I’m sharing this story because I think it’s a good illustration of how the relationship between a startup and a venture capitalist can go — and how it doesn’t always proceed in a straight line.
When VCs tell you that they provide more than just money, you might think that’s just talk. For some investors, maybe it is. But a good VC can provide a lot of substantive help, both strategic and tactical, and that has always been YL Ventures’ approach with our portfolio.
Keep in mind that BlazeMeter’s remarkable outcome is overwhelmingly due to the hard work and the brilliance of its founder and employees. But we’re very proud of the role YL Ventures played.
Over the years, I (and occasionally my partner Ofer Schreiber) worked with BlazeMeter intensely, including helping the management team find and evaluate key employees, doing lots of relevant market research, providing online marketing support, doing competitive analysis, evaluating their acquisition offer, and more.
Ofer and I first met BlazeMeter’s founder, Alon Girmonsky, in 2010. His Tel Aviv-based company was then called PerformanceXpert. Our first meeting was not auspicious, to be honest. We believed he was a solid entrepreneur and a brilliant engineer, and the idea he had for a cloud-based load-testing tool was a good one. But it was too early for us to invest.
A few months later, we heard through a friend at a social event that PerformanceXpert had made a lot of progress. We set a second meeting with Alon for May, 2011. We came away from that meeting very excited by the progress the company had made, and we expressed our interest in investing very soon after. It took about three months to finalize the deal. Our investment (with YL Ventures as the sole investor) closed in August, 2011.
Rolling up our sleeves
We immediately got to work helping PerformanceXpert with its most critical need: Rebranding and relaunching with a more effective marketing strategy, a new website, and a new name.
Our first move was to introduce Alon to Geva Perry, an online B2B marketing expert based in San Francisco with roots in Israel. Geva agreed to join the fledgling company as a board member and interim Chief Marketing Officer, and he started on the rebranding effort.
Geva led the process of selecting a new name, and working with the company eventually settled on BlazeMeter. The company relaunched itself with the new name and new website in late 2011, gaining a lot of press coverage in the process.
Getting down to business
In early 2012, we again increased our investment in BlazeMeter. During the first quarter of that year, we identified opportunities to considerably improve the company’s conversion funnel, and helped it make changes to its website as well as begin recruiting online marketing managers and consultants to provide continuous improvement.
Later in the year BlazeMeter discovered that its website was excellent at converting JMeter enthusiasts (a particular set of geeks who already knew about the open-source code BlazeMeter used) but not very good at converting the more general addressable market of all developers, testers, and administrators and operators of websites and mobile apps. We discovered this issue several months after the relaunch and moved immediately to address it. Within days, we mobilized several worldwide CRO experts to analyze the website and offer recommendations. Within weeks, Ofer and I sourced, attracted and helped BlazeMeter hire one of those experts (formerly at Adobe Omniture) to come and join BlazeMeter fulltime as SVP Digital Marketing, based in New York.
By early 2013, we could see clear signs that BlazeMeter’s broad ecosystem strategy was paying off. Its cloud-based load-testing services were accessible to hundreds of thousands of developers via complementary PaaS, APM, and mobile development platforms. The company had secured strategic partnerships with New Relic, Acquia, CloudBees, TeamCity, Google Analytics, AppDirect, WordPress, and others. BlazeMeter posted strong growth in monthly recurring revenues (MRR) and in its average selling price (ASP). It also got favorable coverage by two prominent industry analysts: 451 Research and IDC.
Buoyed by this momentum, YL Ventures increased its investment in BlazeMeter twice throughout 2013.
By the middle of that year, it was clear that BlazeMeter’s “arms dealer” positioning within the cloud market gave it incredible leverage and enviable gross margins. The company was well on its way to success, despite having spent less than $1MM to date. From the very beginning, Alon had the precious entrepreneurial ability to achieve a lot with little money.
By November BlazeMeter was able to point to 3x revenue growth over the preceding six months! And it closed out 2013 with a stellar quarter, landing major clients, securing more key partnerships including Amazon Web Services, and releasing unique features to the market.
Growth and acceleration
I led a major Series A follow-on funding round for BlazeMeter in December 2013, which the company announced in early 2014. It continued its phenomenal growth, landing huge bookings month after month and building an incredible customer logo list. It also continued to score major partnerships, including IBM and Red Hat.
From 2014 through 2015, BlazeMeter was a more mature company. Its growth continued unabated, however, and we continued to stay closely involved in tracking its key metrics and product launches. A few highlights:
● BlazeMeter relocated its headquarters from Tel Aviv to Mountain View, California in Q3 2014, and made its first acquisition, of Loadosophia, a load-testing analytics software provider.
● BlazeMeter helped the White House ensure that its new website could withstand traffic spikes of up to 250,000 simultaneous visitors. In the wake of the embarrassing launch of HealthCare.gov in 2013, that was a valuable improvement for the White House, which held a problem-free launch of a new site, GlobalChange.gov, in May.
● In July 2015, Amazon fully integrated BlazeMeter into its AWS CodePipeline service, making it one of only four performance testing providers to enjoy such close integration with AWS.
By the end of 2015, BlazeMeter was able to report 2x year-over-year growth in revenues and customer logos. Major clients closed at the end of 2015 included Target and the NFL.
At the start of 2016, we participated in a follow-on round of investment, in the form of a convertible note. By mid-2016, BlazeMeter received a term sheet for a follow-on round from a highly reputable VC firm and also got a letter of intent for acquisition by CA Technologies. (Interestingly, when we made our first investment in 2011, we identified CA as one of the potential acquirers of the company!)
The entire BlazeMeter board of directors was deeply involved in helping BlazeMeter evaluate and negotiate both of those offers.
By late September 2016, BlazeMeter had signed a definitive agreement to be acquired by CA. The acquisition extends CA’s DevOps portfolio; CA was particularly interested in adding a SaaS-based application performance testing solution built on open source software. After the acquisition, BlazeMeter seamlessly integrates with CA’s continuous delivery solutions to improve testing efficiency and accelerate the deployment of applications for CA’s customers.
At the time of acquisition, BlazeMeter has 3,000 customers, of which 300 are large enterprises, including the NFL, Tesla Motors, KPMG, Sony, Target, BT, Disney, Walmart, Pfizer, Adobe, Nike, Mattel and Citi.
But as you can see, the story didn’t have a smooth start. It wasn’t “love at first sight” for Alon and us, and it took a while to sort out the kinks in BlazeMeter’s branding, marketing strategy, and conversion funnel.
If you have dreams of raising VC funding and growing your business to a successful exit, keep these points in mind:
● It takes time to close your first investment.
● The best investors will want to get their hands dirty and help you with strategic and tactical issues.
● It may take a year or more to start seeing the results of these improvements.
● And at the end of the day, no VC can do the hard work for you. It takes constant focus on key metrics and on execution, on all fronts, to make a company successful.
As one of the company’s customers tweeted in August of this year, “BlazeMeter is the best thing that happened to performance testing since the stopwatch was invented.” We are so proud to have played a part in that story.
Big congrats to the outstanding BlazeMeter management team – Alon Girmonsky, Dan Benger, Alex Haiut, Tamir Pokorny, Todd Feinroth, Eilam Levin and Andrey Pokhilko, and my fellow BlazeMeter board members – Justin Moore, Adi Pundak-Mintz, Kobi Samboursky and Sergey Gribov!