WalkMe recently announced a funding round of $90 million, bringing its total raised to over $300 million. But according to President and Co-founder of WalkMe Raphael Sweary, the real measure of WalkMe’s success is its annual recurring revenue being more than $100 million (which it is) and whether the company is helping its customers.
WalkMe’s customers are comprised of businesses undergoing digital transformations and looking to accelerate their digital platform adoption.
In this DevOps Chat, Raphael and I discuss WalkMe’s plans for its latest funding, including plans for its SaaS-based digital platform. As usual, the streaming audio is immediately below, followed by the transcript of our conversation.
Transcript
Alan Shimel: Hey, everyone, it’s Alan Shimel for devopsy.kinsta.cloud and you’re listening to another DevOps Chat. You know what, we’re recording this—oh, December 23rd, here, getting near the end of the year. This is probably the last DevOps Chat of the year. So, what a great way to end our year of fantastic DevOps Chat with Rafael Sweary, president and co-founder of WalkMe. Rafael, welcome to DevOps Chats.
Rafael Sweary: Thank you, Alan. I’m super excited being here. It’s one of the last days of selling in Q4, and you know how it is when you’re a B2B business. It’s a big quarter for us, so I’m actually feeling privileged that I can spend some time with you.
Shimel: I appreciate you taking it, I know how crazy it is. You know, Rafael, just on the subject, that’s something I’ve noticed the last two, three years. Years and years ago, kinda the consensus was that especially here in the U.S., after Thanksgiving, things kind of shut down, people got in that holiday mode and business slowed up. But I don’t know whether it’s because we live in a more global economy now or just, things are that different. The last couple years, the last couple weeks of the year have been absolutely frenetic with people doing things and deals coming in and sales being done, right up to the last second, it seems.
Sweary: Yeah. So, I’ve never felt the Thanksgiving effect. For us, it’s always, the last quarter of the year was strong. I think it’s because of budgets that companies have and they want to use it. And sometimes people have something on their desk that they want to come to closure with by the end of the year. So, next year, they can start building and start implementing the new software that they bought. So, I’ve never felt it, but I’ve definitely heard people talking about this phenomenon.
Shimel: Yeah.
Sweary: So, it might be, as you say, the globalization and everybody’s connected all the time. And so, we’re kind of hooked. We’re kind of—
Shimel: Yeah. I agree, I agree. But Rafael, the big news is—well, the big news for WalkMe is, you guys have recently announced, what was it, a $90 million round?
Sweary: Yeah, it’s a $90 million round. It brings the total that we raised to $307 million.
Shimel: Wow.
Sweary: We went into this funding, this funding we didn’t really thought about raising money, and we started entertaining with the idea—because we were very, very well-funded before and we’re selling a lot, so we are, we didn’t really, we’re not a startup that is in a dire need of cash. We weren’t in such a situation. We were very lucky there. And we were planning—we’re planning, we had, our hope is to go cash flow positive and start thinking about going public, et cetera.
Now, what is happening is that, on one hand, we saw a huge opportunity to grow much faster than what we planned, because things were going really, really well with our larger accounts. And, on the other hand, there is a lot of uncertainty crippling into the market. So, you see some instability in the financial markets. Overall, it’s not—it’s not sustainable, but you keep seeing people are, you start seeing those articles about being, writing about the evaluations being too high, et cetera.
And the second thing, you’re going into an election year. Now, uncertainty is not good for business, and those two things brought us into the option of possibly raising capital. We didn’t plan to raise so much money, but when you are dealing in such evaluations and when you’re raising money from later stage funds, they have a minimum that, below that minimum, they’re not interested in the deal, even if the deal is great. Just because they can’t, from a portfolio management, they gotta deploy a lot of money to every company. The minimum for Vitruvian, which is the fund we selected to work with, was 70 million, and then, you know, we have preempt rights, which was exercised by our existing investors, which made the round into 90 million.
Shimel: Right. That’s crazy. So, you know, Rafael, as we were talking off mic, you know, we live in a bit of a crazy time—I don’t know if it’s crazy or if it’s just the new normal—but we live in a time where large numbers like this are not as unusual as it was when I was doing startups, you know, even 10, 20 years ago. And so, first of all, congratulations, alright, because I don’t care what anyone says. It’s hard raising money and it’s hard raising that kind of money, so obviously, you’re doing good stuff there.
But I think the question for our audience is—okay, so now, we have another well financed startup here, raised 307 million, unicorn valuations. But what does it mean to them? How is this gonna change and affect their life, right? When we look at WalkMe, right, the digital adoption technology to help bridge the digital skills divide—
Sweary: Yeah.
Shimel: How are you helping people with that?
Sweary: So, I want to first start with the unicorn. It’s a nickname I don’t like, I gotta say.
Shimel: Fair enough.
Sweary: And it’s overly inflated. So, when I get up in the morning, I’m not worried whether we’re a unicorn or not, right? [Laughter] What I’m concerned about is our stakeholders. Our stakeholders is our, first of all, our employees and our customers are in the number one place. And I wanna make sure that we’re providing a business for them and we’re working in such an environment where we make everything better for everyone, okay? So, this is my concern. My concern is not whether we’re a unicorn or not.
By the way, speaking about that, I think that TechCrunch, I think it was TechCrunch, suggested to stop looking at whether you’re a unicorn or not, but over you over 100 million in ARR or not?
Shimel: Right.
Sweary: I’m glad to say that we are—
Shimel: Good for you.
Sweary: Well over 100 million in ARR. So, it’s not—now, let’s talk about, a little bit about digital adoption. So, for us as users, there is a lot of technology available, and we can use technology everywhere. The problem is that the technology is changing very, very fast, and for us as humans, we don’t change that fast. The common saying is that when practice makes perfect—but actually, practice makes a habit, and changing a habit is something that is very hard to do. You’re accustomed to do something in one way and to change how you adapt to these changes is something that takes very long.
So, I don’t know if you ever moved from a Windows to a Mac machine or from—
Shimel: Oh, I have. [Laughter]
Sweary: You’ve been?
Shimel: Oh, yeah.
Sweary: So, you know that the first few days were painful, right?
Shimel: Mm-hmm.
Sweary: They were painful. They weren’t fun.
Shimel: I know.
Sweary: Right? It takes some time until you—so, Mac, I don’t know what the move you’ve done, but Mac might be much better than what you had before or Windows much better than what you had before. But when you make the change, those first few days, weeks are very tiring, you gotta focus very hard.
Now, but this is a change you wanted to do. Nobody forced you to do this change, you wanted to do it. Now, when you go into an enterprise environment, what is happening is that you’re forced to make—you are forced by the company to make many, many changes to the way you work. Because the company implements a new software, because the company is, has a new process on an existing software, et cetera, et cetera.
And what happens is that you find yourself overwhelmed with all those changes. You go to do your performance appraisal and the process changed or the application changed, and you find yourself learning it again and again and again.
Now, this is where WalkMe comes in. WalkMe reverses the relationship between the user and technology. If today when a user uses technology, he has to focus and he has to think and understand what he needs to do in the software—we do the opposite. The software tries to understand the user and help him achieve what he came to do.
Now, usually what he came to do is to do something specific. So, this is how we help on the user level. But the way we—so, when you are in a company and you’re an employee of a company, today you have many software packages and it’s very hard to track them and we help you to do that. But also important is what we do for the company itself.
So, the general idea when you implement new software is to improve your business. Usually, companies don’t buy products for spite. Like, I might buy a jacket because I feel like it. But no company buys anything because they feel like it. They buy in order to do something.
Now, usually the things that they’re looking to do is to sell more or to spend less or to reduce risk. Like, any expense that a business will do will fall into one, at least one of those buckets. Now, what companies buy most is technology. It’s the biggest expense after human resources. So, companies invest massive amounts of money in technology, but a lot of the times, they’re not gaining the benefits.
So, let me dive a bit deeper, there. When a company buys or implements a CRM, what is their goal? Is their goal to replace the Excel file or the notebook that the salesperson was using? No. That’s not their goal.
Shimel: [Laughter]
Sweary: Their goal is to cell better, right?
Shimel: Yeah.
Sweary: Their idea is that if the salesperson will use the CRM correctly, they will be able to use AI to recommend which pipeline to focus on, on one hand. On the other hand, they would have better predictability so they can report to the market, and also the HR team will be able to look at it and understand if they need more employees or less, and the purchasing department will understand what supplies they need. So, the hope is that, with putting digital, the company will operate better.
Now, what happens? What happens is that the salesperson, when he comes to the CRM, it’s not helping him. He’s struggling. And what happens is that he’s forced to use the CRM. So, what he does is documenting in the CRM. He actually continues to work on his Excel file, and he works on his notebook, okay? So, you’re not gaining all those benefits because it’s not predictable, it’s done retroactively, okay? It happened—once the action happened, okay, it’s a lagging indicator.
And a lot of companies, a lot of time I talked to them and they say, “I have a great usage for my CRM.” And I said, “Look, if you wanna know if you have adoption for your CRM, go to a salesperson and ask him what he’s gonna close this quarter. If he opens the CRM, you have adoption. If he’s going into his notebook or his Excel file, he’s documenting, and you’re not gaining all the benefits.” And then it’s very easy to see that a lot of, for example, the pipe moves from stage two to stage eight, right? Because you’re not really keeping current.
This is, of course, one example. The same thing is true about any type of professional applications that companies use, and even more on everything that is a digital workforce application. If it’s interesting, I can give you some more examples of what we see at our customers.
Shimel: Agreed, agreed. You know, I’m sitting here listening to you talk, Rafael, and you know, you can’t help but put your own, how it fits in your—we went through this right here at MediaOps, right? We have a CRM tool, and I’m trying to break the people of using whiteboards and spreadsheets, you know? [Laughter].
Sweary: Mm-hmm.
Shimel: It’s just as you describe, right? All the reasons, all the motivations. But it’s also a process.
Sweary: Yeah. How do you handle this process?
Shimel: So, I’ve gotten older. I think I’ve become a better parent and a better supervisor. I used to try to force people and say, “You can’t use the spreadsheet, wipe the whiteboard, I want it all in the”—in our case, it’s HubSpot—“I want it all in HubSpot.”
Sweary: Yeah.
Shimel: And what I found is, you know, they would pay lip service to me and they would just move the wipe board out of the way or they’d have a spreadsheet that they didn’t show me, and then it would be like double work, Rafael. So, they would do it in a spreadsheet and then, to make me happy, they would kinda transfer that stuff into the CRM [Cross talk].
Sweary: Right.
Shimel: But a funny thing happened—as they transferred more and more into the CRM, the CRM became more and more valuable, right? So, you wanted, having things in there that you couldn’t put in there, just as you’re talking about.
Sweary: Yeah.
Shimel: You couldn’t put these things in a spreadsheet any more, right? Because there was more intelligence, if you will, built in there. And so, eventually, we started using it more. But—
Sweary: Yeah. Now, think about this, about, with an enterprise that is global and has multi-branches and has a diverse workforce with different digital IQ. And no parents is there to tell them, “Put it into the Excel sheets and then—uh, put it into the CRM,” and then you start understanding the problem. Now, I assume that your CRM was stabilized.
What is happening a lot of the times, it’s not stabilized, it keeps on changing because companies have new processes and then the process changes. So, for example, you keep learning from your business and you’re like, “Well, if it’s 30% discount, you need this approval process versus 15.” And now you add another complexity, and the salesperson is not able to work, right?
So—and I think there is a solution. There is a solution. I think that what is stopping us from using technology to its fullest is the gap that happens between what the technology can do, what we can do as users, and how much, how long does it take until it gets better, right? So, anyone who’s ever used the GPS would never wanna go back to a map, right?
Shimel: Right.
Sweary: As soon as you experience it, it’s much better than anything you did in the past, do you agree?
Shimel: I agree.
Sweary: So, you don’t need to work—yeah.
Shimel: I agree, I agree.
Sweary: You don’t need to work—exactly. You don’t need to work on adoption. But when you’re talking about an enterprise application, there is a very big gap between the perceived value to the organization, and until you see the value and until it trickles down to the employees.
So, let me take you through another example. So, a lot of companies are implementing HRMs, and they idea behind the HRMs is that the employee can self-task, right? You want vacation, you can take vacation. Now, in the past, let’s assume, let’s go back 20 years ago. An employee wanted vacation, he would fill out a form, it would go to his manager. His manager will scribble something, put it in his outbox, it will go into the HR department and then into the finance department and then back to the manager and then back to the employee.
Now, all those people worked on something that didn’t add any value to the company. It’s just an employee taking vacation. So, the company has this great idea—we’ll put a ____ and when an employee wants to take vacation, he would see whether he has a balance or not. Once he asks for the vacation, if there is an issue and other people in his positions are already on vacation, he’s gonna get an alert, and if he doesn’t have the balance, he will get an alert, et cetera, et cetera. And you say, “Let’s automate this process.”
Now, it comes down to the employee. The employee wants vacation. He doesn’t care about the process and how much time is spent, he wants vacation. He comes into this software, he doesn’t remember the log-in, because the last time he took vacation was a few months ago. And he goes in and he’s not sure how to ask for vacation and he gets stuck a few times and what does he do? He sends an e-mail to his boss. What does his boss do? Sends an e-mail to HR, that sends an e-mail to finance, that sends—and then you’re not gaining the benefits, right? Because you don’t see the value.
Now, for the company, it’s super important that people use this application, because it makes sure that all the vacation days are deducted on time, and it really closes the loop, and less people are working on it. But you’re not gaining the benefits. Make sense?
Shimel: Yeah, makes perfect sense to me.
Sweary: Mm-hmm.
Shimel: Perfect sense. Rafael, I wanna take a moment, because we’re running low on time—you know, we spoke about how much money and all of that and it’s all great. I wanted to give people a sense, though, of how many organizations you’re helping with WalkMe, right? And the amount, and how many applications you guys have done integrations.
Sweary: Okay. So, customers, we have close to 2,000 customer logos, which means that when I say a logo, if—let’s say a company of ours, let’s say just as an example, Coca-Cola. So, we have, let’s say, Coca-Cola Greece and Coca-Cola U.S., it would be one logo, although there are two separate companies and that might be completely unrelated. So, we look at the logo level, and we have close to 2,000, including 30 percent of the Fortune 500.
Regarding applications, WalkMe is platform agnostic. We really don’t care what application you use WalkMe on. We have some enhancements that are specific for the big and popular applications such as Salesforce, Dynamics, Workday, SuccessFactors, and those enhancements—again, they’re not about integration, it’s about, we already have a lot of data about what’s working in those systems and what is not, because we did hundreds of deployments over them. So, there is a lot of things you learn between customers.
When we come to a new Workday implementation today, because we did a few hundred of them, we already know what the employees are gonna struggle with. We already know what the managers are gonna struggle with, and we built it into our system so it’s easier for our customers to create content, specific content. Make sense?
Shimel: Mm-hmm. Got it—got it, got it, got it. Excellent. Rafael, I feel like you and I could talk about this stuff all day and lessons for people out there to learn to hopefully make their businesses better, but we’re out of time. I try to keep these, as I mentioned to you, to 15, 20 minutes. We might have gone over.
Sweary: Sure.
Shimel: But first of all—hey, congratulations on all of the success with WalkMe. And more than just the raising money—2,000 organizations using your product and really making a difference in trying to bridge the digital skills gap. It’s a great, great thing you’re doing, and keep it up. Secondly—love to have you back on again soon, maybe in the new year, and we’ll keep—
Sweary: Sure. I would love to join and talk to you a little bit about what we do specifically for companies, how we help, and try to give some tips to some organizations that we see and what we learn from there, because we’re always humbled by what we learn from our customers. And it’s some of the best businesses in the world, and it’s really fascinating to see, when technology works, the competitive advantages that you’re able to gain.
Shimel: Yeah. Agreed. You know what? You’ve got an open invitation, my friend, so when you’re ready, you’ll reach out to me and we’ll continue this.
Sweary: Awesome. I hope Marissa hears that as well. So, Alan, thank you so much.
Shimel: Thank you.
Sweary: And I look forward to talking to you again.
Shimel: Okay. Rafael Sweary, president and co-founder of WalkMe. This is Alan Shimel for devopsy.kinsta.cloud, and you’ve just listened to another DevOps Chat. Have a happy new year, a happy season’s greetings, merry Christmas, holidays, Hanukkah—whatever you’re celebrating, enjoy, folks.
— Alan Shimel
