UiPath ft. Daniel Dines - From Bootstrapping in Bucharest to One of Software’s Biggest IPOs - Crucible Moments

Loading summary

Transcript93 lines

[00:02]
Daniel Dines
I was joking with my team saying our strategy is like Genghis Khan strategy. You should go faster than them. You know how they conquer China? Their army was faster than Chinese army, so they were defeating all the Chinese cities and they couldn't catch them. So that was kind of my strategy. Let's go, let's spread, let's see where it works and let's double down on it. And they thought, I'm crazy.
[00:30]
Rolof Bueta
Welcome to Crucible Moments, a podcast about the critical crossroads and inflection points that shaped some of the world's most remarkable companies. I'm your host and the managing partner of Sequoia Capital, Rolof Bueta. All businesses rely on a number of repetitive tasks. Data entry, payroll processing, inventory management. And they take up time requiring someone to manually type in the same figures over and over again. Today's story is about the unlikely rise of UiPath, a company that pounced on an opportunity to eliminate some of this repetitive work, replacing it with software operating in the background of an application. This technology is known as Robotic process automation, or RPA. And UiPath has harnessed it to save untold hours and dollars for companies around the world. When we think of the world's tech hubs, Bucharest, Romania is not usually at the top of the list. But after bootstrapping for nearly a decade out of an apartment in the Eastern European city, Daniel Dines saw an opening for the nascent RPA category and placed a risky bet, pivoting his entire company around it. From humble beginnings, UiPath became the fastest growing SaaS company ever, only to face crucible moments in navigating growing pains. Today, the company faces new challenges as it adapts to the changing AI landscape to further revolutionize the way we work. This is the story of UiPath.
[02:11]
Daniel Dines
My name is Daniel Dice. I am the founder and CEO of UiPath. Growing up in Romania, I wanted to become a writer. But I soon discovered that I have no talent actually for writing. And in communist Romania, that involved anyway, a lot of bullshit. I was under a pressure to make my own living since I was 19. I had to sustain myself. And at that point, I remember I was probably making like $30 a month.
[02:44]
Rolof Bueta
Just before his 20th birthday, Daniel received a gift from his girlfriend that would change the course of his life.
[02:51]
Daniel Dines
She had this book called Introduction to C with programming C of the inventor of the language itself, Bjarne Strub. I started to read it and I read it more like fiction, and I got really enamored by the language. A friend of mine from university told me There is a guy that hires developers. He hired both of us, but basically without any kind of interview. It was just a discussion. So I started to work with this guy, but initially he didn't have a computer to give to me because it was a small firm with, I think, maybe like 10 people. But they were all working during the day. But he offered me to go there during the night. So I had access to their best computer at that time. So I changed. For the next six months, my entire life, I was working basically from like 8 to 6 in the morning. I was basically just sleeping, working on the computer. And I learned so much. It was. I was really immersed, and I built basically my entire career on that six months.
[04:05]
Rolof Bueta
Over the next few years, Daniel continued to hone his skills as a developer. In 2001, he landed a job at Microsoft in Seattle. After learning the ropes at a major tech company, Daniel became determined to start a business of his own. He moved back to Romania and launched DeskOver. In the early years, DeskOver focused on outsourcing and building software developer kits. But miles from any major tech hub, the company faced challenges.
[04:33]
Luciana Alexandru
Europe has a very fragmented ecosystem, so in the us, of course, there is New York, there is Miami, there are other ecosystems. But Silicon Valley is so concentrated when it comes to talent. You have mentorship and expertise just around the corner. And that wasn't the case for Daniel and for his co founders, starting in Bucharest. My name is Luciana Alexandru and I'm a partner at Sequela. I was born and raised in Romania, but I have to be honest, I had not focused on Romania as a country that had a lot of potential to create these outliers.
[05:10]
Daniel Dines
The idea of raising capital in 2005 in Romania was unheard of. I bootstrapped the company by doing some consulting work. So we were all working in a small flat.
[05:24]
Andra Cicilmus
It was a very, very small company. They were all male software developers who were pretty isolated by themselves. I was the first female. I was a junior developer at the time, and it wasn't very easy for me to start. My name is Andra Cicilmus and I'm a VP of Product at UiPath. Daniel helped us a lot in letting us express our opinions, although most the times, at least in the beginning, were wrong and encouraging us to speak up and say whatever crossed our minds and if it was a good idea. It was always built on and included in the development process. So we started having a lot of parties. We started playing poker nights. We started debating a lot more. It was really, really nice. Like A family debate over dinner.
[06:19]
Daniel Dines
I started to do some products. The first commercially viable application was this SDK type of software that a developer could have used and read the text on any application.
[06:34]
Andra Cicilmus
We were building a software library which are the building parts of any software product that was automating your actions. And to give you an example, because I remember when Daniel first explained to me, I went home and my friends asked me, okay, so what will you do there? And I said, I didn't understood, but it sounded interesting. So I think this is what most of our customers thought in the beginning as well. So at that time, the browsers, for example, didn't have that remember your password functionality. So every time you wanted to join something, you needed to remember and type your own username and password. Our library was able to do this automation for you, just like the browser does it today.
[07:18]
Daniel Dines
We were doing initially things that we kind of liked as developers. We thought this is a cool thing to build this stuff. It was kind of hackery in a way, but not really a business vision.
[07:32]
Andra Cicilmus
Our primary customer was actually the software developer. They were individuals that were. Some were working in companies, some were freelancing and it was quite hard for it to take off as a developer tool dedicated to hardcore developers. We had customers that used it, but not many. We were like the engine of a card, but we didn't have all the other parts.
[07:57]
Rolof Bueta
Deskover struggled to find product market fit. But in 2012, Daniel received an email that would alter the company's trajectory.
[08:05]
Daniel Dines
We got this request from someone who show a demo of our product and they put their personal address, but they didn't mention any business or anything. So at that point I was on the verge of ignoring that request, but I don't know, I had a hunch. You know, there is this gut feeling sometimes that tells you maybe you should follow that lead.
[08:30]
Rolof Bueta
The request was from a manager at a business process outsourcing company in Chennai, India, who needed to reliably automate some of the company's manual tasks. He wanted to see how deskover compared to a larger British tech company called Blue Prism that worked on robotic Process Automation, or rpa.
[08:48]
Daniel Dines
I never heard about Blue Prism or RPA at that time, but I said, I have no idea who they are. Let me search on the Internet. And I did a quick search. Why I was talking to him, I didn't read much, but I said, it seems like this is a big company. I don't think we can compare in any shape with them. But he was patient and he started to work with Us more to understand. He really liked our approach. So we had this visual low code that was really novelty at that time. And in all RPA space it was only us and Blue Prism that had this low code approach. So we had a nice flow chart to design an automation and nobody else had that at this point. And basically he was actually looking to get some leverage on Blue Prism and they were really consider kind of inflexible.
[09:44]
Rolof Bueta
The company in India invited Desk over to come to Chennai to see if its software library could automate some of the BPO's processes.
[09:52]
Daniel Dines
I also said yes without missing a heartbeat. I displaced three people, some of my best people, to go to India for three months at cost. So this is how we got into RPA and I got the wind of what RPA is.
[10:08]
Andra Cicilmus
I was a part of the three people team that went to India. The experience in India was very eye opening for us. We used to go every day into the office in India. We were automating part of the process. Something wasn't working. We went back to our hotel, we implemented the fix or the new feature that was required to automate that part. We went with a new version of the product the next day and automated the part that was missing. When we returned to Bucharest, it was like a light for us. We said, okay, this is what we can do to make their lives better, the companies better, to bring them real value. I wouldn't call us a company at that point. When we went in India, we were a small group of people that wanted to bring value to their customers. When they finally discovered, oh, we might have customers. And that was the moment that we decided to switch and focus on rpa.
[11:07]
Daniel Dines
I realized that actually that's a much bigger market than what we were going for before. I couldn't imagine that there are so many inefficiencies in the world of business, enterprise, business processes. It has become obvious to me that we have to go all in after that market.
[11:34]
Rolof Bueta
After eight years of bootstrapping and looking for product market fit, Daniel made a crucible decision. DeskOver would shift its focus entirely to RPA.
[11:46]
Daniel Dines
There was no risk for us at that point. We were going to die anyway in our little market. There are moments when you go, you feel like you are in a fog and you don't know which direction to go. And you go carefully and suddenly the fog clears up and you see where you go and then you go very fast. That was us after kind of eight years of going in the fog. We went right after the target. It was very easy for us to just follow customer requests based on that.
[12:27]
Brandon Deer
We knew that Blue Prism had an indirect sales motion, meaning they sold exclusively through the channel. They didn't have direct conversations with their customers. My name is Brandon Deer. I am the Chief strategy officer and COO of our go to market organization at UiPath. And I think this is something that set us apart very early on was that we wanted to go direct, we wanted to have customer empathy and centricity, we wanted to originate product innovation, new feature ideas, world class support, and we wanted to do it all through the voice and the continuous feedback loop of having a one to one relationship with our customers.
[13:04]
Rolof Bueta
In 2013, Deskover released a new RPA focused product. They called it UiPath Studio.
[13:12]
Daniel Dines
We've built our first orchestration in our product. It was a little bit patchy, but you have a product that is capable of building one automation and you need to build another product that can scale, deploy and scale hundreds of automation in time.
[13:30]
Andra Cicilmus
We built all the other building blocks that allowed us to automate a business process from one end to the other and with input visible, both for the people that are actually doing the job, the mundane tasks, but also for the C suite or management suite to see how their automations are performing.
[13:51]
Luciana Alexandru
The other thing that came up quite often with customers was just a more robust and more scalable architecture. Because when you run many robots at scale, automating many, many processes, the last thing you want is for these robots to break down because then you still have to have humans go and fix them. And you're trying to automate this work, you're not trying to create extra work. Customers wanted RPA and it was a lot about Daniel and the team. Yes, creating more demand, but mostly fulfilling the demand that was already out there.
[14:25]
Andra Cicilmus
One of the key things to learn and to remember while you are a startup is that your market fit may not be the one that you're thinking of, may not be the one that you're actually serving today. But if you are open and if you allow yourself to look outside to interact with all the opportunities that come, you may actually discover, discover that your market fit is other and is the one that is more appropriate for you.
[14:56]
Daniel Dines
Imagine eight years working in a garage. You know that you build some kind of good technology, but nothing moves. You don't die, but you don't grow either. After you get so much beating, I think you don't stop. It gets you prepared. I felt this is the moment that we all were waiting for. But our real growth was after we first concluded our Sid Round.
[15:25]
Rolof Bueta
After achieving product market fit, the company began attracting attention from investors in Europe. As it was taking off in 2015, Daniel changed the name of the company from Deskover to UiPath.
[15:38]
Luciana Alexandru
I happened to go to Bucharest for a weekend and I thought, let me take one day and meet some of the smartest people in the tech ecosystem in Bucharest.
[15:49]
Rolof Bueta
At the time, Luciano was working for the venture capital firm Accel in Bucharest. She met UiPath's seed investor, who insisted on making an introduction to Daniel.
[16:02]
Luciana Alexandru
I remember when I went to visit the company, one of the co founders said something to me that I still remember after seven years now. I said, I'm so excited to see a Romanian company with so much potential. And they were almost offended. They said, we are a Silicon Valley company, but we're building in Romania. And with Daniel, after spending many hours together, a few things became obvious. He was highly intelligent. He had an unusual level of determination, which is reflected in the fact that for 10 years he did not give up. I think at some point he called himself unemployable. Looking for product market fit for a decade takes a lot of resilience. That's really unique. So he had this attitude that this is it or nothing else. There's no choice but to win, there's no choice but to succeed. And he was very confident. It came across in many ways, but one of the ways was when we signed the term sheet. I still remember, he said with just a lot of conviction, this is going to be a very successful company.
[17:14]
Rolof Bueta
Luciana and Accel led a $30 million Series A financing. The company's pivot to RPA had completely transformed it from obscurity to one of the hottest tech startups in Europe. But Daniel wasn't satisfied.
[17:29]
Daniel Dines
So we have finished 2016 with 5 million in ARR and in 2017 we were thinking we will finish the year maybe 30, 35. So it was really huge growth and I could have seen that actually this is becoming a big category and at that point we were still number three in the market. But what I realized is there is a big pull from the market and this is going to accelerate into next year and actually the number one company will take the lion's share. And if we can become prominently clearly the number one RPA company, it will be a no brainer decision for many customers and we will get the biggest market share.
[18:21]
Rolof Bueta
Some crucible moments land on your doorstep. Others hide in plain sight, demanding you identify them and act. While many would have been happy with the company's trajectory, Daniel sensed a Fleeting opportunity to change gears and leapfrog the competition to become the clear winner in a big category.
[18:42]
Daniel Dines
We knew pretty well our competitors and we knew where they were as revenue. I think the biggest one was probably maybe 70, 80 at that point. And I knew that they are probably going to 100 next year based on their growth. And in a board meeting at that time, when we were discussing the budget for 2018, I remember Luciana Alexandru telling me, daniel, I will be very happy if next year you'll deliver like $70 million of ARR. And I told them we need to be twice as big revenue wise as our competitors. So I want to build a company to deliver $200 million in 2018. And they thought I'm crazy. Clearly.
[19:33]
Rolof Bueta
The thing about large numbers is that the bigger you get, the harder it is to maintain your growth rate. And if you do, the organizational challenges are immense. Going from 5 million to 35 million in revenue in a year is one thing, but to go from 30 million to 200 is something else entirely.
[19:54]
Luciana Alexandru
I remember this board meeting where Daniel put out a plan to go from 35 million to 200. At the time, a very, very aggressive growth plan. And I remember saying, Daniel, even if we double from 35 to 70, that will be a great year. I remember it because Daniel reminds me all the time.
[20:16]
Rolof Bueta
To get there, Daniel borrowed a strategy from the history books.
[20:20]
Daniel Dines
Literally at that point, I was joking with my team saying our strategy is like Genghis Khan strategy.
[20:31]
Brandon Deer
We both read the same book, which was the biography of Genghis Khan, and there was this obsession around the speed.
[20:39]
Daniel Dines
You should go faster than them. You know how they conquered China, their army was faster than Chinese army, so they were defeating all the Chinese cities and they couldn't catch them. So that was kind of my strategy. Let's go, let's spread, let's see where it works and let's double down on it.
[20:58]
Andra Cicilmus
He talked about the Genghis Khan strategy all the time. Once an idea comes to mind, usually while he reads something, he repeats it and thinks about it and repeats it and repeats it until I think it makes sense to everyone.
[21:13]
Rolof Bueta
The Genghis Khan strategy would mean expanding into multiple international markets simultaneously, including the US and Japan, and rapidly scaling up the UiPath team to serve them.
[21:25]
Daniel Dines
Going to multiple markets simultaneously was, I think, a product of our exuberance.
[21:34]
Luciana Alexandru
I would say that at the time there was no playbook. Yet I think that UiPath is one of the first companies that built out this playbook.
[21:42]
Rolof Bueta
UiPath also carefully examined the Practices of competitors in order to differentiate themselves.
[21:50]
Brandon Deer
Our competitors, they were at the forefront of all of our conversations. What are the things that they were coming out with? What are the things that they're talking about in their press releases and their documentation? When we met with respective customers that were already using their technologies, we'd ask them, what is it about them that you love? How do you drive value? What have they shared with you in terms of future things that you're excited about? How have you compared and contrast our capabilities versus theirs? I think early on we saw that there was kind of a naive neglect from the blue prism, shop around customer support and white glove service. And so we completely rotated towards providing the best support. Anything the customer wanted, we did. You know, it was like an Amex black card concierge type service. You called UiPath as a customer or a prospective account. We gave you our all and it didn't matter who you talked to. You could have called me direct. You could have called Daniel direct.
[22:43]
Luciana Alexandru
I think RPA was great to UiPath, but UiPath was also great to RPA. The company invested a lot in category building, in customer education, in just giving customers a delightful experience, which is what promotes more and more of this product to be sold.
[23:03]
Rolof Bueta
UiPath met Daniel's audacious goal, growing from $5 million in revenue to $35 million to nearly $200 million year over year. This astronomical rise made UiPath the fastest growing SaaS company in history. At the time, UiPath moved its headquarters to New York and opened 30 offices in 16 countries.
[23:28]
Luciana Alexandru
Those stories are very, very rare. At the time, in my experience, it was almost unheard of. At this point. The UiPath story was pretty crazy. It was probably the quote unquote, hottest startup in Europe and one of the hottest startups in the US they had access to really great talent. It was overall incredibly exciting. But I will say it also made us a little bit nervous because the revenue growth was spectacular. The employee growth was also spectacular.
[24:01]
Brandon Deer
It seemed like every day there was 10 new people in the office, and it wasn't that big an office. It was probably equipped to hold, I don't know, 150 or so people. I remember going to the men's room and turning the corner and there was a line looping all the way across the desk where the engineers sat. And the engineers are sitting there trying to have their quiet time, conduct their coding and trying to work in some peace and quiet. And you've got a line of guys kind of doing an S wrap around their desks and it was just this moment of like one. You could see they were pissed off and super irritated, but it was also like kind of funny, you know, to see. And all of these people had just started, you know, we were busting at the seams.
[24:43]
Daniel Dines
We moved to a bigger office and you see suddenly a hundred people in a room and you have to talk to a hundred people. It was kind of insane, the feeling for me. And you have all sorts of faces and they look with trust in you and things were growing and yeah, it was crazy. Good times. It's the best feeling in the world, really.
[25:04]
Rolof Bueta
The Genghis Khan strategy had paid off. UiPath had cornered the RPA market. But in 2019, it became obvious that this extraordinary growth came at a price.
[25:18]
Brandon Deer
And I think that there's always dichotomies of trade off between speed and quality and process.
[25:25]
Luciana Alexandru
We're seeing two different things. On the one hand, we're seeing a lot of customer demand and we're seeing a very fast growing market where UiPath is really solidifying its position as the leader. In fact, it's growing much faster than competitors and the reviews of their product are really positive compared to other players in the market. So on the one hand that's going really well. On the other hand, we're starting to feel internal organizational pains from having added so many people in such a short period of time. And the company is obviously burning quite a lot of money at this point as well, given the meaningful increase in the organization from 100, 150 people to about 3,000 people in only a couple of years. Because when you add 3,000 people in two years, of course it's impossible to do that in the most structured, process driven, discipline manner. And that became clear to the board and it became clear to Daniel as well.
[26:24]
Daniel Dines
It's a very risky game you got into. We were in a bad position. We were, we were really getting into our cash.
[26:33]
Rolof Bueta
In 2019, UiPath's projected cash burn was $150 million. But the company ended up at a number almost triple that amount. The company consumed $400 million.
[26:49]
Brandon Deer
Cornering a market isn't for the faint of heart. It sounds like, hey, let's go, let's go build an incredible company and make a ton of money. And that sounds great. In actuality, to do it, you need to make a lot of mistakes, painful mistakes along the way. You need to really feel some pain. It's hard to realize the cost of all of these things in any given moment. As you're making those decisions, you end up With a lot of people with poorly defined roles that you made a lot of big offers to. You end up with a lot of big customers, that you made a lot of big promises to.
[27:23]
Rolof Bueta
The explosive growth finally brought a reckoning. How could the company rein in costs to grow in a sustainable way?
[27:32]
Brandon Deer
I think we really were fighting for our lives. It was a matter of life and death at that moment. And that's part of the reason that we were forced to cut so deeply and so quickly.
[27:41]
Daniel Dines
We have to do hard course, correct. We had to fire 10% of our people. I think there is no tougher feeling than to tell someone, you know, that we have to part ways because it's a disappointment. It's a disappointment in yourself. First of all, you feel their pain, you feel their disappointment. It never gets easy. It's. It's hard. It's the hardest part, I think, of business. It's a pain that makes you to act in a way that you'll never feel it again.
[28:20]
Luciana Alexandru
UiPath had to make some very hard decisions while the company was still growing very fast. So on the one hand you can be out there celebrating incredible growth like very few companies had. From 5 million to 35 to 170 to 370. This is really spectacular. But at the same time, you have to be very, very honest with yourself about how the health of your organization, the culture, the productivity of your organization, fixing problems, doing more with less. I think as a leader, you also have to be really, really honest with yourself about all these things. And Daniel did that.
[28:59]
Rolof Bueta
The measures taken to right size the business in 2019 meant that UiPath headed into 2020 a leaner and more nimble company. This paid off during the pandemic, allowing them to weather the crisis and its economic instability better than competitors. In 2020, UiPath's revenue broke $600 million. And then in April 2021, UiPath had one of the largest software IPOs in history. It was a breathtaking rise from a company that just a few years earlier was only a handful of engineers operating out of a small apartment in Bucharest.
[29:35]
Andra Cicilmus
The IPO moment itself still feels like a dream. I think the moment I personally realized we actually IPO'd was the night of the party when I was looking at an ice sculpture with UiPath and New York Stock Exchange and I said, why are these words together? It makes no sense. Oh, we just IPO'd today. Okay, now it does.
[30:03]
Rolof Bueta
Utilizing so called computer vision technology, UiPath had always relied on a form of AI for its process automation. But in late 2022. OpenAI's release of ChatGPT upended the AI landscape.
[30:19]
Brandon Deer
I don't know that anyone was fully prepared for the power of generative artificial intelligence. I think it came fast and furious. And I remember the first time I heard about GPT was probably two and a half, three years ago. And there were a bunch of really kind of complex white papers written on that. If you were part of the AI community, you know, you were listening to researchers begin to talk about it. But its application, at least within the enterprise, was not widely accepted. I don't think a lot of people saw it as a real threat to what they were doing today. Everyone in enterprise software has been building, you know, their tech and training their data and acquiring customers for so long. How could something come in and disrupt that in an automated fashion overnight and have seemingly unlimited intelligence on everything?
[31:11]
Rolof Bueta
For UiPath, the rise of generative AI posed an existential question. Would the capabilities of LLMs impact the relevance of RPA? How should UiPath adapt?
[31:23]
Daniel Dines
We started with computer vision. So to understand screens, we extended that computer vision technology to understand documents, semi structured document. And it was kind of natural to incorporate gen AI. It's kind of clear to me that if we don't go to combine genai with automation, we will become extinct, we will become irrelevant to the enterprises. I think the main challenge with gen AI for businesses right now is from the reliability of gen AI. It's so smart, but it's like hiring unstable geniuses. And most companies would like stable, decent level of intelligence. And I think this is where most of the challenges are. But having the automation, creating better grounding for LLMs I think will go a long distance.
[32:23]
Brandon Deer
When a new technology like this evolves. I think if you're not at the forefront of it, you're likely in a place to be displaced. And so we're investing everything that we have to ensure that our products are not just keeping up with the market, but actually pushing the market as it relates to all the different capabilities around automation.
[32:44]
Andra Cicilmus
I think it's very important for UiPath to have the AI capabilities that fix the customer's problems, but also to be able to explain to them this is not an AI problem. You can automate this with this tool or this tool or any other process and it will be maybe more cheap and more reliable for you. I think they complement each other. I don't think it can ever be outdated. The RPA category can be eliminated altogether.
[33:16]
Daniel Dines
Our platform, having our low code approach, is very suitable to use to build an LLM app. And when you pair it with automation, the result is exponential.
[33:29]
Rolof Bueta
UiPath has released a number of products combining Genai and RPA like AI center, which lets users easily add ML models to existing UiPath automations. There's also clipboard AI, a tool specifically designed for copying and pasting large amounts of data. And UiPath Autopilot, a tool anyone can use to supercharge productivity.
[33:51]
Andra Cicilmus
UiPath Autopilot is one of the best examples of AI working with RPA and helping our platform deliver the AI benefits to our customers. We have Autopilot for developers, Autopilot for testers, Autopilot for reporting. And what this actually does is it brings the value and the power of our platform to people that don't know how to build the processes end to end and they don't have the deep technical skills. It's more like you're talking to a friend in layman terms. And Autopilot can generate for you the test cases, the workflows, the automations, the reporting. And this will be really helpful both for the beginners and for non technical people, but also for advanced developers that want to validate their work.
[34:44]
Daniel Dines
Our main proposition is automation will make the models more reliable and how AI can help us. I think we've become much crisper over the last 18 months. I see actually a new dawn in a way for automation. Now. Many people realize that AI without automation doesn't really get to the full benefit of AI. And to quote one of our long time customer, he said to me recently, daniel, we talk a lot about AI, but most of time we end up talking about automation.
[35:23]
Rolof Bueta
To prioritize the company's integration of RPA with LLMs and ensure the company remains relevant in the AI era. In January 2024, Daniel decided to step away from his position as CEO to take on the role of Chief Innovation Officer.
[35:40]
Daniel Dines
It was very helpful for me, considering all the evolution of AI, to be there, to put my mind completely there.
[35:48]
Brandon Deer
Daniel had some time as the Chief Innovation Officer of the company, where his primary domain, his primary effort was spent on all things products and engineering. And I think that was a really incredible opportunity for him and for the company. For him to get extremely deep into the weeds in a domain that he's super passionate about. I think the things that Daniel's been working on for the last year around semantic automation, around agentic AI process orchestration, these are the things that are probably going to shape the future of the company.
[36:20]
Rolof Bueta
But with Daniel focused on product innovation, it was a rocky period for the company's leadership team.
[36:27]
Daniel Dines
It was an old guard versus new guard type of, you know, dynamic in the company, which was kind of not very healthy. I got a little bit disconnected also from customers, from partners doing all this. And the company has become more and more siloed. Not that we are not talking, but I think somehow organizations mimic the leader.
[36:55]
Rolof Bueta
To mend divisions and propel the company in a new direction. In May 2024, Daniel stepped back into the role of CEO. The rapid change in leadership rattled the public markets, and UiPath stock saw a steep drop in share price.
[37:12]
Daniel Dines
The last two months were probably some of the toughest, maybe the toughest. It was a different order of magnitude from 2019. Talking to investors after our earnings call. It was really some of the toughest moments. It's the disappointment of people that put the trust in you. It's. To me, it's extremely hard to get over it. At the human level, it's terrible. But at an intellectual level, I think we are doing the right thing. I think that my returning as the CEO revigorates a bit for us as a company. Maybe it's the best move. We can move faster, I can connect faster, I can break the silos. To me, there are no new people or old people. It's just one. We are putting the company back on track. And of course it's gonna take. It's gonna take, you know, a few quarters until we'll see the results. But we are seeing the early signs in the company.
[38:16]
Brandon Deer
I think we're all super bullish on the future of the company. We made a number of refinements to how we build, where we spend time, how we ship. And I think our product strategy has really honed in on something quite special for the future.
[38:32]
Rolof Bueta
Today, UiPath has 10,800 customers in over 100 countries. It continues to be the leader in RPA.
[38:40]
Brandon Deer
I think UiPath today in many respects is special because it has the same values that Daniel had set forth all those years ago. It has the same mission. People no longer need to be stuck in those keystrokes, in those mouse clicks, moving data between systems and different end applications. And that allows them to focus on higher level, more strategic thinking.
[39:04]
Luciana Alexandru
We always joked in the earlier days that UiPath was a tenure in the making. Overnight success. It is the largest enterprise software company coming out of Europe in the last decade or more. And one may expect this company to start in London or Paris or Munich. And that wasn't the case. The company started in a pretty small country in Eastern Europe that doesn't have a developed technology ecosystem. And from there, Daniel and the team found their way to global domination in RPA and to winning not only in Europe, but to winning in the US as well. And I think that's really inspirational. And to this day, founders come and want to meet me and want to talk to me because they think that that's a really great story. And then because Daniel is such a role model and because they showed that, you know, with great people with the right ambition, you can build something great from anywhere.
[40:03]
Daniel Dines
I think no Crucible Moment will look the same to me. I think it's essential to be surrounded by people you trust, board members, your executive team, and collectively go through these moments. It's so important to come together and talk and really in all good will, find solutions, even if sometimes it's the wrong direction. But by moving, you learn. And then if you have the will to course correct, you will find eventually the right way.
[40:49]
Rolof Bueta
This has been Crucible Moments, a podcast from Sequoia Capital.
[41:05]
Brandon Deer
Crucible Moments is produced by the Epic Stories and Vox Creative podcast teams along with Sequoia Capital.
[41:15]
Andra Cicilmus
Special thanks to Daniel Dines, Luciana Luxandru, Brandon Deer and Andra Cherish Kamish for sharing their stories.
[41:24]
Daniel Dines
SA.

Summary5 min read

Crucible Moments: UiPath ft. Daniel Dines - From Bootstrapping in Bucharest to One of Software’s Biggest IPOs

Hosted by Roelof Botha of Sequoia Capital

Introduction and Early Beginnings

Crucible Moments delves into the pivotal decisions that shaped UiPath, tracing its journey from a modest startup in Bucharest, Romania, to one of the most significant software IPOs in history. Daniel Dines, the founder and CEO of UiPath, shares his personal and professional evolution, highlighting the challenges and strategies that defined the company's trajectory.

Daniel Dines reflects on his early aspirations and the harsh realities of communist Romania:

[00:02] "I was joking with my team saying our strategy is like Genghis Khan strategy. You should go faster than them... let's spread, let's see where it works and let's double down on it. And they thought, I'm crazy."

Starting with minimal resources, Dines emphasizes the importance of perseverance:

[02:10] "Growing up in Romania, I wanted to become a writer. But I soon discovered that I have no talent actually for writing... I had to sustain myself... making like $30 a month."

The Pivot to Robotic Process Automation (RPA)

After honing his skills at Microsoft and launching DeskOver, Dines faced the challenge of finding product-market fit in a fragmented European tech ecosystem. The turning point came in 2012 when an opportunity in Chennai, India, introduced him to Robotic Process Automation (RPA).

Roelof Botha narrates the shift:

[07:56] "Deskover struggled to find product market fit. But in 2012, Daniel received an email that would alter the company's trajectory."

Responding to a manager's request from a BPO company, Dines made a decisive pivot towards RPA:

[08:05] "I don't know, I had a hunch... let's go, let's spread... and we got into RPA and I got the wind of what RPA is."

This strategic shift led to the development of UiPath Studio in 2013, marking the company's entry into the RPA market:

[13:03] "In 2013, Deskover released a new RPA focused product. They called it UiPath Studio."

Rapid Growth and the Genghis Khan Strategy

Capitalizing on the burgeoning RPA market, UiPath adopted an aggressive growth strategy inspired by Genghis Khan's military tactics. This approach emphasized rapid expansion across multiple international markets simultaneously.

Daniel Dines elaborates on this strategy:

[20:20] "Our strategy is like Genghis Khan strategy... Let's go, let's spread, let's see where it works and let's double down on it."

Andra Cicilmus, VP of Product at UiPath, observes the cultural impact:

[20:57] "He talked about the Genghis Khan strategy all the time... until it makes sense to everyone."

This strategy propelled UiPath to unprecedented growth:

[23:02] "UiPath met Daniel's audacious goal, growing from $5 million in revenue to $35 million to nearly $200 million year over year."

By 2016, UiPath secured a $30 million Series A financing led by Accel, solidifying its position as a leading RPA provider:

[17:14] "Luciana and Accel led a $30 million Series A financing... the hottest tech startups in Europe."

Challenges of Scaling

With explosive growth came significant challenges. UiPath's rapid expansion led to organizational strain, high cash burn, and cultural friction within the company. By 2019, UiPath faced a critical juncture as it grappled with sustaining its growth.

Daniel Dines candidly discusses the risks:

[25:17] "Cornering a market isn't for the faint of heart... you need to make a lot of mistakes... it's hard to realize the cost of all of these things."

The company experienced a dramatic increase in cash burn, projecting a loss of $150 million but ultimately consuming $400 million:

[26:33] "In 2019, UiPath's projected cash burn was $150 million. But the company ended up at a number almost triple that amount."

To address these issues, UiPath implemented significant cost-cutting measures, including a 10% workforce reduction:

[27:41] "We have to do hard course, correct... firing 10% of our people... it's the hardest part of business."

Strategic Shifts and AI Integration

Emerging technologies, particularly generative AI like OpenAI's ChatGPT, posed both opportunities and existential threats to UiPath's RPA-centric model. Recognizing the need to integrate AI with automation, UiPath embarked on a path to enhance its offerings.

Daniel Dines emphasizes the necessity of this integration:

[31:22] "If we don't go to combine genai with automation, we will become extinct... automation creating better grounding for LLMs."

UiPath introduced several AI-powered tools to complement its RPA solutions:

AI Center: Facilitates the addition of ML models to existing automations.
Clipboard AI: Designed for efficient data copying and pasting.
UiPath Autopilot: Enhances productivity for both technical and non-technical users by generating test cases, workflows, and automations.

Andra Cicilmus highlights the practical applications:

[34:43] "Autopilot can generate for you the test cases, the workflows, the automations, the reporting... helpful for beginners and advanced developers alike."

Leadership Changes and Reflection

In January 2024, amid the evolving AI landscape, Daniel Dines transitioned from CEO to Chief Innovation Officer to focus on product innovation. However, this period saw internal turmoil as organizational silos emerged.

Daniel Dines reflects on the challenges:

[36:26] "It was an old guard versus new guard type of dynamic... the company has become more and more siloed."

Reassessing the company's direction, Dines returned to the CEO position in May 2024 to steer UiPath back on track:

[37:11] "Returning as the CEO revigorates us... no new people or old people. We are putting the company back on track."

Despite a temporary drop in stock prices, UiPath emerged stronger and more focused:

[38:31] "People no longer need to be stuck in those keystrokes... allowing them to focus on higher level, more strategic thinking."

Conclusion and Future Outlook

Today, UiPath boasts over 10,800 customers in more than 100 countries, maintaining its leadership in the RPA sector. The company's ability to adapt and integrate AI with automation continues to drive its relevance and growth in an increasingly competitive tech landscape.

Luciana Alexandru praises UiPath's inspirational journey:

[39:03] "Founders come and want to meet me... they showed that, with great people and the right ambition, you can build something great from anywhere."

Daniel Dines offers a final reflection on navigating crucible moments:

[40:03] "It's essential to be surrounded by people you trust... learn, and if you have the will to course correct, you will find eventually the right way."

Notable Quotes:

Daniel Dines:
"[20:20] Our strategy is like Genghis Khan strategy... Let's go, let's spread, let's see where it works and let's double down on it."
Brandon Deer:
"[32:22] When a new technology like this evolves... you're likely in a place to be displaced."
Andra Cicilmus:
"[14:56] ...if you are open and if you allow yourself to look outside to interact with all the opportunities that come, you may actually discover, discover that your market fit is other and is the one that is more appropriate for you."

This comprehensive journey of UiPath, from its humble beginnings to its meteoric rise, underscores the importance of strategic pivots, relentless growth, and the ability to adapt in the face of technological advancements. For entrepreneurs and business leaders, UiPath’s story serves as a testament to resilience, innovation, and the impact of decisive crucible moments.

Loading summary

Transcript93 lines

[00:02]
Daniel Dines
I was joking with my team saying our strategy is like Genghis Khan strategy. You should go faster than them. You know how they conquer China? Their army was faster than Chinese army, so they were defeating all the Chinese cities and they couldn't catch them. So that was kind of my strategy. Let's go, let's spread, let's see where it works and let's double down on it. And they thought, I'm crazy.
[00:30]
Rolof Bueta
Welcome to Crucible Moments, a podcast about the critical crossroads and inflection points that shaped some of the world's most remarkable companies. I'm your host and the managing partner of Sequoia Capital, Rolof Bueta. All businesses rely on a number of repetitive tasks. Data entry, payroll processing, inventory management. And they take up time requiring someone to manually type in the same figures over and over again. Today's story is about the unlikely rise of UiPath, a company that pounced on an opportunity to eliminate some of this repetitive work, replacing it with software operating in the background of an application. This technology is known as Robotic process automation, or RPA. And UiPath has harnessed it to save untold hours and dollars for companies around the world. When we think of the world's tech hubs, Bucharest, Romania is not usually at the top of the list. But after bootstrapping for nearly a decade out of an apartment in the Eastern European city, Daniel Dines saw an opening for the nascent RPA category and placed a risky bet, pivoting his entire company around it. From humble beginnings, UiPath became the fastest growing SaaS company ever, only to face crucible moments in navigating growing pains. Today, the company faces new challenges as it adapts to the changing AI landscape to further revolutionize the way we work. This is the story of UiPath.
[02:11]
Daniel Dines
My name is Daniel Dice. I am the founder and CEO of UiPath. Growing up in Romania, I wanted to become a writer. But I soon discovered that I have no talent actually for writing. And in communist Romania, that involved anyway, a lot of bullshit. I was under a pressure to make my own living since I was 19. I had to sustain myself. And at that point, I remember I was probably making like $30 a month.
[02:44]
Rolof Bueta
Just before his 20th birthday, Daniel received a gift from his girlfriend that would change the course of his life.
[02:51]
Daniel Dines
She had this book called Introduction to C with programming C of the inventor of the language itself, Bjarne Strub. I started to read it and I read it more like fiction, and I got really enamored by the language. A friend of mine from university told me There is a guy that hires developers. He hired both of us, but basically without any kind of interview. It was just a discussion. So I started to work with this guy, but initially he didn't have a computer to give to me because it was a small firm with, I think, maybe like 10 people. But they were all working during the day. But he offered me to go there during the night. So I had access to their best computer at that time. So I changed. For the next six months, my entire life, I was working basically from like 8 to 6 in the morning. I was basically just sleeping, working on the computer. And I learned so much. It was. I was really immersed, and I built basically my entire career on that six months.
[04:05]
Rolof Bueta
Over the next few years, Daniel continued to hone his skills as a developer. In 2001, he landed a job at Microsoft in Seattle. After learning the ropes at a major tech company, Daniel became determined to start a business of his own. He moved back to Romania and launched DeskOver. In the early years, DeskOver focused on outsourcing and building software developer kits. But miles from any major tech hub, the company faced challenges.
[04:33]
Luciana Alexandru
Europe has a very fragmented ecosystem, so in the us, of course, there is New York, there is Miami, there are other ecosystems. But Silicon Valley is so concentrated when it comes to talent. You have mentorship and expertise just around the corner. And that wasn't the case for Daniel and for his co founders, starting in Bucharest. My name is Luciana Alexandru and I'm a partner at Sequela. I was born and raised in Romania, but I have to be honest, I had not focused on Romania as a country that had a lot of potential to create these outliers.
[05:10]
Daniel Dines
The idea of raising capital in 2005 in Romania was unheard of. I bootstrapped the company by doing some consulting work. So we were all working in a small flat.
[05:24]
Andra Cicilmus
It was a very, very small company. They were all male software developers who were pretty isolated by themselves. I was the first female. I was a junior developer at the time, and it wasn't very easy for me to start. My name is Andra Cicilmus and I'm a VP of Product at UiPath. Daniel helped us a lot in letting us express our opinions, although most the times, at least in the beginning, were wrong and encouraging us to speak up and say whatever crossed our minds and if it was a good idea. It was always built on and included in the development process. So we started having a lot of parties. We started playing poker nights. We started debating a lot more. It was really, really nice. Like A family debate over dinner.
[06:19]
Daniel Dines
I started to do some products. The first commercially viable application was this SDK type of software that a developer could have used and read the text on any application.
[06:34]
Andra Cicilmus
We were building a software library which are the building parts of any software product that was automating your actions. And to give you an example, because I remember when Daniel first explained to me, I went home and my friends asked me, okay, so what will you do there? And I said, I didn't understood, but it sounded interesting. So I think this is what most of our customers thought in the beginning as well. So at that time, the browsers, for example, didn't have that remember your password functionality. So every time you wanted to join something, you needed to remember and type your own username and password. Our library was able to do this automation for you, just like the browser does it today.
[07:18]
Daniel Dines
We were doing initially things that we kind of liked as developers. We thought this is a cool thing to build this stuff. It was kind of hackery in a way, but not really a business vision.
[07:32]
Andra Cicilmus
Our primary customer was actually the software developer. They were individuals that were. Some were working in companies, some were freelancing and it was quite hard for it to take off as a developer tool dedicated to hardcore developers. We had customers that used it, but not many. We were like the engine of a card, but we didn't have all the other parts.
[07:57]
Rolof Bueta
Deskover struggled to find product market fit. But in 2012, Daniel received an email that would alter the company's trajectory.
[08:05]
Daniel Dines
We got this request from someone who show a demo of our product and they put their personal address, but they didn't mention any business or anything. So at that point I was on the verge of ignoring that request, but I don't know, I had a hunch. You know, there is this gut feeling sometimes that tells you maybe you should follow that lead.
[08:30]
Rolof Bueta
The request was from a manager at a business process outsourcing company in Chennai, India, who needed to reliably automate some of the company's manual tasks. He wanted to see how deskover compared to a larger British tech company called Blue Prism that worked on robotic Process Automation, or rpa.
[08:48]
Daniel Dines
I never heard about Blue Prism or RPA at that time, but I said, I have no idea who they are. Let me search on the Internet. And I did a quick search. Why I was talking to him, I didn't read much, but I said, it seems like this is a big company. I don't think we can compare in any shape with them. But he was patient and he started to work with Us more to understand. He really liked our approach. So we had this visual low code that was really novelty at that time. And in all RPA space it was only us and Blue Prism that had this low code approach. So we had a nice flow chart to design an automation and nobody else had that at this point. And basically he was actually looking to get some leverage on Blue Prism and they were really consider kind of inflexible.
[09:44]
Rolof Bueta
The company in India invited Desk over to come to Chennai to see if its software library could automate some of the BPO's processes.
[09:52]
Daniel Dines
I also said yes without missing a heartbeat. I displaced three people, some of my best people, to go to India for three months at cost. So this is how we got into RPA and I got the wind of what RPA is.
[10:08]
Andra Cicilmus
I was a part of the three people team that went to India. The experience in India was very eye opening for us. We used to go every day into the office in India. We were automating part of the process. Something wasn't working. We went back to our hotel, we implemented the fix or the new feature that was required to automate that part. We went with a new version of the product the next day and automated the part that was missing. When we returned to Bucharest, it was like a light for us. We said, okay, this is what we can do to make their lives better, the companies better, to bring them real value. I wouldn't call us a company at that point. When we went in India, we were a small group of people that wanted to bring value to their customers. When they finally discovered, oh, we might have customers. And that was the moment that we decided to switch and focus on rpa.
[11:07]
Daniel Dines
I realized that actually that's a much bigger market than what we were going for before. I couldn't imagine that there are so many inefficiencies in the world of business, enterprise, business processes. It has become obvious to me that we have to go all in after that market.
[11:34]
Rolof Bueta
After eight years of bootstrapping and looking for product market fit, Daniel made a crucible decision. DeskOver would shift its focus entirely to RPA.
[11:46]
Daniel Dines
There was no risk for us at that point. We were going to die anyway in our little market. There are moments when you go, you feel like you are in a fog and you don't know which direction to go. And you go carefully and suddenly the fog clears up and you see where you go and then you go very fast. That was us after kind of eight years of going in the fog. We went right after the target. It was very easy for us to just follow customer requests based on that.
[12:27]
Brandon Deer
We knew that Blue Prism had an indirect sales motion, meaning they sold exclusively through the channel. They didn't have direct conversations with their customers. My name is Brandon Deer. I am the Chief strategy officer and COO of our go to market organization at UiPath. And I think this is something that set us apart very early on was that we wanted to go direct, we wanted to have customer empathy and centricity, we wanted to originate product innovation, new feature ideas, world class support, and we wanted to do it all through the voice and the continuous feedback loop of having a one to one relationship with our customers.
[13:04]
Rolof Bueta
In 2013, Deskover released a new RPA focused product. They called it UiPath Studio.
[13:12]
Daniel Dines
We've built our first orchestration in our product. It was a little bit patchy, but you have a product that is capable of building one automation and you need to build another product that can scale, deploy and scale hundreds of automation in time.
[13:30]
Andra Cicilmus
We built all the other building blocks that allowed us to automate a business process from one end to the other and with input visible, both for the people that are actually doing the job, the mundane tasks, but also for the C suite or management suite to see how their automations are performing.
[13:51]
Luciana Alexandru
The other thing that came up quite often with customers was just a more robust and more scalable architecture. Because when you run many robots at scale, automating many, many processes, the last thing you want is for these robots to break down because then you still have to have humans go and fix them. And you're trying to automate this work, you're not trying to create extra work. Customers wanted RPA and it was a lot about Daniel and the team. Yes, creating more demand, but mostly fulfilling the demand that was already out there.
[14:25]
Andra Cicilmus
One of the key things to learn and to remember while you are a startup is that your market fit may not be the one that you're thinking of, may not be the one that you're actually serving today. But if you are open and if you allow yourself to look outside to interact with all the opportunities that come, you may actually discover, discover that your market fit is other and is the one that is more appropriate for you.
[14:56]
Daniel Dines
Imagine eight years working in a garage. You know that you build some kind of good technology, but nothing moves. You don't die, but you don't grow either. After you get so much beating, I think you don't stop. It gets you prepared. I felt this is the moment that we all were waiting for. But our real growth was after we first concluded our Sid Round.
[15:25]
Rolof Bueta
After achieving product market fit, the company began attracting attention from investors in Europe. As it was taking off in 2015, Daniel changed the name of the company from Deskover to UiPath.
[15:38]
Luciana Alexandru
I happened to go to Bucharest for a weekend and I thought, let me take one day and meet some of the smartest people in the tech ecosystem in Bucharest.
[15:49]
Rolof Bueta
At the time, Luciano was working for the venture capital firm Accel in Bucharest. She met UiPath's seed investor, who insisted on making an introduction to Daniel.
[16:02]
Luciana Alexandru
I remember when I went to visit the company, one of the co founders said something to me that I still remember after seven years now. I said, I'm so excited to see a Romanian company with so much potential. And they were almost offended. They said, we are a Silicon Valley company, but we're building in Romania. And with Daniel, after spending many hours together, a few things became obvious. He was highly intelligent. He had an unusual level of determination, which is reflected in the fact that for 10 years he did not give up. I think at some point he called himself unemployable. Looking for product market fit for a decade takes a lot of resilience. That's really unique. So he had this attitude that this is it or nothing else. There's no choice but to win, there's no choice but to succeed. And he was very confident. It came across in many ways, but one of the ways was when we signed the term sheet. I still remember, he said with just a lot of conviction, this is going to be a very successful company.
[17:14]
Rolof Bueta
Luciana and Accel led a $30 million Series A financing. The company's pivot to RPA had completely transformed it from obscurity to one of the hottest tech startups in Europe. But Daniel wasn't satisfied.
[17:29]
Daniel Dines
So we have finished 2016 with 5 million in ARR and in 2017 we were thinking we will finish the year maybe 30, 35. So it was really huge growth and I could have seen that actually this is becoming a big category and at that point we were still number three in the market. But what I realized is there is a big pull from the market and this is going to accelerate into next year and actually the number one company will take the lion's share. And if we can become prominently clearly the number one RPA company, it will be a no brainer decision for many customers and we will get the biggest market share.
[18:21]
Rolof Bueta
Some crucible moments land on your doorstep. Others hide in plain sight, demanding you identify them and act. While many would have been happy with the company's trajectory, Daniel sensed a Fleeting opportunity to change gears and leapfrog the competition to become the clear winner in a big category.
[18:42]
Daniel Dines
We knew pretty well our competitors and we knew where they were as revenue. I think the biggest one was probably maybe 70, 80 at that point. And I knew that they are probably going to 100 next year based on their growth. And in a board meeting at that time, when we were discussing the budget for 2018, I remember Luciana Alexandru telling me, daniel, I will be very happy if next year you'll deliver like $70 million of ARR. And I told them we need to be twice as big revenue wise as our competitors. So I want to build a company to deliver $200 million in 2018. And they thought I'm crazy. Clearly.
[19:33]
Rolof Bueta
The thing about large numbers is that the bigger you get, the harder it is to maintain your growth rate. And if you do, the organizational challenges are immense. Going from 5 million to 35 million in revenue in a year is one thing, but to go from 30 million to 200 is something else entirely.
[19:54]
Luciana Alexandru
I remember this board meeting where Daniel put out a plan to go from 35 million to 200. At the time, a very, very aggressive growth plan. And I remember saying, Daniel, even if we double from 35 to 70, that will be a great year. I remember it because Daniel reminds me all the time.
[20:16]
Rolof Bueta
To get there, Daniel borrowed a strategy from the history books.
[20:20]
Daniel Dines
Literally at that point, I was joking with my team saying our strategy is like Genghis Khan strategy.
[20:31]
Brandon Deer
We both read the same book, which was the biography of Genghis Khan, and there was this obsession around the speed.
[20:39]
Daniel Dines
You should go faster than them. You know how they conquered China, their army was faster than Chinese army, so they were defeating all the Chinese cities and they couldn't catch them. So that was kind of my strategy. Let's go, let's spread, let's see where it works and let's double down on it.
[20:58]
Andra Cicilmus
He talked about the Genghis Khan strategy all the time. Once an idea comes to mind, usually while he reads something, he repeats it and thinks about it and repeats it and repeats it until I think it makes sense to everyone.
[21:13]
Rolof Bueta
The Genghis Khan strategy would mean expanding into multiple international markets simultaneously, including the US and Japan, and rapidly scaling up the UiPath team to serve them.
[21:25]
Daniel Dines
Going to multiple markets simultaneously was, I think, a product of our exuberance.
[21:34]
Luciana Alexandru
I would say that at the time there was no playbook. Yet I think that UiPath is one of the first companies that built out this playbook.
[21:42]
Rolof Bueta
UiPath also carefully examined the Practices of competitors in order to differentiate themselves.
[21:50]
Brandon Deer
Our competitors, they were at the forefront of all of our conversations. What are the things that they were coming out with? What are the things that they're talking about in their press releases and their documentation? When we met with respective customers that were already using their technologies, we'd ask them, what is it about them that you love? How do you drive value? What have they shared with you in terms of future things that you're excited about? How have you compared and contrast our capabilities versus theirs? I think early on we saw that there was kind of a naive neglect from the blue prism, shop around customer support and white glove service. And so we completely rotated towards providing the best support. Anything the customer wanted, we did. You know, it was like an Amex black card concierge type service. You called UiPath as a customer or a prospective account. We gave you our all and it didn't matter who you talked to. You could have called me direct. You could have called Daniel direct.
[22:43]
Luciana Alexandru
I think RPA was great to UiPath, but UiPath was also great to RPA. The company invested a lot in category building, in customer education, in just giving customers a delightful experience, which is what promotes more and more of this product to be sold.
[23:03]
Rolof Bueta
UiPath met Daniel's audacious goal, growing from $5 million in revenue to $35 million to nearly $200 million year over year. This astronomical rise made UiPath the fastest growing SaaS company in history. At the time, UiPath moved its headquarters to New York and opened 30 offices in 16 countries.
[23:28]
Luciana Alexandru
Those stories are very, very rare. At the time, in my experience, it was almost unheard of. At this point. The UiPath story was pretty crazy. It was probably the quote unquote, hottest startup in Europe and one of the hottest startups in the US they had access to really great talent. It was overall incredibly exciting. But I will say it also made us a little bit nervous because the revenue growth was spectacular. The employee growth was also spectacular.
[24:01]
Brandon Deer
It seemed like every day there was 10 new people in the office, and it wasn't that big an office. It was probably equipped to hold, I don't know, 150 or so people. I remember going to the men's room and turning the corner and there was a line looping all the way across the desk where the engineers sat. And the engineers are sitting there trying to have their quiet time, conduct their coding and trying to work in some peace and quiet. And you've got a line of guys kind of doing an S wrap around their desks and it was just this moment of like one. You could see they were pissed off and super irritated, but it was also like kind of funny, you know, to see. And all of these people had just started, you know, we were busting at the seams.
[24:43]
Daniel Dines
We moved to a bigger office and you see suddenly a hundred people in a room and you have to talk to a hundred people. It was kind of insane, the feeling for me. And you have all sorts of faces and they look with trust in you and things were growing and yeah, it was crazy. Good times. It's the best feeling in the world, really.
[25:04]
Rolof Bueta
The Genghis Khan strategy had paid off. UiPath had cornered the RPA market. But in 2019, it became obvious that this extraordinary growth came at a price.
[25:18]
Brandon Deer
And I think that there's always dichotomies of trade off between speed and quality and process.
[25:25]
Luciana Alexandru
We're seeing two different things. On the one hand, we're seeing a lot of customer demand and we're seeing a very fast growing market where UiPath is really solidifying its position as the leader. In fact, it's growing much faster than competitors and the reviews of their product are really positive compared to other players in the market. So on the one hand that's going really well. On the other hand, we're starting to feel internal organizational pains from having added so many people in such a short period of time. And the company is obviously burning quite a lot of money at this point as well, given the meaningful increase in the organization from 100, 150 people to about 3,000 people in only a couple of years. Because when you add 3,000 people in two years, of course it's impossible to do that in the most structured, process driven, discipline manner. And that became clear to the board and it became clear to Daniel as well.
[26:24]
Daniel Dines
It's a very risky game you got into. We were in a bad position. We were, we were really getting into our cash.
[26:33]
Rolof Bueta
In 2019, UiPath's projected cash burn was $150 million. But the company ended up at a number almost triple that amount. The company consumed $400 million.
[26:49]
Brandon Deer
Cornering a market isn't for the faint of heart. It sounds like, hey, let's go, let's go build an incredible company and make a ton of money. And that sounds great. In actuality, to do it, you need to make a lot of mistakes, painful mistakes along the way. You need to really feel some pain. It's hard to realize the cost of all of these things in any given moment. As you're making those decisions, you end up With a lot of people with poorly defined roles that you made a lot of big offers to. You end up with a lot of big customers, that you made a lot of big promises to.
[27:23]
Rolof Bueta
The explosive growth finally brought a reckoning. How could the company rein in costs to grow in a sustainable way?
[27:32]
Brandon Deer
I think we really were fighting for our lives. It was a matter of life and death at that moment. And that's part of the reason that we were forced to cut so deeply and so quickly.
[27:41]
Daniel Dines
We have to do hard course, correct. We had to fire 10% of our people. I think there is no tougher feeling than to tell someone, you know, that we have to part ways because it's a disappointment. It's a disappointment in yourself. First of all, you feel their pain, you feel their disappointment. It never gets easy. It's. It's hard. It's the hardest part, I think, of business. It's a pain that makes you to act in a way that you'll never feel it again.
[28:20]
Luciana Alexandru
UiPath had to make some very hard decisions while the company was still growing very fast. So on the one hand you can be out there celebrating incredible growth like very few companies had. From 5 million to 35 to 170 to 370. This is really spectacular. But at the same time, you have to be very, very honest with yourself about how the health of your organization, the culture, the productivity of your organization, fixing problems, doing more with less. I think as a leader, you also have to be really, really honest with yourself about all these things. And Daniel did that.
[28:59]
Rolof Bueta
The measures taken to right size the business in 2019 meant that UiPath headed into 2020 a leaner and more nimble company. This paid off during the pandemic, allowing them to weather the crisis and its economic instability better than competitors. In 2020, UiPath's revenue broke $600 million. And then in April 2021, UiPath had one of the largest software IPOs in history. It was a breathtaking rise from a company that just a few years earlier was only a handful of engineers operating out of a small apartment in Bucharest.
[29:35]
Andra Cicilmus
The IPO moment itself still feels like a dream. I think the moment I personally realized we actually IPO'd was the night of the party when I was looking at an ice sculpture with UiPath and New York Stock Exchange and I said, why are these words together? It makes no sense. Oh, we just IPO'd today. Okay, now it does.
[30:03]
Rolof Bueta
Utilizing so called computer vision technology, UiPath had always relied on a form of AI for its process automation. But in late 2022. OpenAI's release of ChatGPT upended the AI landscape.
[30:19]
Brandon Deer
I don't know that anyone was fully prepared for the power of generative artificial intelligence. I think it came fast and furious. And I remember the first time I heard about GPT was probably two and a half, three years ago. And there were a bunch of really kind of complex white papers written on that. If you were part of the AI community, you know, you were listening to researchers begin to talk about it. But its application, at least within the enterprise, was not widely accepted. I don't think a lot of people saw it as a real threat to what they were doing today. Everyone in enterprise software has been building, you know, their tech and training their data and acquiring customers for so long. How could something come in and disrupt that in an automated fashion overnight and have seemingly unlimited intelligence on everything?
[31:11]
Rolof Bueta
For UiPath, the rise of generative AI posed an existential question. Would the capabilities of LLMs impact the relevance of RPA? How should UiPath adapt?
[31:23]
Daniel Dines
We started with computer vision. So to understand screens, we extended that computer vision technology to understand documents, semi structured document. And it was kind of natural to incorporate gen AI. It's kind of clear to me that if we don't go to combine genai with automation, we will become extinct, we will become irrelevant to the enterprises. I think the main challenge with gen AI for businesses right now is from the reliability of gen AI. It's so smart, but it's like hiring unstable geniuses. And most companies would like stable, decent level of intelligence. And I think this is where most of the challenges are. But having the automation, creating better grounding for LLMs I think will go a long distance.
[32:23]
Brandon Deer
When a new technology like this evolves. I think if you're not at the forefront of it, you're likely in a place to be displaced. And so we're investing everything that we have to ensure that our products are not just keeping up with the market, but actually pushing the market as it relates to all the different capabilities around automation.
[32:44]
Andra Cicilmus
I think it's very important for UiPath to have the AI capabilities that fix the customer's problems, but also to be able to explain to them this is not an AI problem. You can automate this with this tool or this tool or any other process and it will be maybe more cheap and more reliable for you. I think they complement each other. I don't think it can ever be outdated. The RPA category can be eliminated altogether.
[33:16]
Daniel Dines
Our platform, having our low code approach, is very suitable to use to build an LLM app. And when you pair it with automation, the result is exponential.
[33:29]
Rolof Bueta
UiPath has released a number of products combining Genai and RPA like AI center, which lets users easily add ML models to existing UiPath automations. There's also clipboard AI, a tool specifically designed for copying and pasting large amounts of data. And UiPath Autopilot, a tool anyone can use to supercharge productivity.
[33:51]
Andra Cicilmus
UiPath Autopilot is one of the best examples of AI working with RPA and helping our platform deliver the AI benefits to our customers. We have Autopilot for developers, Autopilot for testers, Autopilot for reporting. And what this actually does is it brings the value and the power of our platform to people that don't know how to build the processes end to end and they don't have the deep technical skills. It's more like you're talking to a friend in layman terms. And Autopilot can generate for you the test cases, the workflows, the automations, the reporting. And this will be really helpful both for the beginners and for non technical people, but also for advanced developers that want to validate their work.
[34:44]
Daniel Dines
Our main proposition is automation will make the models more reliable and how AI can help us. I think we've become much crisper over the last 18 months. I see actually a new dawn in a way for automation. Now. Many people realize that AI without automation doesn't really get to the full benefit of AI. And to quote one of our long time customer, he said to me recently, daniel, we talk a lot about AI, but most of time we end up talking about automation.
[35:23]
Rolof Bueta
To prioritize the company's integration of RPA with LLMs and ensure the company remains relevant in the AI era. In January 2024, Daniel decided to step away from his position as CEO to take on the role of Chief Innovation Officer.
[35:40]
Daniel Dines
It was very helpful for me, considering all the evolution of AI, to be there, to put my mind completely there.
[35:48]
Brandon Deer
Daniel had some time as the Chief Innovation Officer of the company, where his primary domain, his primary effort was spent on all things products and engineering. And I think that was a really incredible opportunity for him and for the company. For him to get extremely deep into the weeds in a domain that he's super passionate about. I think the things that Daniel's been working on for the last year around semantic automation, around agentic AI process orchestration, these are the things that are probably going to shape the future of the company.
[36:20]
Rolof Bueta
But with Daniel focused on product innovation, it was a rocky period for the company's leadership team.
[36:27]
Daniel Dines
It was an old guard versus new guard type of, you know, dynamic in the company, which was kind of not very healthy. I got a little bit disconnected also from customers, from partners doing all this. And the company has become more and more siloed. Not that we are not talking, but I think somehow organizations mimic the leader.
[36:55]
Rolof Bueta
To mend divisions and propel the company in a new direction. In May 2024, Daniel stepped back into the role of CEO. The rapid change in leadership rattled the public markets, and UiPath stock saw a steep drop in share price.
[37:12]
Daniel Dines
The last two months were probably some of the toughest, maybe the toughest. It was a different order of magnitude from 2019. Talking to investors after our earnings call. It was really some of the toughest moments. It's the disappointment of people that put the trust in you. It's. To me, it's extremely hard to get over it. At the human level, it's terrible. But at an intellectual level, I think we are doing the right thing. I think that my returning as the CEO revigorates a bit for us as a company. Maybe it's the best move. We can move faster, I can connect faster, I can break the silos. To me, there are no new people or old people. It's just one. We are putting the company back on track. And of course it's gonna take. It's gonna take, you know, a few quarters until we'll see the results. But we are seeing the early signs in the company.
[38:16]
Brandon Deer
I think we're all super bullish on the future of the company. We made a number of refinements to how we build, where we spend time, how we ship. And I think our product strategy has really honed in on something quite special for the future.
[38:32]
Rolof Bueta
Today, UiPath has 10,800 customers in over 100 countries. It continues to be the leader in RPA.
[38:40]
Brandon Deer
I think UiPath today in many respects is special because it has the same values that Daniel had set forth all those years ago. It has the same mission. People no longer need to be stuck in those keystrokes, in those mouse clicks, moving data between systems and different end applications. And that allows them to focus on higher level, more strategic thinking.
[39:04]
Luciana Alexandru
We always joked in the earlier days that UiPath was a tenure in the making. Overnight success. It is the largest enterprise software company coming out of Europe in the last decade or more. And one may expect this company to start in London or Paris or Munich. And that wasn't the case. The company started in a pretty small country in Eastern Europe that doesn't have a developed technology ecosystem. And from there, Daniel and the team found their way to global domination in RPA and to winning not only in Europe, but to winning in the US as well. And I think that's really inspirational. And to this day, founders come and want to meet me and want to talk to me because they think that that's a really great story. And then because Daniel is such a role model and because they showed that, you know, with great people with the right ambition, you can build something great from anywhere.
[40:03]
Daniel Dines
I think no Crucible Moment will look the same to me. I think it's essential to be surrounded by people you trust, board members, your executive team, and collectively go through these moments. It's so important to come together and talk and really in all good will, find solutions, even if sometimes it's the wrong direction. But by moving, you learn. And then if you have the will to course correct, you will find eventually the right way.
[40:49]
Rolof Bueta
This has been Crucible Moments, a podcast from Sequoia Capital.
[41:05]
Brandon Deer
Crucible Moments is produced by the Epic Stories and Vox Creative podcast teams along with Sequoia Capital.
[41:15]
Andra Cicilmus
Special thanks to Daniel Dines, Luciana Luxandru, Brandon Deer and Andra Cherish Kamish for sharing their stories.
[41:24]
Daniel Dines
SA.