Building a Tech Startup Outside the Silicon Valley

Transcript

1. Building a Tech Startup Outside the Silicon Valley
2. Preface • This talk is about our journey • Your experience will be different • Of course its heavily survivor biased
3. Agenda for today • Chronology of Instana • How we evolved our engineering organisation
 to over 50 engineers • Ask me anything
4. Chronology of
 Instana
5. Inception & Validation 2014
6. What problem did we want to solve? • Management of IT systems is messy and no fun • In many companies several monitoring silos exist in operations • End User Monitoring • Infrastructure Monitoring • Cloud Monitoring • Application Monitoring • …
7. That is not a new problem! • For a startup its great if a problem is recognized already • Companies have already allocated budgets to solve this problem • Solving this problem is essential for companies that need IT to do business
8. There must be competition!? • The monitoring market has many solutions • We needed to understand most of them to know their strengths and weaknesses • Lots of one-trick-pony type of solutions show complexity of the problem, but also need for end-to-end visibility • Technology advances, and solutions quickly become legacy • Many solutions do have quality issues on stability or usability • Lack of automation and assistance • High dissatisfaction about the inability to solve real problems
9. Our window of opportunity • We focused on containers first • We also utilize modern technology to process data better • We deliver end to end visibility • We provide high quality and future proof technology • We automate root cause analysis • We solve actually day to day use cases of our customers
10. Founding Team • A well rounded team • Pete
 built sales, marketing and channel at similar startup before • Pavlo
 renown big data and stream processing expert • Mirko
 serial entrepreneur, networker • Fabian
 domain expert and experienced engineer • Avoiding the typical anti-pattern of
 “I have a great idea, now I need a team to do it”
11. Business Validation • What is the total addressable market (TAM) • What could be our market share • Who is our customer? • Mega tech corps like Google? • Local mom & pop shops? • Who is relevant competition? • How do we want to position ourselves? • A new product (AI Ops) • A better product (next gen APM)
12. Slides from our 2015 VC Pitch Deck
13. The Market * of companies Edge - Web Scale Companies Highly individual & complex architectures Head - Enterprise Customers „New architectures“ - System of innovation Head - Enterprise Customers „SOA architectures“ - System of Records Long Tail - Small Enterprises Packages Apps, Standardized less than 1.000* about 
 50.000* more than 
 1.000.000*
14. The Market Vendors & Tools * of companies Perfect Market-Segments
 to place INSTANA signal fx
15. $2.6B 
 market The Market Top 15 APM Vendors 0 100 200 300 Revenue 2014 Dynatrace CA Techno-
 logies IBM Dell Microsoft Riverbed Splunk HP New Relic Oracle App
 Dynamics BMC Software Fujitsu Hitachi Nec Data Source: Gartner, Inc., „Market Share Analysis: Application Performance Monitoring, 2014“ by Federico De Silva, May 27, 2015 16% Y-2-Y growth
16. Time for APM 3.0! 1990 1995 2000 2005 2010 2015 Client/Server Linux Open Source Web 3-Tier Java EE SOA Web 2.0 OSS Middleware Cloud Big Data µService Containers Lambda Arch. Tivoli BMC CA Nagios CA/Wily Dell/Quest Precise HP/Mercury dynatrace AppDynamics New Relic APM 1.0 APM 2.0 APM 3.0
17. Tech Validation • Prototypes for core ideas • Single agent, auto update, easy install, high resolution • Container Ready • Stream processing • Algorithms and learning for data stream • Graph for understanding • “NoSQL” Storage • 3D UI and innovative visualisations
18. From Prototype to Product
19. Early prototype
20. Design prototype
21. Visionary Version…
22. Almost Working Version…
23. Kind of Working Version…
24. Actually Working Version
25. Actually Working Version
26. Current Version
27. Lots of talking • We talked to hundreds of potential customers and partners • From previous life, network and cold calling • Practiced your pitching and marketing • Got feedback on ideas and prototypes • Narrowed down our target audience • Not trying to serve everybody • Narrowed down our solution • Ideally we would have done only 1 thing, but APM is a wide topic
28. Seed 2015
29. Let’s do this! • Market? Check! • Exists, big, underserved • Ideas? Check! • Validated by externals • Team? Check! • We had everyone to do it ourselves • Tech? Check! • It actually works
30. Founding the company • We named our company Instana, because it is cool, but also has a meaning. And it was “free”, except on twitter :-( • Lots of legal stuff • We incorporated in the US, due to better VC market • For investments it is important to build a good CAP table for founders, VCs and employees • Filed for Patents, Trademarks • Secured initial financing, with a convertible note
31. Stealth
32. Product Market Fit • Selling the USPs and vision beyond • Building a foundation, that is • good enough • operable • expandable • Hiring slowly for missing tech skills • Most of our first hires came from our network
33. Sell something • We started with a reasonable price for our product from day one • Find something people are willing to pay for • This is not about profit, or break even. It is about proof. • We build “infrastructure” only monitoring. Sold to “friendly” customers, but also cold called / cheap marketing • Deliver value (even when low initially), convince of future value and execute and deliver. Keep your promises. • Underpromise and overdeliver.
34. Watching the feedback • Feedback is mostly positive • Feedback will help you to polish, but not generate radical solutions • Remember Henry Ford…
35. A Round 2016
36. Pitching • Lots of VCs • Lots of Variants of Pitches • Working Demos • Showing Proof: Customers • Showing Scale • Of tech • Of company • Spent weeks in silicon valley
37. Weeks in valley • Talked to thought leaders • Lots of great networking potential in the bay • Everybody is open for discussions • Do not pitch your idea, but rather show results and ask for feedback based on their expertise and experience • Still tough to get into VC Money. Little trust that a team outside the valley can have success...
38. Weeks in Europe • Looked for a tech VC • Still pitched the idea of getting an US VC down the line • And we found our investor
39. Our Series A Lead Investor: Target Partners • Target Partners focuses mostly on
 Early Stage “Hard Tech” startups
 in Germany. • Our partner Berthold has been
 amazing throughout the process
40. Building the 1.0 Version • It was clear to us that our vision is way too big. 
 The domain requires this and we knew it would be a long run • We build small features providing an outline of what the later product will look like • Many small little MVPs that form a big picture • Make components scale and redundant (and document trade-offs)
41. Building the 1.0 Team • We decided to grow the team very slowly • Focused on experts working “alone” • Since experts could be anywhere, we went global • Started to hire Sales, Pre Sales, Marketing • Always keeping cost in mind
42. B Round 2017
43. How we found our B round investor • 2017 something interesting happened. • We were growing the product and customer base and making more noise marketing wise • We were starting to think about the B financing • Then suddenly VCs approached us… • … and flew in people… • …who refused to leave until we sign
44. Our Series B Lead Investor: Accel • Accel focuses on SaaS solutions
 for customers and enterprise • Harry and Adrian flew in the next day • Laura and Andrei came as well, and
 refused to leave
45. Accelerating Growth • Along our customer base we also started to grow the company faster • Grow all departments • Cost control and planning becomes a challenge • Turn external services into internal functions Accounting, HR • Overcoming organisational challenges
46. C Round 2018
47. Our Series C Lead Investor: Meritech • If you are watching my JavaZone
 vimeo, this is the thing I could not
 announce on stage :)
 vimeo.com/289698520 • Meritech is a late stage growth fund • Happy to have Alex on board now
48. Evolution of the 
 Engineering Organisation
49. Growth
50. How we started
57. Remote Work
58. Local vs Remote • Instana is a remote by default company • However, in engineering we prefer to have teams co-located • We have 4 main engineering offices • Solingen, Germany • München, Germany • Novi Sad, Serbia • Austin, Texas, USA
59. Hiring
60. Local vs Remote • As you could see, diversity is an issue • Remote hiring tends to favour extroverts, meritocrats • We cannot take care of Juniors remotely • We build (currently) 4 local teams, where diversity is easier to achieve, and add a few remote people to the mix
61. Support Engineer
62. Engineers need to resolve Customer Issues • Customer Success team deals with questions 
 and comments • Engineering needs to understand and fix issues • We have currently 2 Support Engineer of the
 Week (SoW) • Responsibilities • Triage • Communicate (via Zendesk) • Help (Document or Implement)
63. Release Engineer
64. Major Releases vs Hotfixes • Releases contain new functionality
 and major changes • Hotfixes contain bug fixes, improvements,
 small additions • We need to communicate around releases • Marketing • Customer Success • Sales • SaaS is “hot-fixed” almost daily • On Premises Releases trail SaaS releases
65. Autonomous Teams
66. Teams organise themselves • Teams have a purpose / goal • Teams are staffed with cross-
 functional skills • Teams organise their
 working mode on their own
67. Common Tools
68. Github • Following the Gitflow model
 https://nvie.com/posts/a-successful-git-branching-model/ • Using PRs to discuss changes • Also covers our documentation • And customer sample apps • Like Robot Shop
69. Slack • You want asynchronous communication that mimics office chatter • Slack does this for us • Use private channels for 
 “blameless” discussions • Star and mute channels!
70. Slack • When its down, tweet :)
71. Zoom • High Quality Video Conferencing
 and Screensharing • Zoom has great apps and
 even “Meeting Room” support
72. Realtime Board • Teams do various meetings to discuss plans and designs • Visualisation of ideas and
 interaction are hard
 remote • Realtime Board fixes this
73. Trello • A lot of planning does not 
 require a high level of detail • Trello is good for getting a
 high level overview of progress • We use it for roadmapping 
 and other organisational things
74. Pivotal Tracker • Lower level issue and task tracking • Iteration planing aid • Progress tracking • Chaotic at times
75. Wiki / Docs • Boards and Trackers are often
 insufficient for longer design
 and requirements work • We use Notion.so as internal
 documentation & knowledge
 base and for shorter lived
 working documents. • For drafting things, we also use 
 Google Docs / Sheets