A “unicorn company” or “unicorn startup” is a privately-held company that has reached a valuation of more than $1 billion. As of February 2022, there are 1000 unicorns all over the world.
Companies are called “decacorns” when they reach a valuation of more than $10 billion and “hectocorns” when they’re valued at over $100 billion.
Despite differences in scale and funding, unicorns face many of the same challenges as smaller SaaS businesses. By understanding how they tackled these hurdles, you can derive valuable insights to help you grow your own company.
Let’s dive into the stories of 11 SaaS startups that rose to fame.
Salesforce has transformed from a startup taking on the CRM giants Oracle and Siebel Systems in the 1990s to a full-fledged SaaS powerhouse through its 23-year journey.
The origin story of Salesforce has taken on legendary statuses like Jobs’ garage or Zuckerberg’s dorm room. It was started in 1999 by former Oracle employee, Marc Benioff along with Parker Harris from a San Francisco apartment.
The company went public in 2004 and eventually became one of the top SaaS companies in the world.
What can you learn from Salesforce’s growth story?
Many SaaS businesses shy away from transparent pricing because of the fear that competitors could use pricing intelligence against them. However, Salesforce believes that by not displaying pricing information, you’re wasting the time of your sales teams—and therefore, leaving money on the table.
Instead of hiding pricing, the company believes in improving its offerings with a customer-first approach. Salesforce quickly gained more than 3 million customers because its product was user-friendly, easy to set up, worked speedily, and easily integrated with existing software platforms.
Salesforce was founded on a single, daring premise that software should be available to all, 24/7, via a global cloud computing infrastructure. It was the first company to sell cloud-delivered software—long before the term SaaS was coined.
At the time, Oracle and SAP were selling software that had to be licensed, installed, and updated on-premise. Now, these companies are trying to catch up to the SaaS wave!
CEO Benioff says, “It’s amazing to consider that no matter what size customer we were pitching, or where in the world we were selling, a singular idea drove all our accomplishments: we never sold features. We sold the model and we sold the customer’s success.”
Salesforce worked on building a company culture from Day One. Benioff had a vision for responsible capitalism and the company’s earliest planning documents talk about its charitable 1-1-1 model. The idea of the model was to give one percent of Salesforce’s equity, one percent of its product, and one percent of its employees’ time to the community.
Another aspect of building a culture from the beginning involves getting customers to trust the company. When Salesforce started, people were yet to fully trust the Internet so the company had to overcome objections around entering credit card details or sharing contact information online.
Co-founder Harris says, “We had to not only think about scale, we had to think about how do we get the trust of our customers, to say that we will protect your information as well or better than you can.”
Once dismissed as an “ant at the picnic,” Salesforce is now regarded by investors as a major growth stock.
Founded in 1982, Adobe is an example of a company that refurbished its core business model while continuing to retain stakeholder confidence, learning from customers, and rebuilding its product offering from scratch.
Its Creative Suite was generating more than $3.4 B in revenue when, in 2012, it released Adobe Creative Cloud. The subscription-based offering initially received mixed responses from users who were loyal to its perpetual-licensed software. Until 2017, both options were available side-by-side to customers.
In the last ten years, Adobe has outperformed its rivals Salesforce and Microsoft.
Lessons to learn from Adobe’s transformation to the world’s fourth-most valuable software company:
Before its digital transformation, Adobe’s growth was driven almost entirely by increasing upgrade pricing for existing customers. The company needed to expand its total addressable market.
As an experiment, it began to offer its flagship product Photoshop along with Lightroom for $10/month—which became a success. Customers who were unwilling to invest $900 for Photoshop or those who felt that the 14-day trial was not enough to evaluate it properly could now get started with a monthly subscription.
Adobe took a risk in giving up existing business to disrupt itself and open up new markets.
Adobe retained stakeholder confidence throughout its big pivot with three tactics: over-communication, goal-setting, and education.
Adobe’s massive pivot was quite challenging for many of its employees to accept and align with. Its leaders set clear expectations around its future vision and were transparent about its commitment to the cloud model. They encouraged open debate on the change and were willing to accept that not everybody would get on board.
Zoho’s CEO, Sridhar Vembu, is known as the Badshah of Bootstrapping.
He talks of Zoho’s journey: “When we started, we were in small niche micro-segment, in fact, the entire global market for our offering at that time was probably $10 million. We used the opportunity and then bootstrapped it into other segments. Now we are addressing markets that are maybe $100-200 billion or even bigger global markets so we have room to grow and that is why we are expanding both geographically and in terms of our talent pool.”
Founded in 1996 as Adventnet, Zoho is a cloud software suite with applications like Zoho CRM, Creator, Projects, and Sheets. Currently, it has 50+ apps, over 9,000 employees, 60 million users, and generates a revenue of $42.7 billion.
Since the company remains privately held, it can make unconventional investments and focus on customers in a way that public companies cannot.
We can distill three important learnings from Zoho’s journey so far:
Zoho had to learn to be flexible and change course according to market demands:
A brand has to stay focused, yet agile to remain relevant.
Long-lasting brands need a long-term approach toward team building. Zoho always focused on putting its employees first. The company ensured that its employees were happy and had opportunities for collaboration and learning.
When hiring, Zoho looked for people who wanted to grow with the company and then gave them opportunities to pursue their interests. The company culture encourages the building of close relationships over time, which helps employees work together effectively.
Zoho believes that a long-lasting brand should leverage its resources and influence to bring positive social change such as providing financial support to external organizations, creating opportunities for volunteer work, or bringing inclusivity and diversity at the workplace.
The Zoho Schools program provides free education to disadvantaged children (often with a monthly stipend) and a guaranteed employment opportunity at Zoho after graduation.
Freshworks, a business automation software company, was launched in 2010 and quickly acquired 200 customers within 200 days. Venture capital firms like Sequoia Capital, Tiger Global, and Accel discovered the startup and, in 2018, Freshworks raised $100 million in Series G funding. It hit a $1.5 billion valuation and became India’s first enterprise tech unicorn.
Freshworks is also the first SaaS company founded in India to be listed on the Nasdaq. Currently, it has 52,500 customers across 120 countries and generates more than $300 million in revenue.
What are the lessons that Freshworks can teach us?
Even though the Freshworks buyer is not the ultimate user, the company recognized that end-users were becoming more important in software buying. As legacy vendors did not build their products to meet users’ needs, Freshworks stepped in to fill the gap. Only when users adopt the product do executives see the expected ROI and generate product insights.
Freshworks focuses on being discovered organically through free or low-cost channels like word of mouth and search marketing instead of paid marketing and outbound sales. Its organic content marketing strategy includes blogs, ebooks, a marketplace with 1000+ pre-built apps to customize Freshworks, an academy with courses and certifications, and a community forum called Refresh for user-generated content.
Freshworks also employs guerilla marketing tactics to target people who are dissatisfied with legacy software and to amplify word-of-mouth marketing.
Freshworks made it easy for potential customers to try out its product and quickly complete onboarding without having to talk to a sales representative.
It offers 21-day free trials for its products, freemium editions of its flagship products like Freshdesk, and several free sidecar products.
Freshdesk’s intuitive onboarding process includes:
In 2013, Eric S Yuan, a former Cisco engineer, launched Zoom Video Communications. At the time, videoconferencing conjured up images of downloading complicated software and setting it up along with other IT-related processes. Zoom changed that perception by enabling users to simply send an invitation link that would launch the meeting.
Since the pandemic, Zoom has grown exponentially to reach 300 million daily meeting participants. From an enterprise-focused platform, it has become a fact of daily life for millions of people.
Lessons we can learn from Zoom’s growth story:
As VP of Engineering at Cisco, Yuan realized that customers were not happy with Webex and the problems could not be fixed by tweaking the software. A new solution had to be built from scratch to win back disenchanted customers. However, Cisco’s executives did not agree to Yuan’s proposal and he decided to resign.
He then built a superior product that became Zoom and the first iteration only took a year. In the first two years, when the company still had a small team, Yuan would email any customers who canceled their subscriptions. He would invite them to a Zoom call to discuss the issues and find a solution.
Yuan continues to engage with customers on Twitter and responds to negative feedback. He passes on issues to his team so that they can be resolved quickly.
Zoom’s brand took a beating in the data breach of early 2020 but Yuan took several measures to remedy the issue instead of sweeping it under the carpet. He solved legal issues, bought a security company called Keybase to improve security, and hired Facebook’s security chief Alex Stamos as a consultant.
Since the fourth industrial revolution and the rise in the demand for video conferencing, Zoom has been focused on acquiring enterprise customers.
But in the early 2010s, the popularity of massive open online courses (MOOC) necessitated a platform to facilitate remote learning. Yuan sensed the opportunity and acquired Stanford Continuing Studies as its first customer—just three months after Zoom was launched.
A San Francisco-based file hosting service company, Dropbox evolved out of MIT student Drew Houston’s frustration of losing flash drives. It debuted in 2007 as a startup funded by seed accelerator Y Combinator.
Since then, Dropbox has grown to 600 million users and its total revenue in 2020 was $1.9 billion. The company dared to dream big in a field dominated by behemoths like Google, Apple, and Microsoft.
What lessons can we learn from Dropbox’s growth strategy?
Many founders think they need a polished, sophisticated product before launching it. But Dropbox demonstrated that you shouldn’t aim to have a finished product before customers have had a chance to use it and provide feedback or you might build something that customers don’t even want.
Dropbox launched in 2007 with a minimum viable product (MVP). It gathered feedback from early adopters to optimize the product and add more features that would make it better.
Dropbox used innovative (at the time) and bootstrap methods to market its product. The simplicity of the product meant that the company had to market itself cleverly.
One of the ways in which it enticed users was by offering a free plan with 2 GB storage when the product was launched. This helped build a wide user base to which Dropbox marketed its paid subscriptions. Today, the company has 14.3 million paying customers who generate more than $1.66 billion in revenue.
Dropbox has mastered the art of networking with its clients to acquire more customers. It incentivized users to tell other people about the product by offering 500 MB of extra storage to the referrer and their friends.
It’s a clever digital marketing strategy because Dropbox grew to 100 million users within its first four years. The company did not have to spend much on marketing because such word-of-mouth tactics ensured that users spread the word by sending invitation links to friends and family to get the extra space.
Dropbox ensured its product was integrated across all existing platforms so that it was simple and easy to use. As long as users were connected to the Internet, their files were synced across devices and up-to-date.
Zendesk, a customer support and sales platform, recently hit the $1 billion revenue milestone. From an extremely humble start in a loft in Copenhagen, Denmark, the company has come a long way to acquire 170,000+ paid accounts across 160 countries.
The COVID-19 pandemic caused a rise in demand for Zendesk’s platform because businesses needed a way to establish, maintain, and manage relationships with their customers.
Here’s what Zendesk does to ensure continued success:
Zendesk believes that product-led growth teams should keep a close eye on their data along with marketing trends because:
Mona Nasiri, Director of Product Growth and Monetization says, “Data instrumentation should start way beforehand so that you can actually track those baselines and see how things shifted post-launch. So, we add that step as early as discovery or solutioning.”
Zendesk fosters collaboration between product-led growth and sales teams even though they may seem incompatible. They call it “product-led sales.”
For example, by proactively identifying high-quality leads, sales productivity can be improved. Also, by using automated triggers to move deals from the sales funnel to the self-service path, the sales team can concentrate on bigger deals.
Zendesk discovered that customers found complex pricing plans a hindrance to buying. So they simplified their plans and pricing to include three base plans with starting prices of $49 per agent per month and two enterprise plans.
Each pricing tier is explained with a checklist of features and benefits, and customers can choose the plan that fits their needs and budget.
Zendesk launched a comprehensive messaging solution to enable businesses to communicate with their customers via channels convenient for them, such as text messaging, WhatsApp, or chat windows. So businesses can reach their customers through mobile, PC, or social media.
Zendesk strives to meet evolving customer demands through its broad landscape of tools and services.
DocuSign Inc., an electronic signature and approvals service, witnessed explosive growth due to pandemic-driven demand. Its stock rose by 200% in 2020!
Since its launch in 2003, it has grown mostly by word-of-mouth marketing. And the company does not expect demand to fall any time soon due to its new Agreement Cloud services.
DocuSign stays true to three tactics to ensure longevity and sustainability:
DocuSign is known for its excellent customer support because it has an internal customer-first culture. The company ensures high customer success by enabling high adoption rates for initial use cases. Customers become familiar with the benefits of the product leading to business efficiency.
Next, the company helps these customers extend the eSignature services to other aspects of their business. Finally, it seeks opportunities where other Agreement Cloud products can be implemented in the customer’s company.
DocuSign’s CEO, Dan Springer, recommends looking at metrics like net revenue retention rate to determine success in customer adoption. DocuSign posted a net retention rate of 123% and a revenue of $1.5 billion for fiscal year 21. It currently has 892K customers.
Most customers learn about DocuSign after signing a document and then seeking more information about the company’s services. Such brand recognition leads to customers signing up for free trials and eventually becoming paying customers.
DocuSign’s CRO, Loren Alhadeff, says, “…as they use our products, and send out agreements to be signed, they broaden DocuSign’s exposure to customers and non-customers alike. When those agreements move back and forth around the world, they drive people to our website and digital channel where they can trial the product or immediately buy it.”
With its exemplary customer service, these customers become the company’s advocates.
Originally, DocuSign was intended as a tool to improve workflows for almost any business — legal, operations, sales, or marketing.
Over the years, the company has launched other products like Analyzer, Monitor, Notary, Insight, and CLM to complement its eSignature product.
Now, with the Agreement Cloud, DocuSign has an opportunity in terms of scalability.
Even though DocuSign is the market leader in agreement software, it has expanded its suite of tools to acquire fresh markets.
Automattic Inc., founded in 2005, is the company behind WordPress.com, Jetpack, WooCommerce, and Tumbler. Currently, WordPress (an open-source software) runs nearly 42% of all websites on the Internet. WooCommerce powers around a quarter of online ecommerce stores.
Automattic has always been fully-remote and distributed. Its asynchronous workforce comprises 1,700 employees spread across 80 countries. It has raised almost $1 billion, most recently at a $7.5 billion valuation.
Why is Automattic’s fully-remote culture a success?
All managers and leaders at Automattic work remotely so they are committed to making the arrangement work. No employee is left out or forgotten.
Since employees don’t need to relocate, the company can hire better people who are intrinsically motivated and disciplined. This avoids issues of remote work abuse.
Automattic’s remote work culture focuses on empowering employees instead of treating them like children who need supervision. Managers care more about results than superficial aspects like the location of work.
Self-motivated and supported remote workers are highly productive. Thus, freedom, autonomy, and trust are important pillars of the company’s culture.
Instead of email, employees at Automattic use chat rooms, Skype, and an internal blog called P2 that enables team members to stay connected, share prototypes, and collaborate in a familiar environment. Messages on P2 are searchable, visible to all, and can be linked to via a URL. Irrespective of time zone, anybody can catch up with these messages.
Remote work managers at Automattic meet annually for a physical get-together to discuss company strategy or just socialize. Thus, strategy work that requires people to be in the same place is effectively done.
In 2012, Stewart Butterfield, CEO of Slack, and his friends were working on a video game called Glitch but it did not succeed. The chat platform they were using to collaborate was spun into a company that eventually became Slack.
At its beta release in 2013, Slack received 8,000 sign-up requests within 24 hours.
From the beginning, Slack built a culture of empathy to help teams work better. They believe that they’re not just selling a software product, they’re selling the whole system in which people think and do work.
Here are three lessons from Slack:
Instead of spending heavily on growth to scale, Slack focused on understanding how customers used the product. It evaluated nearly all the feedback it received from early adopters to build its early product. Its responsive approach to product development allowed Slack to quickly iterate on user feedback and pitch larger companies to try out the product.
Slack set up a small user experience team right from the beginning to help new users. That’s how the company ensured a better user experience each time it delivered a new feature.
The ability to accept that something isn’t working and therefore make a change is critical. Your original vision might not succeed, but if you have empathy for your user base and you listen to them, you can build brand loyalty and improve your product.
Slack infuses a bubbly, bouncy, and fun personality into its platform. Its bright color palette, emojis, and the Slack robot have an upbeat feel to them. Even its name is like a self-aware joke that companies adopting Slack want to incorporate an effortless, casual corporate culture.
Atlassian, a SaaS company with a suite of project management, collaboration, and communication tools like Jira, Confluence, and Trello, used some unconventional strategies to grow from $20 million in ARR to $20 billion today.
Instead of following the traditional sales/marketing model, Atlassian invested in the flywheel business model to reduce friction and build a loyal customer base.
Here’s what Atlassian did:
Their key strategic insight was that products could sell themselves only when certain elements were in place: a good product that potential customers could discover on their own, could use on their own, and onboard effectively on their own. The product also needed a loyal user base who would advocate for it both internally and externally.
Atlassian used a self-service model wherein they didn’t ask customers to fill in a “Contact Us” form and then have a salesperson pitch to them. Instead, they’ve focused on creating an intuitive onboarding process that didn’t need to be explained too much to customers.
Most SaaS websites don’t display pricing because they don’t want to give competitors a chance to undercut them. But Atlassian began by offering a single price point, just above free.
Currently, they offer a tiered pricing structure that includes a free version, a standard version, a premium version, and an enterprise version. Simons, ex-President, said, “…even an enterprise customer could come to the website, spend $10,000, start with a team of 10 or team of 50 and get going without actually needing to talk to us.”
Atlassian employed product advocates instead of formal sales teams. They answer questions around product capability, pricing, or alternatives and then direct customers back to the self-service path. This minimized the sales team at the beginning of the sales cycle and enabled more money to be diverted into R&D.
At the time of their IPO, they were spending only 19% of their revenue on sales and marketing!
The company also has enterprise advocates to focus on large, complex customers and answer more complicated questions.
Atlassian built a global network of channel partners to steer large enterprise customers in the right direction without having to establish its own team in every region. The industry expertise of these partners helped the company expand into target markets efficiently.
Atlassian also partnered with peer companies (such as Confluence and Slack) to drive cross-product integrations that make products stickier and widen the customer base.
Among the top traits of SaaS unicorn companies are aspects that a founder can control: obsessing over your customers, disrupting the marketplace, having a strong belief that your vision will succeed, and expanding the size of your total addressable market.
Fast-growing companies can use a combination of product-led growth and customer-centricity to achieve the unicorn status they dream of.