It’s that time of year, where I — as a committee of one judge, me! — select one startup in the tech ecosystem that “broke out” and has the makings of an even larger outcome should things continue to go right. As a little tradition on this blog, I’ve singled out companies starting in 2013 with Stripe; there was Snap back in 2014; Slack in 2015; took a break in 2016, as I wasn’t inspired to select one then; and last year, 2017, was Coinbase. (Had I begun this tradition earlier, for those wondering, it would’ve been Airbnb in 2012, and Uber in 2011.)
You may look at this and think to yourself “well, of course, how controversial are those?” This year, however, is like any other year in which I’ve tracked these and tried to single out one. [Here is the Google Doc where we tracked these.] Whereas in 2016 I struggled to come up with one, and whereas in 2017 it was obvious it was Coinbase, with 2018 comes the most money poured into U.S. venture capital deals, a spike in mega-financings where it’s common to see not only $100M private rounds, but companies that raise two or three types of financings like this in the same calendar year!
Therefore, I’m bracing myself for the fact most folks will disagree with or simply not like what I’ve selected this year, but it’s OK – there’s no easy answer. Let’s quickly take stock of 2018 – we witnessed micro-mobility startups like Bird and Lime, most notably, go from early-stage concepts into companies valued in the billions after raising hundreds of millions of the dollars; we saw enterprise businesses such as Netskope, TripActions, Flexport, and Brex; there were open-source giants like Hashicorp and Gitlab; incredible $100M-revenue breakouts in the robotic-processing automation space, such as Automation Anywhere and UIPath; consumer-facing companies like Hims, Allbirds, and Roblox have all quickly made the leap to unicorn status; and companies which were already deemed unicorns continued into higher levels of scaling, such as Opendoor, Instacart, DoorDash, Coinbase, Stripe, Tanium, and many others. In 2018, it was that kind year.
So, after all of those warnings and disclaimers (and, yes, you are free to disagree with my selection here), but after months of reflection, I believe Airtable is The Breakout Tech Company of 2018. This is the company, in my opinion, which only first appeared on the radar of most investors in 2018. Here’s why:
1/ Pro-sumer Trend Has Legs In Enterprise: The freemium pricing model ushered in a new wave of business applications and services. Look at Docusign, as one shining example — a company many folks thought would be a $1-2B outcome for a feature (e-signatures) transformed into a $10B+ document management platform. More recently, the success of Slack cemented in this trend in enterprise, where intense competition for eyeballs and engagement raised on the bar for startups to break in. As a result, we’ve seen both the rise of open-source networks leading to startups (a la Gitlab and Hashicorp, among others), as well as Docusign- and Slack-inspired freemium models designed to grow within groups at companies. Airtable isn’t the only company in this collaboration space — incumbents have invested resources in “low-code” platforms, such as Google’s App Maker, Microsoft’s PowerApps, Dell’s Boomi, and Intuit’s Quick Base; other great products on the startup side include Superhuman, Notion, Front, Coda, and a few others. It’s entirely possible the trend lifts these companies in due time, as well.
2/ The Metrics-Momentum Signal: According to Forbes, Airtable’s revenues are slated to grow 4x this year to $20M annualized, with over 80,000 different companies using some part of the platform. As Airtable only slowly moved into monetization, the last 4-6 quarters of retention and revenue growth likely convinced investors the product was not only here to stay, but very likely to accelerate revenue growth even more.
3/ The (Potential) Big Winners: It’s hard for me to know the exact funding lineage here, but if my memory serves me right, seed fund Freestyle hosted one of the founders as an intern, in turn getting the chance to invest early in the company, as did Ray Tonsing of Caffeinated Capital, who has found his way as an early investor into many of the companies listed above. This could also be the signature investment for CRV’s Max Gazor, who joined the firm a bit after 2010 and has quietly been making great enterprise picks.
4/ The Deal-Heat Signal: After raising around ~$50M earlier in 2018 (Q1 reported, so could’ve been late 2017, too), the race to track down Airtable for its Series C was hotly contested. It would be too easy to dismiss typical Bay Area “deal heat” as noise, however it’s been my observation that when this many high-quality firms circle around a young company — especially where firms will bend their own traditional norms (e.g. Benchmark investing in a $100M-sized round & Thrive and Coatue joining – we’ve learned it was Thrive who led, btw) — it is more likely to be an accurate, strong signal of company momentum. The way this deal was whispered about among both VCs, growth funds, and LPs in 2018 sort of reminded me how of how folks fought for the Snap “momentum round” in 2013.
5/ The Enduring Allure Of Platform Potential: Revenue is important. Revenue acceleration is, too. But in the early days of a young company, there’s one thing that captures the desire of investors — the ability to become a platform. That word, “platform,” can be overused — I define it as a central place where other developers can, without little or no permission, build new products and potentially extract more rents in new markets than the platform itself. A recent large example of this would be how companies like Uber and Instagram leverage the iPhone’s sensors to create new networks. With Airtable, beyond the trends, metrics, and fancy investors, is the potential promise of such a platform — one that has extended its reach slowly into tens of thousands of companies, smartly hooked in users by slowly layering in tiered pricing plans, and carrying forth a vision of a new, malleable, and user-friendly database which can serve as a ground truth for new apps and services we have yet to imagine.