enterprise White, how is this going to help facilitate that? Even more? >>It really helps, you know, touching on what Mark just mentioned about the citizen developer, right, just as one of many examples, the empowerment of end users to automate things for themselves um is critical to that land and expand um successes that we've been seeing and where from an I. T standpoint, the frustration with the citizen developer is, you know, maybe what they're building isn't so top notch right? It works for themselves. What we can't replicate that, but put making it easy to make api integration part of what they do in studio X is so key to enhancing also the reusability of what's coming out of there. So that c uh C O E S can replicate that across teams are globally within their organization and that's part of land and expand because you may find something that's valuable in one line of business replicates easily into another line of business if the tool set is in place >>pretty powerful model lisa >>it is guys. Thanks so much for joining us today, talking about the club elements acquisition, what you're uh, doing with integration service, What's to come the opportunities in it for both sides and your partners? We appreciate your time. >>Great. Thank you. Thank you very much. I >>appreciate it. Thank you for >>David Want I'm lisa martin. You're watching the cube live in las Vegas at the bellagio Ui Path forward for stick around. We'll be right back. Yeah. Mhm. Mhm mm.

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> UiPath has had a long, strange trip to IPO. How so you ask? Well, the company was started in 2005. But it's culture, is akin to a frenetic startup. The firm shunned conventions and instead of focusing on a narrow geographic area to prove its product market fit before it started to grow, it aggressively launched international operations prior to reaching unicorn status. Well prior, when it had very little revenue, around a million dollars. Today, more than 60% of UiPath business is outside of the United States. Despite its headquarters being in New York city. There's more, according to recent SEC filings, UiPath total revenue grew 81% last year. But it's free cash flow, is actually positive, modestly. Wait, there's more. The company raised $750 million in a Series F in early February, at a whopping $35 billion valuation. Yet, the implied back of napkin valuation, based on the number of shares outstanding after the offering multiplied by the proposed maximum offering price per share yields evaluation of just under 26 billion. (Dave chuckling) And there's even more to this crazy story. Hello everyone, and welcome to this week's Wikibon CUBE Insights, Powered by ETR. In this Breaking Analysis we'll share our learnings, from sifting through hundreds of pages (paper rustling) of UiPath's red herring. So you didn't have to, we'll share our thoughts on its market, its competitive position and its outlook. Let's start with a question. Mark Roberge, is a venture capitalist. He's a managing director at Stage 2 Capital and he's also a teacher, a professor at the B-School in Harvard. One of his favorite questions that he asks his students and others, is what's the best way to grow a company? And he uses this chart to answer that question. On the vertical axis is customer retention and the horizontal axis is growth to growth rate and you can see he's got modest and awesome and so forth. Now, so I want to let you look at it for a second. What's the best path to growth? Of course you want to be in that green circle. Awesome retention of more than 90% and awesome growth but what's the best way to get there? Should you blitz scale and go for the double double, triple, triple blow it out and grow your go to market team on the horizontal axis or should be more careful and focus on nailing retention and then, and only then go for growth? What do you think? What do you think most VCs would say? What would you say? When you want to maybe run the table, capture the flag before your competitors could get there or would you want to take a more conservative approach? What would Daniel Dines say the CEO of UiPath? Again, I'll let you think about that for a second. Let's talk about UiPath. What did they do? Well, I shared at the top that the company shunned conventions and expanded internationally, very rapidly. Well before it hit escape velocity and they grew like crazy and it got out of control and he had to reign it in, plug some holes, but the growth didn't stop, go. So very clearly based on it's performance and reading through the S1, the company has great retention. It uses a metric called gross retention rate which is at 96 or 97%, very high. Says customers are sticking with it. So maybe that's the right formula go for growth and grow like crazy. Let chaos reign, then reign in the chaos as Andy Grove would say. Go fast horizontally, and you can go vertically. Let me tell you what I think Mark Roberge would say, he told me you can do that. But churn is the silent killer of SaaS companies and perhaps the better path is to nail product market fit. And then your retention metrics, before you go into hyperbolic growth mode. There's all science behind this, which may be antithetical to the way many investors want to roll the dice and go for super growth, like go fast or die. Well, it worked for UiPath you might say, right. Well, no. And this is where the story gets even more interesting and long and strange for UiPath. As we shared earlier, UiPath was founded in 2005 out of Bucharest Romania. The company actually started as a software outsourcing startup. It called the company, DeskOver and it built automation libraries and SDKs for companies like Microsoft, IBM and Google and others. It also built automation scripts and developed importantly computer vision technology which became part of its secret sauce. In December 2015, DeskOver changed its name to UiPath and became a Delaware Corp and moved its headquarters to New York City a couple of years later. So our belief is that UiPath actually took the preferred path of Mark Roberge, five ticks North, then five more East. They slow-cooked for the better part of 10 years trying to figure out what market to serve. And they spent that decade figuring out their product market fit. And then they threw gas in the fire. Pretty crazy. All right, let's take a peak (chuckling) at the takeaways from the UiPath S1 the numbers are impressive. 580 million ARR with 65% growth. That asterisk is there because like you, we thought ARR stood for annual recurring revenue. It really stands for annualized renewal run rate. annualized renewal run rate is a metric that is one of UiPath's internal KPIs and are likely communicate that publicly over time. We'll explain that further in a moment. UiPath has a very solid customer base. Nearly 8,000, I've interviewed many of them. They're extremely happy. They have very high retention. They get great penetration into the fortune 500, around 63% of the fortune 500 has UiPath. Most of UiPath business around 70% comes from existing customers. I always say you're going to get more money out of existing customers than new customers but everybody's trying to go out and get new customers. But UiPath I think is taking a really interesting approach. It's their land and expand and they didn't invent that term but I'll come back to that. It kind of reminds me of the early days of Tableau. Actually I think Tableau is an interesting example. Like UiPath, Tableau started out as pretty much a point tool and it had, but it had very passionate customers. It was solving problems. It was simplifying things. And it would have bid into a company and grow and grow. Now the market fundamentals for UiPath are very good. Automation is super hot right now. And the pandemic has created an automation mandate to date and I'll share some data there as well. UiPath is a leader. I'm going to show you the Gartner Magic Quadrant for RPA. That's kind of a good little snapshot. UiPath pegs it's TAM at 60 billion dollars based on some bottoms up calculations and some data from Bain. Pre-pandemic, we pegged it at over 30 billion and we felt that was conservative. Post-pandemic, we think the TAM is definitely higher because of that automation mandate, it's been accelerated. Now, according to the S1, UiPath is going to raise around 1.2 billion. And as we said, if that's an implied valuation that is lower than the Series F, so we suspect the Series F investors have some kind of ratchet in there. UiPath needed the cash from its Series F investors. So it took in 750 million in February and its balance sheet in the S1 shows about 474 million in cash and equivalent. So as I say, it needed that cash. UiPath has had significant expense reductions that we'll show you in some detail. And it's brought in some fresh talent to provide some adult supervision around 70% of its executive leadership team and outside directors came to the company after 2019 and the company's S1, it disclosed that it's independent accounting firm identified last year what it called the "material weakness in our internal controls over financial report relating to revenue recognition for the fiscal year ending 2018, caused by a lack of oversight and technical competence within the finance department". Now the company outlined the steps it took to remediate the problem, including hiring new talent. However, we said that last year, we felt UiPath wasn't quite ready to go public. So it really had to get its act together. It was not as we said at the time, the well-oiled machine, that we said was Snowflake under Mike Scarpelli's firm operating guidance. The guy's the operational guru, but we suspect the company wants to take advantage of this mock market. It's a good time to go public. It needs the cash to bolster its balance sheet. And the public offering is going to give it cache in a stronger competitive posture relative to its main new competitor, autumn newbie competitor Automation Anywhere and the big whales like Microsoft and others that aspire and are watching what UiPath is doing and saying, hey we want a piece of that action. Now, one other note, UiPath's CEO Daniel Dines owns 100% of the class B shares of the company and has a 35 to one voting power. So he controls the company, subject of course to his fiduciary responsibilities but if UiPath, let's say it gets in trouble financially, he has more latitude to do secondary offerings. And at the same time, it's insulated from activist shareholders taking over his company. So lots of detail in the S1 and we just wanted to give you some of those highlights. Here are the pretty graphs. If whoever wrote this F1 was a genius. It's just beautiful. As we said, ARR, annualized renewal run rate all it does is it annualizes the invoice amount from subscriptions in the maintenance portion of the revenue. In other words, the parts that are recurring revenue, it excludes revenue from support and perpetual license. Like one-time licenses and services is just kind of the UiPath's and maybe that's some sort of legacy there. It's future is that recurring revenue. So it's pretty similar to what we think of as ARR, but it's not exact. Lots of customers with a growing number of six and seven figure accounts and a dollar-based net retention of 145%. This figure represents the rate of net expansion of the UiPath ARR, from existing listing customers over a 12 month period. Translation. This says UiPath's existing customers are spending more with the company, land and expand and we'll share some data from ETR on that. And as you can see, the growth of 86% CAGR over the past nine quarters, very impressive. Let's talk about some of the fundamentals of UiPath's business. Here's some data from the Brookings Institute and the OECD that shows productivity statistics for the US. The smaller charts in the right are for Germany and Japan. And I've shared some similar data before the US showed in the middle there. Showed productivity improvements with the personal productivity boom in the mid to late 90s. And it spilled into the early 2000s. But since then you can see it's dropped off quite significantly. Germany and Japan are also under pressure as are most developed countries. China's labor productivity might show declines but it's level, is at level significantly higher than these countries, April 16th headline of the Wall Street Journal says that China's GDP grew 18% this quarter. So, we've talked about the snapback in post-COVID and the post-isolation economy, but these are kind of one time bounces. But anyway, the point is we're reaching the limits of what humans can do alone to solve some of the world's most pressing challenges. And automation is one key to shifting labor away from these more mundane tasks toward more productive and more important activities that can deliver lasting benefits. This according to UiPath, is its stated purpose to accelerate human achievement, big. And the market is ready to be automated, for the most part. Now the post-isolation economy is increasingly going to focus on automation to drive toward activity as we've discussed extensively, I got to share the RPA Magic Quadrant where nearly everyone's a winner, many people are of course happy. Many companies are happy, just to get into the Magic Quadrant. You can't just, you have to have certain criteria. So that's good. That's what I mean by everybody wins. We've reported extensively on UiPath and Automation Anywhere. Yeah, we think we might shuffle the deck a little bit on this picture. Maybe creating more separation between UiPath and Automation Anywhere and the rest. And from our advantage point, UiPath's IPO is going to either force Automation Anywhere to respond. And I don't know what its numbers are. I don't know if it's ready. I suspect it's not, we'd see that already but I bet you it's trying to get there. Or if they don't, UiPath is going to extend its lead even further, that would be our prediction. Now personally, I would have Pegasystems higher on the vertical. Of course they're not an IPO, RPA specialist, so I kind of get what Gartner is doing there but I think they're executing well. And I'd probably, in a broader context I'd probably maybe drop blue prism down a little bit, even though last year was a pretty good year for the company. And I would definitely have Microsoft looming larger up in the upper left as a challenger more than a visionary in my opinion, but look, Gartner does good work and its analysts are very deep into this stuff, deeper than I am. So I don't want to discount that. It's just how I see it. Let's bring in the ETR data and show some of the backup here. This is a candlestick chart that shows the components of net score, which is spending momentum, however, ETR goes out every quarter. Says you're spending more, you're spending less. They subtract the lesses from the mores and that's net score. It's more complicated than that, but that's that blue line that you see in the top and yes it's trending downward but it's still highly elevated. We'll talk about that. The market share is in the yellow line at the bottom there. That green represents the percentage of customers that are spending more and the reds are spending less or replacing. That gray is flat. And again, even though UiPath's net score is declining, it's that 61%, that's a very elevated score. Anything over 40% in our view is impressive. So it's, UiPath's been holding in the 60s and 70s percents over the past several years. That's very good. Now that yellow line market share, yes it dips a bit, but again it's nuanced. And this is because Microsoft is so pervasive in the data stat. It's got so many mentions that it tends to somewhat overwhelm and skew these curves. So let's break down net score a little bit. Here's another way to look at this data. This is a wheel chart we show this often it shows the components of net score and what's happening here is that bright red is defection. So look at it, it's very small that wouldn't be churn. It's tiny. Remember that it's churn is the killer for software companies. And so that forest green is existing customers spending more at 49%, that's big. That lime green is new customers. So again, it's from the S1, 70% of UiPath's revenue comes from existing customers. And this really kind of underscores that. Now here's more evidence in the ETR data in terms of land and expand. This is a snapshot from the January survey and it lines up UiPath next to its competitors. And it cuts the data just on those companies that are increasing spending. It's so that forest green that we saw earlier. So what we saw in Q1 was the pace of new customer acquisition for UiPath was decelerating from previous highs. But UiPath, it shows here is outpacing its competition in terms of increasing spend from existing customers. So we think that's really important. UiPath gets very high scores in terms of customer satisfaction. There's, I've talked to many in theCUBE. There's places on the web where we have customer ratings. And so you want to check that out, but it'll confirm that the churn is low, satisfaction is high. Yeah, they get dinged sometimes on pricing. They get dinged sometimes, lately on service cause they're growing so fast. So, maybe they've taken the eye off the ball in a couple of counts, but generally speaking clients are leaning in, they're investing heavily. They're creating centers of excellence around RPA and automation, and UiPath is very focused on that. Again, land and expand. Now here's further evidence that UiPath has a strong account presence, even in accounts where its competitors are presence. In the 149 shared accounts from the Q1 survey where UiPath, Automation Anywhere and Microsoft have a presence, UiPath's net score or spending velocity is not only highly elevated, it's relative momentum, is accelerating compared to last year. So there's some really good news in the numbers but some other things stood out in the S1 that are concerning or at least worth paying attention to. So we want to talk about that. Here is the income statement and look at the growth. The company was doing like 1 million dollars in 2015 like I said before. And when it started to expand internationally it surpassed 600 million last year. It's insane growth. And look at the gross profit. Gross margin is almost 90% because revenue grew so rapidly. And last year, its cost went down in some areas like its services, less travel was part of that. Now jump down to the net loss line. And normally you would expect a company growing at this rate to show a loss. The street wants growth and UiPath is losing money, but it's net loss went from 519 million, half a billion down to only 92 million. And that's because the operating expenses went way down. Now, again, typically a company growing at this rate would show corresponding increases in sales and marketing expense, R&D and even G&A but all three declined in the past 12 months. Now reading the notes, there was definitely some meaningful savings from no travel and canceled events. UiPath has great events around the world. In fact theCUBE, Knock Wood is going to be at its event in October, in Las Vegas at the Bellagio . So we're stoked for that. But, to drop expenses that precipitously with such high growth, is kind of strange. Go look at Snowflake's income statement. They're in hyper-growth as well. We like to compare it to Snowflake is a very well-run company and it's in hyper-growth mode, but it's sales and marketing and R&D and G&A expense lines. They're all growing along with that revenue. Now, perhaps they're growing at a slower rate. Perhaps the percent of revenue is declining as it should as they achieve operating leverage but they're not shrinking in absolute dollar terms as shown in the UiPath S1. So either UiPath has applied some magic automation mojo to it's business (chuckling). Like magic beans or magic grits with my cousin Vinny. Maybe it has found the Holy grail of operating leverage. It's a company that's all about automation or the company was running way too hot on the expense side and had a cut and clean up its income statement for the IPO and conserve some cash. Our guess is the latter but maybe there's a combination there. We'll give him the benefit of the doubt. And just to add a bit more to this long, strange trip. When have you seen an explosive growth company just about to go public, show positive cashflow? Maybe it's happened, but it's rare in the tech and software business these days. Again, go look at companies like Snowflake. They're not showing positive cashflow, not yet anyway. They're growing and trying to run the table. So you have to ask why is UiPath operating this way? And we think it's because they were so hot and burning cash that they had to reel things in a little bit and get ready to IPO. It's going to be really interesting to see how this stock reacts when it does IPO. So here's some things that we want you to pay attention to. We have to ask. Is this IPO, is it window dressing? Or did UiPath again uncover some new productivity and operating leverage model. I doubt there's anything radically new here. This company doesn't want to miss the window. So I think it said, okay, let's do this. Let's get ready for IPO. We got to cut expenses. It had a lot of good advisors. It surrounded itself with a new board. Extended that board, new management, and really want to take advantage of this because it needs the cash. In addition, it really does want to maintain its lead. It's got Automation Anywhere competing with it. It's got Microsoft looming large. And so it wants to continue to lead. It's made some really interesting acquisitions. It's got very strong vision as you saw in the Gartner Magic Quadrant and obviously it's executing well but it's really had to tighten things up. So we think it's used the IPO as a fortune forcing function to really get its house in order. Now, will the automation mandate sustain? We think it will. The forced match to digital worked, it was effective. It wasn't pleasant, but even in a downturn we think it will confer advantage to automation players and particularly companies like UiPath that have simplified automation in a big way and have done a great job of putting in training, great freemium model and has a culture that is really committed to the future of humankind. It sounds ambitious and crazy but talk to these people, you'll see it's true. Pricing, UiPath had to dramatically expand or did dramatically expand its portfolio and had to reprice everything. And I'm not so worried about that. I think it'll figure that pricing out for that portfolio expansion. My bigger concern is for SaaS companies in general. I don't like SaaS pricing that has been popularized by Workday and ServiceNow, and Salesforce and DocuSign and all these companies that essentially lock you in for a year or two and basically charge you upfront. It's really is a one-way street. You can't dial down. You can only dial up. It's not true Cloud pricing. You look at companies like Stripe and Datadog and Snowflake. It is true Cloud pricing. It's consumption pricing. I think the traditional SaaS pricing model is flawed. It's very unfairly weighted toward the vendors and I think it's going to change. Now, the reason we put cloud on the chart is because we think Cloud pricing is the right way to price. Let people dial up and dial down, let them cancel anytime and compete on the basis of your product excellence. And yeah, give them a price concession if they do lock in. But the starting point we think should be that flexibility, pay by the drink. Cancel anytime. I mentioned some companies that are doing that as well. If you look at the modern SaaS startups and the forward-thinking VCs they're really pushing their startups to this model. So we think over time that the term lock-in model is going to give way to true consumption-based pricing and at the clients option, allow them to lock-in for a better price, way better model. And UiPath's Cloud revenue today is minimal but over time, we think it's going to continue to grow that cloud. And we think it will force a rethink in pricing and in revenue recognition. So watch for that. How is the street going to react to Daniel Dines having basically full control of the company? Generally, we feel that that solid execution if UiPath can execute is going to outweigh those concerns. In fact, I'm very confident that it will. We'll see, I kind of like what the CEO says has enough mojo to say (chuckling) you know what, I'm not going to let what happened to for instance, EMC happen to me. You saw Michael Dell do that. You saw just this week they're spinning out VMware, he's maintaining his control. VMware Dell shareholders get get 40.44 shares for every Dell share they're holding. And who's the biggest shareholder? Michael Dell. So he's, you got two companies, one chairman. He's controlling the table. Michael Dell beat the great Icahn. Who beats Carl Icahn? Well, Michael Dell beats Carl Icahn. So Daniel Dines has looked at that and says, you know what? I'm not just going to give up my company. And the reason I like that with an if, is that we think will allow the company to focus more on the long-term. The if is, it's got to execute otherwise it's so much pressure and look, the bottom line is that UiPath has really favorable market momentum and fundamentals. But it is signing up for the 90 day short clock. The fact that the CEO has control again means they can look more long term and invest accordingly. Oftentimes that's easier said than done. It does come down to execution. So it is going to be fun to watch (chuckling). That's it for now, thanks to the community for your comments and insights and really always appreciate your feedback. Remember, I publish each week on Wikibon.com and siliconangle.com and these episodes are all available as podcasts. All you got to do is search for the Breaking Analysis podcast. You can always connect with me on Twitter @dvellante or email me at david.vellante@siliconangle.com or comment on my LinkedIn posts. And we'll see you in clubhouse. Follow me and get notified when we start a room, which we've been doing with John Furrier and Sarbjeet Johal and others. And we love to riff on these topics and don't forget, please check out etr.plus for all the survey action. This is Dave Vellante, for theCUBE Insights Powered by ETR. Be well everybody. And we'll see you next time. (gentle upbeat music)

>>Live from Las Vegas. It's the cube covering UI path forward Americas 2019 brought to you by UI path. >>Welcome back to Las Vegas. Everybody. You're watching the cube, the leader in live tech coverage. This is day two of UI path forward UI pass, third North America event and we're excited to be here. This is our second year here. Daniel DNAs is here. He's the CEO of the rocket ship known as UI path. Welcome back to the cube. Great to see you again. >>Thank you. Thank you for inviting me here. >>Oh, so it's our, it's our pleasure and it's been great to be able to document this and we've been saying all week that we see the ecosystem developing the customer base, that UI path very reminiscent of some of the very successful companies that we've seen. But we've never seen a company sort of growing this fast. I have to start with you. Our big idea person kind of go big or go home mentality. But did you really see it getting here so fast? >>Well we, we kind of see it a year ago going here. I can not say that. I've seen it five years, five years ago, I couldn't see, I couldn't see me even in front of a hundred people speaking not to talk about 3000 like can close today, yesterday. >>Well, it's gotta make you very happy. You set it up on stages. When you see your saw the software that you developed, your, you're a developer, you're a coder affecting people's lives. The way some of the examples that you gave, it was a little tear in your eye maybe out of saying, but how to tug at your heart a little bit. That's got to be as a developer and of course now CEO, that's gotta be very gratifying to see your technology have an impact on people's lives. >>Okay, well I can tell you it is a really gratifying, in the end it's, um, we, we, we've built technology, you know, to, first of all, we are proud as engineers to build the best technology that we can, but it's, uh, it makes us a lot more, it's a lot more touching seeing that you can help humans to become better, to become healthier, to even save lives, to help refugees. It's a, it's an amazing feeling. It's when >>I talk to people about robotic process automation, most people don't, don't really are connected and they'll say things to me like, really is there that much room for automation? We've been in the computer industry for 50 years, we've been automating everything back office, front office. How much more room is there? And you put forth the premise last night in your keynote essentially said technology is actually created inefficiencies that >>despite all the automation that we've had now we have all these processes that can be improved. So necessarily the first time I had heard that put forward. I guess my question is, so technology got us into this problem, can technology get us out? >> Yeah. Um, first of all, I'm a software engineer, so I didn't believe there are so many inefficiencies in within the business world. I fought the law. Gender prizes should have been automated completely. Everything should run as move, as ineffectually. But in reality, the alert is far away from this. And as I said yesterday, email and a pro plus activity tools, especially spreadsheets and line of business application has changed completely. How we perform or in front office and back office. But uh, it's, it's a lot of skit work because it's, it's work created when people build business processes, they work with different systems and they always touch the system by looking at the user interface of the, by looking at human readable interfaces of these systems and uh, and when you go and automate them it's kind of difficult to translate into a BIS. >>So where are the at the on the field. So our approach is just through replicates Q months using the same tools, the same thing. Knowledge is that thought for media to business people building and the it's the only way that can work at scale. Of course you can take one particular process, build an it project flow developers with them be successful but you cannot do it. The large scale that an enterprise has, it's the only technology that can work at the large scale. Like I believe in the transportation industry, self-loving cars are the only solution to the industry or not. It's not feasible to say I will build much larger freeways. No, you put self driving cars or self driving trucks driving in the night on the freeway and this is how you will free daily, you know, everything else for the norm of agriculture. Same sort of concept. >>Like there's nothing, I can't make more land. Right? But as you grow your company, um, you guys growing so fast, are you able to use automations to support that growth? I'm sure there are some inefficiencies in it because there's a pace of growth. Helped me understand that this is, this is our story. So way we've built initial finance processes, finance, HR, procurement processes in the very manual slides using people and then scaling up when each a point where we've become a big consumers of all our own technology. It's not, it's not about what we use the most modern systems in the world. It's not a vote that they are not integrated. It's about all the, all the words build by this business people, all the reports that we are creating or all this stuff required a lot of work. We have automated more than a hundred thousand manual hours within you iPod today. >>A mother company built on the best technology stick, all that. Do you feel, feel like that's part of the reason why you've been able to grow so fast? Maybe faster than other historical examples of software companies? Systems are one thing way we weren't able to grow as fast by couple of reasons. First of all, we went global from day one. We were not the typical Silicon Valley company that says I will win in North America and then I will replicate this model across the world because they lose about three to five years in Muslim America just Lang to perfect the machine at least at least then we just went when globally they want an hour. It helps because we can make a business case easy so we can, we can go into a lot of gentle price, show them how it works and it does not require such a huge investment. >>That list to get started and second is it's evolved our culture. We put the big emphasize in keeping our culture customer focus and we put humility as the core. Then that evolved culture and I, I know it might sounds a bit pretentious to see, we put humility, but it's a humility that gives you a, a great, great framework of how you operate. You can, it makes you listen to people, it makes you able to change your mind. It makes you actually accelerate because people that change their mind or they look to find foster better solution that people that are stuck and they need a lot of data until they make, because they are afraid of losing face in making decision. So it's something that works. So it's uh, it's this, those two things combined gave us this cake. It's very interesting you say that because there's a lot of ways to skin a cat. >>Um, many companies have succeeded with extremely dogmatic approach. I mean, I would argue Microsoft, much of its success was it was built around personal productivity, you know, or bust. Um, yet your philosophy is be more open minded. You're humble. Listen to the customers change fast if necessary. Kind of a different philosophy maybe than some others have used in the past. I believe that our philosophy is, is helping us, I don't know, maybe a Microsoft has change. Yeah, exactly that. Satya. So, so it's uh, it's not, so I think this is, this is built in the fabric of how humans operate. We talk to other humans, we learned their needs and then we address their needs. I think it's arrogance to say, I know your boss, I will do this is what you have to do. Like many more traditional software companies are doing, we were very fortunate to build these products by listening to customers. >>That's, that's luck. You don't have to find product market fit. Listen to customers. Market is big. Bring what they want. Well the funny thing is, you know, we talking about the analysts meeting and I do remember you, you're there the other day. You said that you made a bunch of mistakes early on that you got ahead a build it and they will come a mentality. You've kind of built it and then you had to go out, listen to people and figure out how to apply it. Right. Actually I've been using a lot of parallels to service now. It's kind of right. Fred Luddy did, he built, he built a platform and then the VC said, well what do we use it for? He goes, anything good? He had to go and talk to people into the route. Okay, how do I apply it? But you said, well kind of made some mistakes early on, but you recovered from those mistakes by listening. >>It sounds like the definitely in the bill. Coming from a software engineer background, I, uh, I have, uh, at least I had the tendency to don't give enough credit to sales, to marketing even to the customers it was, we clearly understand the customers in the, so we build technology for the sake of technology. So we were really fortunate to have some MALDI customers. We didn't understand how because I fought that custom was, should all to themselves to test and find the best technology out there and just go there. I was really kind of, I had a lot of blind sports, so on how this world operates, but after I've stopped it to visit customers and understand their pain points and their requests actually realize they are smarter than us in using our own technology because they use it in the real world. So then message that that completely transformed my thinking. So I went back to my engineering team, sunlight, unlike the one guys on this day, I don't want to ever hear, we don't fix bugs and we do features and we do this. When the customers say, you do this, you say, thank you, thank you for showing me the light. I will do this. That's, that makes me create a better broad your feet >>back as a gift. The feedback is a gift. So I want to ask you about the statement you made yesterday in your keynote about we are cloud first and you announced a SAS capability today. I said I signed up, took me seconds, and now I've got to do some work to invite some other people and start doing some automations. But when you were in your apartment in Bucharest or wherever you started the company, why not cloud then? >>Most of our customers are still on prem. So way we have to be where customers are with the clouds first four years ago we wouldn't be here today. Oh. So we started close to the customers way and learn a lot from really large customers that thought a bit more reluctant to go into cloud and now as I think all in all in life is about timing. I think it's the right time timing to benefit the other segments of the market and allow for automation on demand was the infrastructure. Bryce, that people that are still on prem pay are huge. Compare some in some companies only to provision a server would be like 200 K period one time on. Then you have people to maintain them. Offering a many surveys by us in our own cloud looking at the best, you know, we create the best infrastructure, most efficient. We have the best people understanding our technology. We're seeing it. I think it's a great business proposition, but now we were ready to do it. >>Well, plus it sets up potentially new pricing models, you know, consumption based pricing models. You hear a lot of, a lot of row, a lot of bots, uh, are, are sitting idle as a customer. Help just charge me when I'm using violet, thinking of, you know, the serverless and functions. But this is possible only with economy of scale. So the cloud is, you're going to your cloud, you're not going to build it on Azure or AWS or you guys may use, we'll use Bob Lee Clow shows, which is infrastructure. You just have this look Chelios. Yeah. Okay. Um, I'm going ask you about, uh, IPO. Um, what, can you share with us your thoughts? You know, the window seems to be closing a little bit different, right? You know, Uber's and now Slack, you know, not such a successful. And what are your thoughts on IPO? Well, I think that the enterprise software >>companies were actually pretty successful in IPO and this year. And they have one of the, you know, a lot of just multiples that we have. We're seeing. So you cannot compare marketplace companies like who you are or Lyft to enterprise software. So I think for a good enterprise software company, they will always be a place to land a good IPO regardless of timing. Timing is, doesn't work for us. We are still, we are still a young company in many ways. We are 40 years old company. So it will be one of the yellow most earliest IPO. Very, very, very early. We need the bit, we need more at least one year. Like we want do an IPO in 2020, but we've been here the 2021 would be a good year for that. Depends on the climate, but we have met on the client, you have them, you're very well capitalized. Right? It's not like you need to do upsell Kevin the motivation and we still have five would bribe private Gabby. The markets are very frothy so you can still raise a lot of money and very good volume. >>Right. So the motivation for IPO is, is what awareness maybe for the employee. >>Yeah. Exited for the employees. And, uh, you'll just get to a size where you cannot be prideful. And most of our customers are public and they are much more comfortable dealing with the public. >>Yeah, for sure. It's part of your transparency edict, but I mean, well a lot of companies that have raised a ton of dough at the Cloudera for example, waited and waited and waited and then, you know, they go public. It's like, then the public doesn't get to participate in the upside. So I'm sure you're having those conversations thinking about it though. You know, the little guy wants to invest too and you're like, yeah, why not, right? Yeah. So let's go this. It's very exciting times and as you say, it depends on the time and we'll see what happens with the 2020 election who can, who can predict those things. But, so I want to ask you about the Capitol because software is a very capital efficient marketplace, but, but we see companies, you know, you included raising hundreds of millions, sometimes a billion plus dollars. Why such large raises? Where do you see that going? You mentioned engineering, you'd have plenty of money to do engineering. Is it really promotion? We tried to get to escape philosophy. We >>build a big market and we have invested in a mode in order to, if you go fast, well let's take cold car. Okay, the fosters or car go, the more guess it consumes. Right, so you need, if you want to comprise the time, it's costly, but that helps you extend much faster when when large markets and build a large bill, really a large company. In the short time, we could have been much more efficient if we, instead of four years, we would have built this company in 10 years. Many companies, if they would reach our size in 10 years, I will still be happy, but we've done it in four instead of 10 and then it was if you have unit capital to grow fast, >>I think it's the right approach because I do think there's going to be consolidation in this market and I think the company that achieves escape velocity and you are the favorite to do that now, we'll do very, very well. I think the market's much larger than the market forecast suggests. I think the Tam is way, way, way under, and again, we call this on service now as well. We saw this early on at the core. People tell how the core is really not that big, but, but the, but the adjacencies and the potential market is, it's, it's, it's way more than 16 billion or whatever that number is you showed. I think it's, it's, it's, it's 30 40 you know, perhaps even even bigger. >>I think as people realize that this is the really, the only way you can achieve automation on this, a smaller type of processes, but large volume, I think they will. They will go more and more. >>Well then, I know you're super busy and you've got to go. Thanks so much for coming again. Thank you guys for watching. Keep it right there. We'll be right back. Right after this short break. You're watching the cube from UI path forward three right back.

>> Announcer: Live from Las Vegas, it's theCUBE. Covering UiPath Forward Americas 2019. Brought to you by UiPath. >> We're back, UiPath Forward III from Las Vegas at the Bellagio, you're watching theCUBE, the leader in live tech coverage, my name is Dave Vellante. Marie Myers is here, she's the CFO of the rocket-ship known as UiPath. Welcome to theCUBE, thanks for coming on. >> Thank you. >> So, wow. You must be under a lot of pressure to keep the ship moving in a fast direction. But I was just talking to Daniel, he said, you know, when we started the company, we had basic finance systems, kind of like every other startup, but that obviously has changed, so. Well, congratulations, I know you got a lot more work to do but how are you spending your time these days? >> Doing a lot of work, is what I would say. So, as you've kind of seen, that tremendous growth, so huge pressure to just scale the company and ensure that the company has the ability to meet the growth that we're experiencing. So right now I've been really focused on building the operational backbone and actually building a lot of robots for UiPath, actually. That's something I wasn't expecting but came into the role and really help build our own ecosystem around robotics as well. >> I was asking Daniel how much dogfooding, champagne sipping you guys have done and, if it has contributed to the growth and it sounds like quite a bit, actually. >> Absolutely, I'd say we're really hitting the gas pedal right now in terms of building out our own competency and kind of to your point, eating the dog food, drinking the champagne and starting to push the envelope on how we actually use automation and AI to really scale our own business. You asked me where I was spending my time and where I was focused, I literally moved my family to Bucharest for the summer to really focus in on helping to scale the infrastructure. >> So, CFOs usually have a philosophy, a framework, that they like to work with. Obviously you got to stay flexible. How would you describe your philosophy as to how you'd like to manage this company? >> Well clearly, for us we're at an incredible stage of momentum in the market, and the ability for us to continue to build distance in terms of being number one is critical, so in terms of strategy, supporting that number one position, being agile. Able to scale for growth and ultimately do so profitably is certainly the ambition that we have in mind. And that requires turning a lot of different dials, right? And being able to turn them at the right time but at the same time ensure that we've got enough, let's just say, cushion underneath to scale that growth, because the growth is happening very very quickly. >> So CFOs, today's CFO is definitely, I would say more strategic than when I first got into the business, we used to joke that the cheap financial officer. But, I think of CFOs that I really admire, guys like Mike Scarpelli, who was at ServiceNow, now he's at Snowflake. I think he was at Data Domain too, Tom Sweet at Dell, whole different example, they're doing crazy financial engineering. But, much more of a strategic focus. Want to throw gasoline in the fire, and drive growth, but at the same time, thinking about efficiency, so. How have you seen that role evolving and how does that apply to what you guys are doing? >> So I think your comments about the role of the CFO are really right on, I mean, what's perhaps even more interesting, I think, for CFOs that are in software and maybe in a space like we're in is that you ultimately also get involved in being an advocate for your business. In robotics process automation, almost 40% of the first use cases are in finance. So, you're out there supporting the business case with other CFOs who want to understand how does efficiency really, why they should buy from us and what's the business proposition? So you've got to balance the demands of the business with running the business and so, I think that does give you the very unique lens because you understand how this product, to your point, drives operational efficiency. And obviously all CFOs really care, that's right on the list of the top three. >> You know, that's interesting, Marie, because the tech company CIOs are always being pulled in. Because they're early users of some technology. It's not common anyway, that the CFO is one of the lead sales go-to people but it sounds like it is in your case. How much time do you spend in the field? >> I try to balance my time, because you could get pulled very heavily I feel because of the nature of our business into that but I think because robotics process automation has been a key entry point into finance, there's a lot of work for CFOs to do there. So I try to balance my time, but it is, I think, a very important part of our own learning for our company, we get a lot of feedback from our customers. And, even helps me in my role because I get use cases from customers that I apply internally to drive our own efficiency. >> Well, plus, you know, you can see what's happening in the field, you can feel the pain of the sales reps, you can tell which ones are kind of sandbagging, >> You're right, absolutely! >> 'cause they're all sandbaggers! >> You're right about that, so it's been great being at this event, I know a lot of the great reps and so you really understand, you've got a good pulse on what's happening in terms of the business and where the risks are in the quarter. So that's one advantage. >> What're the metrics that you're driving? I mean, obviously the conventional ones, throw those in, but. >> Yeah, I mean obviously productivity, very important for us, we've got a lot of folks we've hired so really understanding what that productivity looks like. The usual cast of characters, AR. Customer acquisition costs, really focused on, what is that first customer costing and then how we're managing our land and expand. What our upsell looks like, so I think the usual cast of characters. >> And then eventually, as all these M and As happen, you'll get cohort sales coming in and the like. So, is everything that you guys sell recognized on a deferred revenue basis? >> No, we're in the midst of converting to 606 right now so we're kind of like subscription one year on prem. So pretty conventional software, red rack. >> Okay, but as you move to the cloud model. >> That gives us a different model, yeah. And we have it, we're just starting that journey. >> It seems like, you see different models. You know, Adobe bit the bullet, Splunk sort of peeled the Band-Aid off very slowly and they both can work. But it seems like a lot of the, I'll call it game, maybe it's the wrong word. But that's what came to mind, is educating the street. On that metric, on that transition. You certainly see it, for instance, in Oracle's case. Putting a lot of emphasis on helping the street understand that transition. That's not your primary focus right now, I'm sure you're spending some time with the analysts, I saw many buzzing around here. >> There was a lot here in the last few days. >> Dave: Yeah, they all want your business! >> (she laughs) They all want your business! I got a lot of texts in the last 48 hours. >> Well, it's an exciting time. And you know, eventually you guys are going to do an IPO and why wouldn't they? Be smart to be here, but what are your thoughts on that? Is that something that you really don't pay attention to right now, are you preparing for that? >> I'd say we're just getting total transparency, we're just moving through 606. So we're digesting that transition first and we're just starting down the whole cloud migration path. So as we start to think that through it's going to be I'd say a priority for 2020. And it's going to be important, I mean, for this business we expect, who's to say what the uptake rate is as customers move to the cloud? But I suspect it's going to be fairly aggressive in our business just because of the nature of bots and how customers think about bots. >> Yeah, so, Daniel said on the previous segment, he said, look, IPO's in our future, probably not 2020, we need at least a year to get our act together. So we're looking at 2021 but it depends on what the climate is, et cetera. My question is, and I've talked to, I see you orange here, Pure Storage is a high flyer in the infrastructure business, they're all orange, so they paint the town orange. >> Seems orange is very popular right now. >> It's a great color, recognizable. But I was talking about, they're all about growth. Not about optimizing profit right now and that's the right play because the street's rewarding growth. You guys, clearly, all about growth. >> We've got the growth story buttoned down, yeah. >> Yeah, you've got that down. But you still want to put gas on the fire, right? So, right now you're still optimized for growth. >> Absolutely, you see what's happening here, right? So, yeah, I think that kind of-- >> And you're well capitalized, so that's not the issue. So the strategy, I presume, is keep growing, get escape velocity, because, the company that gets escape velocity and is the leader in this business, you guys are the leader right now. You're not going to rest, you're going to stay paranoid, I'm sure. But the one that leads is going to make the most money. That always happens. >> Well, extending that leadership role is part of our core strategy, right? Maintaining number one, putting distance. I think you've seen the products that we announced here the last couple of days, adding to the portfolio or giving us incremental TAM so we can grow across the space. I think growing both down the stack and up the stack is critically important for us as we think forward to the future, too, right? We just don't want to be a pure robotics process automation company. We want to look across AI, down the stack into process mining. >> How do you think about your TAM? >> That's a great question. So I've been studying up a little over the last few days preparing for the board meeting tomorrow. I mean, robotics process automation, TAM next year is about two and a half, or two and change in terms of revenue, two billion. I've been looking at it a lot more broadly because I do believe that it is defined today quite narrowly in terms of very traditional RPE. And that started very much in the back office. As we've spread automation and kind of created that platform mentality, the TAM becomes additive. You've got now the process mining TAM which I think we can clearly start to play in that space. And then also the BPMs and now, obviously, AI. So, I was just doing our own back of the envelope in the last few days and you can get, easily, I think now, above that $10 billion mark and it depends on how you start to think about AI as you go forward and that just adds incremental TAM. >> Well, and you throw in services, you're already there. >> Yeah, exactly. >> Probably be there by next year. I think generally, I'll just give you my quick opinion. I think the market's undercounting the TAM potential. And I haven't done a detailed TAM analysis of the, I don't even want to say RPA 'cause that's the core. >> Exactly. >> But I could see this thing expanding dramatically, we talked about cohort sales. Just talking to customers, you're like one to 2% penetrated and there's so many more use cases. As you bring in AI, which, I really think of AI as a horizontal. But if you start applying AI and bringing in automation as an adjacency to you guys, I think that TAM are going to be many many tens of billions beyond what you're thinking. >> That's exactly how I like to think about it, of course, I go back to my IDC friends and try to use some of their benchmarks. But I think they're somewhat conservative. And I think as the market matures and people understand the breadth of the category, I just think that when RPA started it was kind of pigeonholed as a back office opportunity. >> Yeah, I mean, I was at IDC for a long time and we were really crappy at long-term TAM analysis. And you saw it with, Craig LeClair was awesome today. >> Yeah, I love Craig. >> Love him, fantastic. >> Very witty. >> His forecast, however, and same with IDC, we were there, we used to do these linear forecasts and that's not how these markets grow. It's an ogive and a steep S-curve and I think that's my prediction. >> Marie: I couldn't agree more with you. >> We heard predictions this morning, I summarized the predictions and gave my own. And that's one that I see. I'd like to see a longer-term forecast. Maybe we'll work on that. >> Well, we'd love that, I think that's going to be important. I think, part of it's just the maturity of this category. And as folks are starting to understand the breadth of the application, if you think about it, that's why there was so much early work in finance. Now you're starting to see the business spread across the enterprise, right? And I think as it spreads across the enterprise it just adds that incremental TAM and it becomes a gateway to AI. >> I've been using ServiceNow as an example, even though a totally different business, they had a much heavier lift, they started in IT, and went on, so it took longer for adoption. But there's a lot of similarities that I see just in terms of extending beyond just the core of the business, growing the ecosystem, I think is a critical part of that but as far as the customer adoption and the applicability of your technology, I think it's got a lot of legs, so. Like you say, Marie, we'll work on that a little bit. >> I'd love that, thank you. >> Dave: Appreciate you coming on, it was great to have you and wonderful to meet you. >> Enjoyed it. You too, thank you very much. >> You're welcome. Alright, keep right there, buddy, we'll be back to wrap up UiPath Forward III right after this short break. You're watching theCUBE. (electronic music)

>>Live from Las Vegas. It's the cube covering UI path forward Americas 2019 brought to you by UI path. >>Hello everyone and welcome to the cubes live coverage of UI path forward here at the Bellagio. I'm your host hosting alongside of Dave Volante. David's so great to be here with you. I'm so excited to get into this. See Rebecca, so we were, we would use came from the keynote. A lot of high profile UI path executives and important customers were on there too, but then this is the message is it's time to reboot work. It's time to reboot your business, transformed the customer experience, transform the employee experience. I'm wondering as someone who spent a lot of time at these kinds of conferences, and here's a lot of this, these, this kind of messaging, especially in this age of digital transformation, how compelling do you find this value proposition, this, this idea that RPA, robotics, processing automation can do these things? >>The first thing I would mention, Rebecca, is to me it's all about the customers. And you know, it's rare that you see a tech show start with the customers to actually do in the intro. I've seen it before. Nutanix actually does it at his shows, but it's, but it's quite rare because you know, the vendors want to put their message out, they want to control everything, and so they're very, very cautious about that. But, so we had three customers up on stage today doing the intro, which I thought was kind of cool. Tech shows, you know, a lot of smoke, a lot of mirrors and so forth. So you have to try to squint through that. I would say this, it's very clear that the age of automation is here. You know, people have been always concerned about automation for good reason. They're afraid that automation is gonna take away their jobs. >>Having said that, machines have always replace humans. We've talked about this a lot on the cube, but this is the first time in history that machines are replacing humans with cognitive tasks. So that's got to be scaring people a little bit. But when you come back and answer your question, when you talk to customers, they're really happy about software robots because they're doing, they're automating mundane tasks that these folks don't want to do on a day to day basis and they want to do other things. They want to get their weekends back. They don't want to just manually enter data from spreadsheets into applications and back and forth. And so from that standpoint, I think it is real and it is unique. You know, the big question is how much of this is transformational and is it really a path to AI something that UI path and others are really pointing towards and we're going to explore that, >>right? I mean in what you were just saying too is that that that the company's pitch is that we are freeing people. We are liberating them from the mundane, from the drudgery, from the data entry. And as you, as you pointed out, rightfully, a lot of the customers are saying, Oh no, it's giving our time. It's giving our employees time back to focus on the higher level tasks, the more creative aspects of their job. But, but I wonder if it is in fact a w what it really is doing. Two jobs. I mean I think that there was a really telling line in that Forbes profile of uh, Daniel Dina's who is the, the CEO of this company is founder of this company. The first ever bought billionaire exactly. Um, where it was an MIT professor quoted saying, you know, we always say to the companies that we say, give, give us your data and we'll tell you if it is in fact, uh, having this job killing effect. And he said, the companies don't want to give, give that up. >>Right? So now just look at the why is Daniel didn't as a billionaire, it will here, here, here's why. >>Yeah, walk, walk us through this. >>So UI path is up to 3,400 employees. 34 50 is the actual number. Now back in 2017, two years ago, this company did $25 million in annual recurring revenue. Now, ARR is a metric that's very important because you know, even though you book, let's say you book a $12,000 deal, you recognize that $1,000 a month over the 12 month period. So ARR is a very really important metric. So 25 million in 2017 my sources indicate that they'll do over 300 million this year in ARR. So we're talking about a 12 X plus increase in a two year period. They've raised $1 billion. One of their key competitors, automation anywhere has raised similar amounts of money. So they're talking about a couple of billion dollars raised just in the last couple of years. UI past valuation in March was $7 billion. So at that kind of back of napkin, and we're talking about a $10 billion valuation, Daniel obviously owns a lot of that. >>So 20% yeah. So it's, it's pretty substantial in terms of the market impact. Now valuations, as you all know, it's a fleeting metric, right? It comes in, it goes, but so the, but the landscape is very strong right now. It's really interesting to see how much customers are glomming onto this automation tailwind. The other comment I would make is let's lay out the sort of competitive landscape. UI path has gone from kind of a clear third in the marketplace to clear number one. I mean they're kind of separating from the pack, but there are others automation anywhere, blue prism and there are a number of legacy customers as well >>that that's what I wanted to ask you too, is that we have seen a few Microsoft and Google of course are, are, are partnered in their, in their customers, but they also are moving into this area themselves. So I mean will you will let UI path be able to maintain its competitive position as these very established and frankly very smart companies move into this area. Safety's >>another one. SAP bought an RPA company. It's a good question, but, so if you look at, let me start with this sort of underlying trend. If you look at the spending data, so we have access to the enterprise technology, research spending data and it shows the entire space is gaining share relative to other technology initiatives. So when you look at the data for UI path automation, anywhere blue prism, even legacy process automation companies like Pega systems, they're all actually from a spending standpoint attracting a lot of attention. So it's this rising tide lifts all ships. It's still somewhat early in terms of this next generation RPA if you will, you I-PASS advantage is simplicity. They are totally focused on this. You see this all the time. Do we go best of breed or do we go with a suite? So if Oracle comes up with an RPA solution, they throw it in for free, you know, does a customer take that? >>I think it comes down to what the business value is and that's something we're going to explore. It's not uncommon in detect industry that there's a first mover advantage or maybe it's a second mover advantage. You know, Facebook wasn't really first mover, but the one who really gets it right is kind of a winner take most. And so that's where a UI path is going like crazy right now. Trying to scale the company, raise a bunch of money. We saw this week a bunch of bankers sort of sniffing around. All the bankers are here cause they want their business. So I would expect there's some kind of IPO on the horizon, which I think they need to do to be, to your point to be able to compete with the big guys. So bottom line is they have to do it on a better product, more openness, moving faster and getting to scale. And I think they'll be able to reach escape velocity. I don't know if there's enough room for the big three. I would expect that given the spending climate is very good for everybody right now. I would expect within the next two to three years, some consolidation in this space. >>Well. So one of the things that you had just talked about with this next generation RPA, and that is exactly where we're going because these bots have got to become more durable, more smarter and more capable of handling complex tasks. We saw a number of new product announcements today. Oh, I might to get your thoughts and what you think about them and just whether or not they will have this transformational effect. Um, so, so yes, we have some new product announcements, some, some that democratize automation building that all you have to do is know how to run an Excel spreadsheet and you too can build an automation in your company. >>Yeah. It'll take a little bit of training though. >>I know. I think a better idea for those those demos is they should just pluck someone out of the audience and say, okay, you're going to do this. >>No, they would fail. I mean, let's say said, I remember the first time you learned Excel, I'm old enough to remember slash file, retrieve, paste, copy, whatever. You had to go through some training and we went through classes back in the eighties I think it's a similar here. I mean it's not overly complex. It's gonna have a low code theme, but you're right, UI path announced the number of new products. You know, we looked at this a couple of years ago, we went, we went out and we took the big three from the Forrester wave blue prism automation anywhere in UI path and we said, Hey, let's download them and start building some, some, some automations. While the only software we could get ahold of was UI path. Because as they say, they had kind of a simpler or more open model. The other guys were like, well, talk to a reseller is spend some money. >>And we were like, no, we just want to try it before we buy it. And we weren't able to get the other guy software. Now I think automation anywhere has made some strides in that regard in terms of simplification. You know, it's a copycat industry like the NFL. But so let's remember here we're talking about automating mundane tasks. Relatively simple automations. The customers are asking for things like more complex automations. How do we prioritize the automations? How do we figure out where, what's the best bang for the buck? How do we actually have attended bots because many of these are unintended. They'd like to have the human injected into the equation and that's pretty interesting because it brings forth this augmentation scenario that's everybody's talking about in AI and that starts to move us from sort of this tactical, I'm going to save some time on a use case specific or a technology specific automation to something that's more strategic that I can scale across my organization but right now people are saving money on this as a super hot space. As I say, all the bankers are trying to get in because they know some other ideas are coming down the road and the VCs I'm sure are gonna want the air exits. >>I want to talk to you about the leadership of this company. This is Daniel Dienes and you have interviewed him many times. Do minimun has as well. He he, he seems like a different kind of CEO. I mean, first of all, he is, he's a Romanian. Uh, he grew up, uh, behind the iron curtain. Uh, he was a professional bridge player for awhile, at least play competitive bridge player play competitive bridge and now he is a company headquartered in New York city. He still spends a lot of time in Bucharest but I'm curious to hear your thoughts about his leadership style and the kind of culture he's created at UI path and whether or not, because he's made some key hires from AWS, from Google, some, some of the more established tech players, whether or not he is, whether or not he'll be able to keep that startup culture, that startup mindset as the company becomes so much bigger. Well >>I think it's a concern and something that we want to ask about when you ask Daniel about, you know, how have you been able to do this? He'll talk about the mistakes that they made, how they sort of, they had a build it and you and they shall come mentality, which is kind of kind of old thinking these days and they sort of lucked into this RPA space. He also emphasize, emphasize as humble, and he's a very humble guy. I mean, you'll, you'll, you'll meet him I think last year he came on and you know, he's a developer. He had a tee shirt on. He's a coder right now. He's a billionaire coder. So maybe, maybe he'll, he'll dress up a little bit, but you know, maybe a fancy tee shirt, I don't know. Or maybe a collared shirt that says UI path on it. We'll see. >>But so they end, they want to move fast. They believe in openness there. They believe in transparency. I think those things worked in today's marketplace. People love the guy. I mean the customers love them. The employees love them. As you said, they're pulling people in from the hottest companies. Google, AWS. We, I got a on the shoulder today from, from a gentleman and I know from Google, he was in sales at Google. It's not me. There's no, Oh, I'm day three. And so people want to be part of this, this rocket ship. And I think it's gonna move very, very fast. Like I say, I think you're going to see some moves in the marketplace. I think you're going to see some exits and consolidations. We saw some M and a today UI path announced the acquisition of company called process gold that actually competes with a partner of UI path. So it's again, people are going to be on collision courses and they recently made another acquisition of a company called step shots and we're seeing some M and a, you know, relatively small MNA, but it's all about how can they transform from this little startup to this major player. To your point that can compete with the Microsofts and the SAP and the big whales of the world. >>And what do you think is his bigger selling point? Is it that it is transforming the employee experience, which as we know that that should not be discounted because an employee who is doing less mundane tasks able to focus on the more creative interesting parts of his or her job is a happier employee, happier your employees, more productive employee. A more productive employee means a healthier bottom line. So that's now funding to discount. Also the customer experience, as you said, which is clearly a huge top priority for this company. But, but I think the question is, is this technology now is a transformative enough? >>You know, as you asked that question, it kind of reminds me in a different way of a company that we've followed for years service now. When service now first came out, it was kind of doing what people saw as help desk, improving help desk, and they disrupted an industry and they made it better, which is kind of boring. It's kind of mundane, but actually having good it where you're not constantly down and you're not complaining and stuff's not falling through the cracks actually can be somewhat transformative. Kind of boring, but really important. And I see a similar sort of pattern here now the vision is, you know, a robot for every worker and the path to AI and we'll see. But right now the trans, the transformation is we're going to take away all this crap that you hate doing all these crap locations or mundane tasks and we're going to make your life better. >>And people workers want that and it's going to be in theory, a productivity boost as a result of that. That in and of itself, I think Rebecca can be transformative because it'll, it'll help with morale, it'll help with culture, it'll allow people to shift their emphasis on more strategic work and drive more value for the companies. And so, and I think companies that invest in RPA are, are seeing returns in terms of quality, just in terms of employee morale. You'll hear that from the customers that we talked to today. So I think in that sense it can be transformative like service now was now can it take the next step or is this really just paving the cow path? Is it just taking mundane known processes, automating them as opposed to really rethinking what process automation should look like. And that's some of the criticism of RPA and the RPA hype. And you know, we're going to talk about that. We're going to talk to customers about that. We've got analysts from HFS coming on, Kathy from Gartner's coming on. So excited to hear their perspectives as well. >>Exactly. And I, I want to reiterate that point that you're absolutely right. Their question is should we actually think about redesigning the process itself rather than automating the, the the flawed process? >>Yeah, and I mean I guess part of me says yes strategically we should be doing that, but another part of me says, look, I don't have to change anything. And I think that's the big advantage of UI path and these other players is you can basically automate what you have today. You don't have to redesign the process because process redesign is a heavy lift. So if I don't have to do a heavy lift, if I can improve what I'm doing today and it works, yeah, it's the old, if it ain't broke, why fix it, but just improve it. I think that's a very powerful, I think the big question I have is, is that like a big hit of a step function or is it really transformative? I feel like today's tech is a step function, which is important. You're going to get that step function, but I think you're going to absorb that benefit fast and then people are going to say, okay, now what? >>Another good example is virtualization. When I first saw virtualization and the ability to spin up a server, my jaw dropped and went, Oh my God, I could spin up a server in five minutes and it used to take weeks, months to spin up a server. That's game changing. Nobody talks about virtualization anymore. It was a, you know, a five year absorption of productivity for it and now it's like, yeah, I've been there, done that. That's yesterday's news. I think the same thing is going to happen with today's RPA and the big question is can they cross that strategic chasm into what the gentleman from Pepsi, the executive from Pepsi was saying, this automation fabric across the enterprise as a, as a platform for automation and artificial intelligence. That's a big leap. These guys get big plans. Daniel Dienes is a big thinker, go big or go home. So I don't, I don't have the crystal ball on that, I think, but I think there's a decent opportunity given that there's enough attention on this business right now that it, that it could be transformed. >>All right, well, hopefully we'll know more at the end of these two days. Dave, I've, I'm looking forward to getting into with you. I'm Rebecca Knight for Dave Volante. Stay tuned for more. You're watching the cube.

(dramatic music) >> Hey, welcome back, everybody. Jeff Frick here with theCUBE. We are in our Palo Alto studios having a CUBEConversation. We have a itty-bitty little break in the middle of this crazy conference season. Next week, we're back on the road. And one of the places we're going is UiPath Forward Americas. It's our first time to the UiPath user conference. They're all about the RPA, robotic process automation, which is a super hot space and we're really excited to have with us today Carl Eschenbach. He's a partner at Sequoia Capital, who just came in on UiPath's latest round of funding. Which was pretty significant. You can read all about it in the papers as they say. So we're excited to have Carl here. Carl, great to see you again. >> Great to be here. Thanks for having me, Jeff. >> Absolutely, so we of course known you for years and years and years, you had a long, illustrious career at VMware. You've been in the VC world at Sequoia for a couple of years. How are you liking the transition to VC? >> I really enjoyed it. I had a great many year run, almost 15 years at VMware. I was thankful for it, but the transition to Sequoia, I don't think it could have gone any better. I've really enjoyed it and to be working at Sequoia, which is a tremendous platform behind you, with 45 years of rich history, is just a privilege. And leveraging my operating experience of 29 years, now putting it to work through the Sequoia brand, has been pretty exciting for me. I'm very thankful. >> It's been a pretty good run for former VMware guys, in VC. You know, Jerry Chen is on all the time, from Greylock. There's a number of you guys out there. >> Yeah, there's a number. I think Jerry, I think Steve Herrod's now. You know, Martin Casado who was the founder of Nicira, that we bought at VMware was at VC, so there's a bunch of people who have proliferated the VC market, but none of them got the opportunity to be at Sequoia like I did. So I feel very privileged. >> And it really points to the opportunity, the continue innovation opportunity in the enterprise space. 'Cause you're not investing in dating apps, or autonomous vehicles, maybe autonomous vehicles, I don't know, but it's really more the enterprise opportunity continues to be rich with new, kind of transformative opportunities. >> Yeah I think that's right. I spend the majority of my time, as you could imagine, in the enterprise, that's where I grew up, and my operating experience is all in the enterprise deep infrastructure, so I leverage that experience here at Sequoia, focusing on the enterprise. Both infrastructure, hardware, software, public, private cloud, SaaS. So anything associated with offerings in the enterprise, is where I focus and I'll tell you, over the last few years it's been a really rich environment for an investor to think about what's happening in the enterprise as people still are looking for technologies to transform their business at such a rapid rate. Both on premise and obviously with the cloud environment, it's not if, it's when and how fast people ultimately move into the cloud. >> Right, it fascinates me how we continue to uncover these huge buckets of inefficiency. I mean, you think, I used to tease my friends at a center, tease them that you guys wrang all the fat out of the supply chain, now everything's on back order all the time. >> Yeah. >> But we still find huge chunks of inefficiency, and huge opportunities to get more value out, which is I think, one of the fundamental differences in this kind of stock round up and this productivity. It's real, it's not just smoke and mirrors, there are huge still opportunities. >> Yeah, no I agree, I mean, listen, there are huge opportunities to drive gains and productivity. One of the things we're going to talk about is RPA, for example. How do you automate your enterprise to move towards a digitized world? And by doing that you become more automated, which just drives your productivity, your people that much higher, so I think with the ever increasing use of AI and machine learning, getting deeper, deeper integrated into enterprise solutions. It makes things that much more automated, which impacts the productivity of your people, which hopefully has great returns on both your top line growth and bottom line savings. >> Right, so let's dig into that, 'cause business process automation has been around for a long time. I was teasing about a center, you know you bring 'em in and they spend a lot of time, and they map a bunch of stuff out and they change a lot of things. RPA, robotic process automation, which is a relatively new term, I didn't hear about it 'til relatively recently, is a very different approach to automation, than just hiring in all the consultants. It's about actually letting machines learn, listen, and start to build those new processes. >> Yeah, if you think about the BPO world, BPO was still and is still a very manual human intensive activity. To your point, you're bringing on all these people. You do an outsource and then but there's still someone there, you know, doing data entry, and doing very mundane, kind of easy work. But it's all human driven. And people used to try to solve this by going to offshore locations, with lower cost opportunities, where you can get a workforce that's much cheaper, than here in the states. But again it was all human driven. Now with the advent of something like RPA, that can be substituted with software, and software bots or robots. And by doing that it just drives up the efficiency at which you're doing everything in your older system. So, that's why we've seen such a rapid acceleration that you can't ignore around RPA. Just over the last couple of years this has accelerated extremely quickly, the technology's become a lot more mature, people are starting to implement it, it's one of the first instantiations of AI in the enterprise. And if you think about it, Jeff, implementing a software bot that may replace, three, four, five humans. And oh, by the way, the bot can work 24 hours a day. Oh, by the way, the accuracy rate of the bot is probably significantly higher than a human, so the ROI and the value proposition around RPA is very straightforward. You can't ignore the value it brings. And everyone as you know is always looking to save cost, but it does more than just save cost. It actually starts to impact your top line revenue growth. Because you can take those humans, who used to do those mundane tasks, and you can repurpose them to work on, if you will, revenue generating, profitable activities, while the software bots take care of all the automation of your older legacy systems. >> Right, and it's even, not even, its little things. I'm never amazed, right? I do a ton of interviews, we talk about automation all of the time. I still do a whole lot of manual stuff, that I would much rather have my robotic assistant help me do, simple things like you know, make sure that we get the picture out from this interview, you know, after the fact. All these little mundane tasks that the sum total of which are a lot of activity, and then as you said, I think the other really important piece is the accuracy, right? When you, unfortunately, with computers, unfortunately, they only like to do it the way they get set up to do it. They're not really good at errors so much, so once you set it up. But you know, this RPA is different in that the people aren't doing it, they're actually letting the robots do it so VMware early days of virtualization, now we're getting to the point where the compute, the store, and the network are to a point where you get the horsepower to support this type of function. >> Yes. >> I didn't have it in the past. >> Yep, yeah and with RPA, I think, one of the things that's pretty neat, is people are starting to implement RPA, and they're always finding new use cases for it. And once they get some experience in programming these software bots, right, they start to realize well maybe we can implement this in this other area. So it may start in a finance organization, and it may move into, you know, automating cost centers, or automating what you're doing in sales, or sales operations, so there's many opportunities, once it's implemented once to find other use cases. And actually, you're starting to see people become software bot developers. Like they have to set up these bots to implement 'em in their environment. So people have to learn how to program these bots, and then implement 'em. So there's an ecosystem that's starting to be established around the RPA industry. You mentioned some of the Accentures of the world, they're the old BPOs. There's some of the biggest customers of people like UiPath because what they do is they say, wow, today we're solving this with humans, but if I could solve this now with software, in RPA and technology, like UiPath is providing, I can drive up my margins because I'm doing it through the use of software. And I can repurpose those people to do other tasks. >> Right, so great point. You brought UiPath, and that's what we started with. What did you see as an investor, as an executive in UiPath both the technology and the team and their execution, that led you guys to go in on this big round? >> Yeah so we did a pretty deep dive across the entire RPA landscape. Listen, you couldn't ignore the momentum, right? We say don't fight gravity. We saw the momentum of the RPA market accelerating, and the way I like to describe it, it went from a push market where people have to push their technology into the enterprise, to now it's a pull market where the enterprise is pulling the technology in. Now they're looking for the best solution. So we recognized the growth in the RPA market, to your point, just in the last two or three years, it's really accelerated. And then as we looked at the landscape, we had the opportunity to spend time with Daniel, the co-founder and CEO, and I think there was a few things that stood to us around UiPath. Number one, Daniel is a very unique founder. He's been at this for years and his level of perseverance and commitment to make this a very successful company is unwavering. The fact that they're global in nature already, this is a company who started in Bucharest, expanded internationally and expanded to the US simultaneously so they're covering the three major geographies around the world already today even at an early stage of the company. Which is very, very important for someone when you're an investor to say, wow, what's your global footprint? So we had to help them get into these markets. Today they're established around the world. >> They're already there. >> They're in Japan. They're across Europe, because of where they originated. They have a new headquarters in New York, and they're hiring rapidly. The second is we think their technology that exists today in the roadmap, where they're going in the future, was very powerful. And they're going to continue to implement more and more, if you will, AI into their platform. The other thing that we were impressed with was the fact that they are customer focused. They're very customer centric. And they built a global footprint to support their global customers, and they've had to do that because of the rapid acceleration of the product. They think they're getting like six new enterprise customers a day. >> Wow >> On the UiPath platform. And if you're going to do that in a global footprint, you have to have support around the world. And they're maniacal about how they support their customers. So all of this led to us looking at the market, recognizing the RPA growth and saying, UiPath is the company we want to bet on and we couldn't be more excited to be part of the company, and to help them on their journey as they continue to grow. >> Yeah, well we're excited to go to our first UiPath Americas Forward, Forward America, I got it right. Yeah, we'll be there next week, it's in the Fontainebleau hotel in Miami. And we're looking forward, 'cause like you said, it seemed to come out of nowhere. But as typically is the case, right? Always an overnight success, 10 years in the making, we're just late to see. >> Yeah, they have conferences they've been doing around the world, Jeff, UiPath. And every conference they do, including Japan, it's like a standing room only, because there is so much interest in this technology, and again I think anything associated with automating your infrastructure, moving to a new digitalized world, and everyone has a digital strategy first kind of mentality in the enterprise, these people fit right in, smack in the middle of that. >> Yeah, well, clearly the valuation speaks to that, as market validation. >> Yeah. >> So no doubt about it, Well Carl, thanks for taking a few minutes out of your busy day. Glad to hear the VC life is treating you well. >> Well, thanks for having me. It's good to see you guys again back here on theCUBE. It's always fun spending time with you, and thanks for your interest in UiPath and RPA. I think it's a really exciting market, and I'm quite confident we'll continue to accelerate at unprecedented rates. >> Alright, well great. Well, thanks a lot Carl. He's Carl, I'm Jeff. You're watching theCUBE. We're having a CUBEConversation at our Palo Alto studio. Taking a break from the conference season, but we'll be heading back on the road soon. Thanks for watching. >> Thank you. (dramatic music)

(dramatic music) >> Hey, welcome back, everybody. Jeff Frick here with theCUBE. We are in our Palo Alto studios having a CUBEConversation. We have a itty bitty little break in the middle of this crazy conference season. Next week, we're back on the road. And one of the places we're going is UiPath Forward Americas. It's our first time to the UiPath user conference. They're all about the RPA, robotic process automation, which is a super hot space and we're really excited to have with us today Carl Eschenbach. He's a partner at Sequoia Capital, who just came in on UiPath's latest round of funding. Which was pretty significant. You can read all about it in the papers as they say. So we're excited to have Carl here. Carl, great to see you again. >> Great to be here. Thanks for having me, Jeff. >> Absolutely, so we of course known you for years and years and years, you had a long, illustrious career at VMware. You've been in the VC world at Sequoia for a couple of years. How are you liking the transition to VC? >> I really enjoyed it. I had a great many year run, almost 15 years at VMware. I was thankful for it, but the transition to Sequoia, I don't think it could have gone any better. I've really enjoyed it and to be working at Sequoia, which is a tremendous platform behind you, with 45 years of rich history, is just a privilege. And leveraging my operating experience of 29 years, now putting it to work through the Sequoia brand, has been pretty exciting for me. I'm very thankful. >> It's been a pretty good run for former VMware guys, in VC. You know, Jerry Chen is on all the time, from Greylock. There's a number of you guys out there. >> Yeah, there's a number. I think Jerry, I think Steve Herrod's now. You know, Martin Casado who was the founder of Nicira, that we bought at VMware was at VC, so there's a bunch of people who have proliferated the VC market, but none of them got the opportunity to be at Sequoia like I did. So I feel very privileged. >> And it really points to the opportunity, the continue innovation opportunity in the enterprise space. 'Cause you're not investing in dating apps, or autonomous vehicles, maybe autonomous vehicles, I don't know, but it's really more the enterprise opportunity continues to be rich with new, kind of transformative opportunities. >> Yeah I think that's right. I spend the majority of my time, as you could imagine, in the enterprise, that's where I grew up, and my operating experience is all in the enterprise deep infrastructure, so I leverage that experience here at Sequoia, focusing on the enterprise. Both infrastructure, hardware, software, public, private cloud, SaaS. So anything associated with offerings in the enterprise, is where I focus and I'll tell you, over the last few years it's been a really rich environment for an investor to think about what's happening in the enterprise as people still are looking for technologies to transform their business at such a rapid rate. Both on premise and obviously with the cloud environment, it's not if, it's when and how fast people ultimately move into the cloud. >> Right, it fascinates me how we continue to uncover these huge buckets of inefficiency. I mean, you think, I used to tease my friends at a center, tease them that you guys wrang all the fat out of the supply chain, now everything's on back order all the time. >> Yeah. >> But we still find huge chunks of inefficiency, and huge opportunities to get more value out, which is I think, one of the fundamental differences in this kind of stock round up and this productivity. It's real, it's not just smoke and mirrors, there are huge still opportunities. >> Yeah, no I agree, I mean, listen, there are huge opportunities to drive gains and productivity. One of the things we're going to talk about is RPA, for example. How do you automate your enterprise to move towards a digitized world? And by doing that you become more automated, which just drives your productivity, your people that much higher, so I think with the ever increasing use of AI and machine learning, getting deeper, deeper integrated into enterprise solutions. It makes things that much more automated, which impacts the productivity of your people, which hopefully has great returns on both your top line growth and bottom line savings. >> Right, so let's dig into that, 'cause business process automation has been around for a long time. I was teasing about a center, you know you bring 'em in and they spend a lot of time, and they map a bunch of stuff out and they change a lot of things. RPA, robotic process automation, which is a relatively new term, I didn't hear about it 'til relatively recently, is a very different approach to automation, than just hiring in all the consultants. It's about actually letting machines learn, listen, and start to build those new processes. >> Yeah, if you think about the BPO world, BPO was still and is still a very manual human intensive activity. To your point, you're bringing on all these people. You do an outsource and then but there's still someone there, you know, doing data entry, and doing very mundane, kind of easy work. But it's all human driven. And people used to try to solve this by going to offshore locations, with lower cost opportunities, where you can get a workforce that's much cheaper, than here in the states. But again it was all human driven. Now with the advent of something like RPA, that can be substituted with software, and software bots or robots. And by doing that it just drives up the efficiency at which you're doing everything in your older system. So, that's why we've seen such a rapid acceleration that you can't ignore around RPA. Just over the last couple of years this has accelerated extremely quickly, the technology's become a lot more mature, people are starting to implement it, it's one of the first instantiations of AI in the enterprise. And if you think about it, Jeff, implementing a software bot that may replace, three, four, five humans. And oh, by the way, the bot can work 24 hours a day. Oh, by the way, the accuracy rate of the bot is probably significantly higher than a human, so the ROI and the value proposition around RPA is very straightforward. You can't ignore the value it brings. And everyone as you know is always looking to save cost, but it does more than just save cost. It actually starts to impact your top line revenue growth. Because you can take those humans, who used to do those mundane tasks, and you can repurpose them to work on, if you will, revenue generating, profitable activities, while the software bots take care of all the automation of your older legacy systems. >> Right, and it's even, not even, its little things. I'm never amazed, right? I do a ton of interviews, we talk about automation all of the time. I still do a whole lot of manual stuff, that I would much rather have my robotic assistant help me do, simple things like you know, make sure that we get the picture out from this interview, you know, after the fact. All these little mundane tasks that the sum total of which are a lot of activity, and then as you said, I think the other really important piece is the accuracy, right? When you, unfortunately, with computers, unfortunately, they only like to do it the way they get set up to do it. They're not really good at errors so much, so once you set it up. But you know, this RPA is different in that the people aren't doing it, they're actually letting the robots do it so VMware early days of virtualization, now we're getting to the point where the compute, the store, and the network are to a point where you get the horsepower to support this type of function. >> Yes. >> I didn't have it in the past. >> Yep, yeah and with RPA, I think, one of the things that's pretty neat, is people are starting to implement RPA, and they're always finding new use cases for it. And once they get some experience in programming these software bots, right, they start to realize well maybe we can implement this in this other area. So it may start in a finance organization, and it may move into, you know, automating cost centers, or automating what you're doing in sales, or sales operations, so there's many opportunities, once it's implemented once to find other use cases. And actually, you're starting to see people become software bot developers. Like they have to set up these bots to implement 'em in their environment. So people have to learn how to program these bots, and then implement 'em. So there's an ecosystem that's starting to be established around the RPA industry. You mentioned some of the Accentures of the world, they're the old BPOs. There's some of the biggest customers of people like UiPath because what they do is they say, wow, today we're solving this with humans, but if I could solve this now with software, in RPA and technology, like UiPath is providing, I can drive up my margins because I'm doing it through the use of software. And I can repurpose those people to do other tasks. >> Right, so great point. You brought UiPath, and that's what we started with. What did you see as an investor, as an executive in UiPath both the technology and the team and their execution, that led you guys to go in on this big round? >> Yeah so we did a pretty deep dive across the entire RPA landscape. Listen, you couldn't ignore the momentum, right? We say don't fight gravity. We saw the momentum of the RPA market accelerating, and the way I like to describe it, it went from a push market where people have to push their technology into the enterprise, to now it's a pull market where the enterprise is pulling the technology in. Now they're looking for the best solution. So we recognized the growth in the RPA market, to your point, just in the last two or three years, it's really accelerated. And then as we looked at the landscape, we had the opportunity to spend time with Daniel, the co-founder and CEO, and I think there was a few things that stood to us around UiPath. Number one, Daniel is a very unique founder. He's been at this for years and his level of perseverance and commitment to make this a very successful company is unwavering. The fact that they're global in nature already, this is a company who started in Bucharest, expanded internationally and expanded to the US simultaneously so they're covering the three major geographies around the world already today even at an early stage of the company. Which is very, very important for someone when you're an investor to say, wow, what's your global footprint? So we had to help them get into these markets. Today they're established around the world. >> They're already there. >> They're in Japan. They're across Europe, because of where they originated. They have a new headquarters in New York, and they're hiring rapidly. The second is we think their technology that exists today in the roadmap, where they're going in the future, was very powerful. And they're going to continue to implement more and more, if you will, AI into their platform. The other thing that we were impressed with was the fact that they are customer focused. They're very customer centric. And they built a global footprint to support their global customers, and they've had to do that because of the rapid acceleration of the product. They think they're getting like six new enterprise customers a day. >> Wow >> On the UiPath platform. And if you're going to do that in a global footprint, you have to have support around the world. And they're maniacal about how they support their customers. So all of this led to us looking at the market, recognizing the RPA growth and saying, UiPath is the company we want to bet on and we couldn't be more excited to be part of the company, and to help them on their journey as they continue to grow. >> Yeah, well we're excited to go to our first UiPath Americas Forward, Forward America, I got it right. Yeah, we'll be there next week, it's in the Fontainebleau hotel in Miami. And we're looking forward, 'cause like you said, it seemed to come out of nowhere. But as typically is the case, right? Always an overnight success, 10 years in the making, we're just late to see. >> Yeah, they have conferences they've been doing around the world, Jeff, UiPath. And every conference they do, including Japan, it's like a standing room only, because there is so much interest in this technology, and again I think anything associated with automating your infrastructure, moving to a new digitalized world, and everyone has a digital strategy first kind of mentality in the enterprise, these people fit right in, smack in the middle of that. >> Yeah, well, clearly the valuation speaks to that, as market validation. >> Yeah. >> So no doubt about it, Well Carl, thanks for taking a few minutes out of your busy day. Glad to hear the VC life is treating you well. >> Well, thanks for having me. It's good to see you guys again back here on theCUBE. It's always fun spending time with you, and thanks for your interest in UiPath and RPA. I think it's a really exciting market, and I'm quite confident we'll continue to accelerate at unprecedented rates. >> Alright, well great. Well, thanks a lot Carl. He's Carl, I'm Jeff. You're watching theCUBE. We're having a CUBEConversation at our Palo Alto studio. Taking a break from the conference season, but we'll be heading back on the road soon. Thanks for watching. >> Thank you. (dramatic music)