Software startup Postman became India’s newest unicorn when it recently raised $150 million at a valuation of $2 billion. In an exclusive video interview to M Sriram, Postman co-founder and CEO Abhinav Asthana says the coronavirus outbreak saw the company's number pick up across the world, with application programme interface (APIs) related to COVID doing especially well. Asthana foresees a growing opportunity for APIs and tells Moneycontrol that the new technology is narrowing the gap between emerging nations like India and the US. Edited excerpts:
Q) How have the last few months been following the coronavirus outbreak?
We were fortunately not affected by the pandemic. Our fundamentals have been strong throughout. We are a globally distributed company and had the resilience to move operations remotely. That skill was built in. Developers are building more APIs, building more collaboratively. We are seeing far more digital transformation initiatives. We saw a pretty heavy spike in usage during the lockdown.
Q) Can you give us some context in numbers, pre-COVID vs post-COVID or whether specific countries or services saw growth?
We don’t share revenue numbers. The only thing I can share right now is that we saw an uptick everywhere, across the world. APIs related to COVID saw more of a jump. We even led our own project to aggregate the world’s APIs there. We are 11 million developers across half a million companies.
Q) Are most of your customers from the US? What’s the break-up?
We have a big presence in the US and western Europe in terms of customers. In terms of users, we are pretty widely distributed. Wherever they can pay for software, they are paying for Postman.
Q) Have you seen a difference in the speed of adoption? For example, the US and European enterprise markets are far more evolved as opposed to the Indian market or other emerging nations?
Right now what is happening in the tech industry is that the US was an early adopter market but now, developers are catching up so quickly. Today, you will have a tech stack coming up in the US and within a few days, you will see it catching up by developers everywhere.
In the last five years, developing markets have caught up. Even in India today, developers are onboarded with Postman. With Postman we definitely don’t see a difference. With new technology, the gap is shrinking, if it hasn’t disappeared already.
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Q) How do you look at growth opportunities across countries? The US and Europe are developed but also more competitive.
We are a category-creator company, which commands a premium price. We saw a great response to our pricing this year. We don't launch products for particular countries but there are some minor differences when it comes to educating the market. In the US, we will go to companies and tell them or have a webinar saying “this is what we do”, while in India, there are meetups and a little more effort.
Q) How do you plan to use the funds raised?
There are three broad buckets. First, is raw-product innovation. Postman is led by developers and they want a lot from us. They want us to support everything that their API lifecycle demands, so we will be growing our product and engineering teams across the globe. And, this demand is also from across levels--from enterprises, SMBs (small and medium businesses), mid-market firms and even freelancers.
Second is investing in the community. We partner a lot with vendors, look at grassroots bottoms up initiatives; very focused on learning from and educating the market.
The third is scaling and acquiring new enterprise customers. We also have a ton of demand from existing enterprise customers, which is where our sales function is also targeted.
Q) Does the valuation put pressure on you to perform? Now you will be evaluated not just as an API firm but as a $2-billion API company.
Absolutely not. The interesting thing is that once you build a company to solve a key problem, you see what is the size of the opportunity. This time around we are sharing the valuation because we thought people would like to know about it, share it and are excited about it. The size of the opportunity is crazy. Every company in the world is building APIs. So, we still feel like we are at the starting point of making everyone realise how big that is. The valuation is a reflection of the potential we, our customers and our investors see.
Q) So no valuation pressure?
Not at all. That is also why we have also chosen our partners (investors) over the years very carefully. The only pressure we have is to deliver value to customers quickly because when they see we are funded and they are paying for the product, they want a great experience.
And once you see that feedback loop, that motivates you further. That was also the reason behind the fundraise, seeing whether there are still real problems to be solved, which have grown 10x from where it was before because the market is expanding. It feels good to be valued highly for that.
Q) Today when you’re onboarding clients and developers, is your focus changing from enterprises to SMBs to go down the value chain?
We have products which address each tier of users, from a student to an enterprise company, and the way we have designed Postman is that it scales up according to your needs. You can unlock additional capabilities and scaling up product design is something we spend a lot of time on. We always build thinking about who is actually going to use this product. A lot of enterprise products are built to be sold rather than built to be used. And what we have seen is that the problem of API collaboration is fundamentally universal. The problem is the same whether you’re a developer or a large company.
Everyone is ready to pay for software, but there is this realisation that software costs need to be able to scale up and down, depending on the usage. When we started out everyone said developers might not pay for software, but we found out that they pay for great software.
Q) Do you think API collaboration is a winner-take-all market or can there be three-four large profitable companies?
I will speak only for my product and I think we have the best product that beats everything out of the water. I’m sure we’ll see copycat companies and see some emulate us, and that’s fine. That is a common tenet of the industry. I feel very proud that we are essentially creating a market to address a need that no one was addressing, and that market is only going to grow.
Q) When you look back, what is the biggest challenge you faced?
Getting a team together, mobilising them towards a common goal, these were all pretty big challenges in themselves. We always want to give back to the community and in the early days, we gave some of our paid services away for free. It is counterintuitive to think about and to lose revenue but it helped us maintain love from the developer community and build a more fundamentally strong business model. We had an in-app purchase which we made free, we had limited collaboration free and we saw that developers love the product, they learn about it and eventually want to pay you more. Those were harder, long-term calls. It really helped refine our business strategy a lot. Early on, shipping a perfect product week after week is one of the hardest challenges.
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