Silicon Valley executive ‘very excited’ about the Asia Pacific region

Reading Time: 7 minutes

As Silicon Valley venture capital funding slows down considerably, it’s likely to be startups with real business models, product and service offerings that will survive as the party winds down. The number of tech companies exiting to the public markets has continued to dip, until it reached zero in Q1 of 2016.

Once rare, sightings of a unicorn (private valuations of $1 billion or more), soared in 2015 as capital flowed freely with over 200 unicorns in existence with almost 80 alone being created in 2015, but as the bottom line took precedence over growth at all costs as neatly summated by Bill Gurley in a recent essay that has the startup world in the valley scrambling, the unicorn fantasy is unraveling.

Only few of these unicorns are well known to most of the public like Uber, Spotify or Square, and most are unknown quantities. We speak to Anaplan, a unicorn that has had accelerated revenue growth year-on-year.

Cloud based software provider Anaplan currently has almost 500 global companies as customers, and we talked to Paul Melchiorre, Anaplan’s Chief Revenue Officer in the Office of the President, as he traveled to Asia, on how he tempers an aggressive strategy in a responsible manner. 

Anaplan may not be well known in Asia despite being a 1-billion USD start-up coming out of Silicon Valley. Tell me about Anaplan’s track record and expansion strategy.

Paul Melchiorre, Anaplan’s Chief Revenue Officer
Paul Melchiorre, Anaplan’s Chief Revenue Officer

The land and expand strategy is working for us. In this region, the groundwork in opening the markets came as result of early success with some of the larger multi-national companies that have large operations here, such as Procter & Gamble, DelMonte, Dimension Data. We are seeing traction in companies where historically you would go into the CIO’s office and Oracle or SAP is the answer to any question. Now, we are seeing that interest in these decades-old legacy products is dying. The companies we work with in the region can work with a local budget and can implement Anaplan in a matter of weeks. This also allows us to go back to the U.S. or UK and point out to these multi-national companies that their success using Anaplan in Asia can be expanded to other territories.

What about large, local companies in Asia?

It’s a two-fold strategy. First we focus on the large multi-national corporations (MNC) that are based in Europe or in the U.S. These are typically Fortune 2000 companies that have large, global operations and complex planning requirements. Secondly, we work on getting those large, strategic companies like we have done with Telekom Malaysia, a company that was deeply embedded with expensive SAP solutions. Within a relatively short period of time, they have seen success with Anaplan. We are likewise looking at these types of companies in the Philippines and other regions. We are gaining momentum and showing value across Malaysia, Singapore and the Philippines to name a few countries. I saw great opportunity from my visit to Hong Kong and in Greater China with our product. Asia is a lucrative market … I’m very excited about the region.

As a cloud-based company coming to the East, what are the challenges faced, as adoption here has been considerably slower than in the West

I admit that I am surprised that adoption of cloud-based technology isn’t more prevalent in this region. I had to make sure when I got up this morning to check the newspaper and ensure the date is 2016. Companies here could save millions of dollars by replacing their legacy SAP and Oracle environments with Salesforce, Anaplan, Workday, Tableau and a other cloud-based providers. That’s the challenge, but we are seeing innovative technology approaches in some pockets which points to a growing need for smart business practice and an acceptance of enabling technologies.

Taking that into consideration, how do you align your strategy with a prospective customer’s IT strategy?

In the early days of Anaplan, we sold around the Chief Information Officer (CIO) and went directly to the Chief Financial Officer (CFO) or the Head of Sales or the Head of Human Resources, slipping into the side door with a use case as IT was saying the answer is always SAP. Ironically the first call we are now making is to the CIO because the CIO’s that originally bought SAP and implemented it are no longer around.

The new CIOs or CFOs that have inherited these expensive legacy platforms are tired of spending millions of dollars on solutions that haven’t been innovated on in decades. These CIO’s are under huge pressure and the status quo isn’t good enough because the world has changed. The world is demanding an agile way of doing business, and SAP and Oracle transaction systems with add-on solutions wrapped around them aren’t allowing these companies to be nimble and proactively forecast scenarios to adjust business strategies to win in the marketplace. In minutes, Anaplan allows companies to gather data that previously took 2-4 months, so if you need to make a decision within 10 minutes or a day and you have to wait 2 months for the relevant information. In that scenario, you will fail as a business whether you are a small, medium or a Fortune 50.

CIO’s are now seeing that Anaplan is a platform that can enable advanced decision-making in every part of their business. It’s a not a point solution just for financial sales, supply chain or HR planning. Our platform a big win for them and the cost structure is within the budget.

How do you resonate that message across the board, on a way that you are seen as a next generation provider across the enterprise?

It’s key to find an internal champion and do a proof of concept where in a matter of weeks the customer can do something that has previously taken them years to do.

We can take that proof of concept to the senior level of the company and say ‘look guys, you have been trying to do this for many years with SAP, spent tens of millions of dollars and I have done it in a division over here in weeks—and oh, and its up and running, you own it.’

Then I tell them that they should build their own capacity, build a centre of excellence, and re-train their knowledge workers on Anaplan and enable business analysts who are proliferating disconnected, error prone spreadsheets across the company to soft-teach themselves. That message is definitely resonating … and it’s a different story if you get a department or a division to prove it out from the beginning.

anaplan1

What’s your revenue target for 2016?

Our target is to try and double every year, which is aggressive and difficult to sustain as your base becomes larger each year. I think if we come in with 75 per cent growth this year that would be fantastic.

To achieve this, we are growing our customer base of Fortune 500 companies. The good news is that we are starting to get dominant positions across all industries with some of the largest, well-recognised brands.

What happens to mid-sized companies in that case?

We are working with our global network of partners to tackle this area of the market. If I can acquire 450-500 of the top 2000 global companies at the end of this year and then 1000 of them next year and 1500 the year after, then look out Oracle and SAP, you are in big trouble.

Is it realistic to bring in so many of the largest global companies to Anaplan?

I have been selling to the Fortune 1000 for many years. All you need to do is get some of the big ones and the momentum rolls, that’s how we built Ariba, how our team built SAP in 1989. That’s what we will do here, work with the biggest companies, and they will bring everyone else with them.

Anaplan has raised funding successfully during financially tough times. Now there is talk of a tech bubble with a decline in startups going public. Is the next step an IPO?

We have a CFO (James Budge) to answer those questions in relation to Anaplan, but I can assure you there are E-rounds and F-rounds and nobody wants to be part of an F-round, as you know what that means. The good news is, unlike other Silicon Valley companies that have taken on a lot of money, we have been very cautious on how we are dispensing our funds. We are at a great growth rate at over 100 percent year over year in fiscal 2016—and we are doing it in a fiscally responsible manner.

Our CFO and I have both done this before—growth is in a predictive manner and the next step is an IPO when the time is right. A year ago it did not really matter if you went public as long as you had great growth rates, but today I think the public markets are demanding a path to profitability. In the last couple of months the rules of what you need to do in order to become public have changed. We are ensuring that we are compliant with what the market is demanding and building disciplines within the company to ensure sustained profitable growth.

Having had a successful corporate career over 30 years, why did you jump on board and start waving the Anaplan flag? 

Yes, I did not need career enhancement and was in a comfortable position. The reason I took the SAP job was because I knew we were changing the way transaction systems were built as we went from mainframe to server, and that was successful. Then the opportunity came up at Ariba, to build a global network around procurement and change the way global companies buy and sell, and we did that, I stayed there for 15 years to take advantage of this amazing opportunity where SAP ended up acquiring Ariba.

I moved into private equity, which was pretty boring. One day I got a call from one of the board members who told me to check out Anaplan. I honestly did not know who they were. Initially I thought, corporate performance management, its an old space, very crowded with IBM, SAP, Oracle, Hyperion and others, just a boring space. Then I did due diligence and started looking into the company and I realised those companies just mentioned had not reinvested in their technologies. Once Oracle bought Hyperion, SAP acquired Business Objects and IBM acquired Cognos, innovation completely stopped in 2010.

Then you look at the business problem over the past 25 years, the biggest planning platforms for the largest companies is Microsoft Excel—its unbelievable. For example, companies are doing their incentive compensation planning and putting their most sensitive data in Excel spreadsheets and on flash drives. It’s amazing that the business problem has not already been solved and no one is tackling integrated business planning across the enterprise. I joined Anaplan because we can actually solve this challenge for large, global companies.

The Anaplan platform was build from the ground up a few years ago and truly is the only solution that addresses integrated business planning for Fortune global companies across every industry. It’s the only platform that enables smart planning and advanced decision-making across every department. It’s truly transformational.

Anaplan is going to be a billion-dollar software company—and that excites me, that’s why I joined.

We spoke to Paul Melchiorre, just prior to Anaplan CEO Frederic Laluyaux stepping down, with Anaplan explaining they are focusing on growth at scale as the company prepares for the next important phase of profitable growth.

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As Silicon Valley venture capital funding slows down considerably, it's likely to be startups with real business models, product and service offerings that will survive as the party winds down. The number of tech companies exiting to the public markets has continued to dip, until it reached zero in Q1 of 2016. Once rare, sightings of a unicorn (private valuations of $1 billion or more), soared in 2015 as capital flowed freely with over 200 unicorns in existence with almost 80 alone being created in 2015, but as the bottom line took precedence over growth at all costs as neatly...

Reading Time: 7 minutes

As Silicon Valley venture capital funding slows down considerably, it’s likely to be startups with real business models, product and service offerings that will survive as the party winds down. The number of tech companies exiting to the public markets has continued to dip, until it reached zero in Q1 of 2016.

Once rare, sightings of a unicorn (private valuations of $1 billion or more), soared in 2015 as capital flowed freely with over 200 unicorns in existence with almost 80 alone being created in 2015, but as the bottom line took precedence over growth at all costs as neatly summated by Bill Gurley in a recent essay that has the startup world in the valley scrambling, the unicorn fantasy is unraveling.

Only few of these unicorns are well known to most of the public like Uber, Spotify or Square, and most are unknown quantities. We speak to Anaplan, a unicorn that has had accelerated revenue growth year-on-year.

Cloud based software provider Anaplan currently has almost 500 global companies as customers, and we talked to Paul Melchiorre, Anaplan’s Chief Revenue Officer in the Office of the President, as he traveled to Asia, on how he tempers an aggressive strategy in a responsible manner. 

Anaplan may not be well known in Asia despite being a 1-billion USD start-up coming out of Silicon Valley. Tell me about Anaplan’s track record and expansion strategy.

Paul Melchiorre, Anaplan’s Chief Revenue Officer
Paul Melchiorre, Anaplan’s Chief Revenue Officer

The land and expand strategy is working for us. In this region, the groundwork in opening the markets came as result of early success with some of the larger multi-national companies that have large operations here, such as Procter & Gamble, DelMonte, Dimension Data. We are seeing traction in companies where historically you would go into the CIO’s office and Oracle or SAP is the answer to any question. Now, we are seeing that interest in these decades-old legacy products is dying. The companies we work with in the region can work with a local budget and can implement Anaplan in a matter of weeks. This also allows us to go back to the U.S. or UK and point out to these multi-national companies that their success using Anaplan in Asia can be expanded to other territories.

What about large, local companies in Asia?

It’s a two-fold strategy. First we focus on the large multi-national corporations (MNC) that are based in Europe or in the U.S. These are typically Fortune 2000 companies that have large, global operations and complex planning requirements. Secondly, we work on getting those large, strategic companies like we have done with Telekom Malaysia, a company that was deeply embedded with expensive SAP solutions. Within a relatively short period of time, they have seen success with Anaplan. We are likewise looking at these types of companies in the Philippines and other regions. We are gaining momentum and showing value across Malaysia, Singapore and the Philippines to name a few countries. I saw great opportunity from my visit to Hong Kong and in Greater China with our product. Asia is a lucrative market … I’m very excited about the region.

As a cloud-based company coming to the East, what are the challenges faced, as adoption here has been considerably slower than in the West

I admit that I am surprised that adoption of cloud-based technology isn’t more prevalent in this region. I had to make sure when I got up this morning to check the newspaper and ensure the date is 2016. Companies here could save millions of dollars by replacing their legacy SAP and Oracle environments with Salesforce, Anaplan, Workday, Tableau and a other cloud-based providers. That’s the challenge, but we are seeing innovative technology approaches in some pockets which points to a growing need for smart business practice and an acceptance of enabling technologies.

Taking that into consideration, how do you align your strategy with a prospective customer’s IT strategy?

In the early days of Anaplan, we sold around the Chief Information Officer (CIO) and went directly to the Chief Financial Officer (CFO) or the Head of Sales or the Head of Human Resources, slipping into the side door with a use case as IT was saying the answer is always SAP. Ironically the first call we are now making is to the CIO because the CIO’s that originally bought SAP and implemented it are no longer around.

The new CIOs or CFOs that have inherited these expensive legacy platforms are tired of spending millions of dollars on solutions that haven’t been innovated on in decades. These CIO’s are under huge pressure and the status quo isn’t good enough because the world has changed. The world is demanding an agile way of doing business, and SAP and Oracle transaction systems with add-on solutions wrapped around them aren’t allowing these companies to be nimble and proactively forecast scenarios to adjust business strategies to win in the marketplace. In minutes, Anaplan allows companies to gather data that previously took 2-4 months, so if you need to make a decision within 10 minutes or a day and you have to wait 2 months for the relevant information. In that scenario, you will fail as a business whether you are a small, medium or a Fortune 50.

CIO’s are now seeing that Anaplan is a platform that can enable advanced decision-making in every part of their business. It’s a not a point solution just for financial sales, supply chain or HR planning. Our platform a big win for them and the cost structure is within the budget.

How do you resonate that message across the board, on a way that you are seen as a next generation provider across the enterprise?

It’s key to find an internal champion and do a proof of concept where in a matter of weeks the customer can do something that has previously taken them years to do.

We can take that proof of concept to the senior level of the company and say ‘look guys, you have been trying to do this for many years with SAP, spent tens of millions of dollars and I have done it in a division over here in weeks—and oh, and its up and running, you own it.’

Then I tell them that they should build their own capacity, build a centre of excellence, and re-train their knowledge workers on Anaplan and enable business analysts who are proliferating disconnected, error prone spreadsheets across the company to soft-teach themselves. That message is definitely resonating … and it’s a different story if you get a department or a division to prove it out from the beginning.

anaplan1

What’s your revenue target for 2016?

Our target is to try and double every year, which is aggressive and difficult to sustain as your base becomes larger each year. I think if we come in with 75 per cent growth this year that would be fantastic.

To achieve this, we are growing our customer base of Fortune 500 companies. The good news is that we are starting to get dominant positions across all industries with some of the largest, well-recognised brands.

What happens to mid-sized companies in that case?

We are working with our global network of partners to tackle this area of the market. If I can acquire 450-500 of the top 2000 global companies at the end of this year and then 1000 of them next year and 1500 the year after, then look out Oracle and SAP, you are in big trouble.

Is it realistic to bring in so many of the largest global companies to Anaplan?

I have been selling to the Fortune 1000 for many years. All you need to do is get some of the big ones and the momentum rolls, that’s how we built Ariba, how our team built SAP in 1989. That’s what we will do here, work with the biggest companies, and they will bring everyone else with them.

Anaplan has raised funding successfully during financially tough times. Now there is talk of a tech bubble with a decline in startups going public. Is the next step an IPO?

We have a CFO (James Budge) to answer those questions in relation to Anaplan, but I can assure you there are E-rounds and F-rounds and nobody wants to be part of an F-round, as you know what that means. The good news is, unlike other Silicon Valley companies that have taken on a lot of money, we have been very cautious on how we are dispensing our funds. We are at a great growth rate at over 100 percent year over year in fiscal 2016—and we are doing it in a fiscally responsible manner.

Our CFO and I have both done this before—growth is in a predictive manner and the next step is an IPO when the time is right. A year ago it did not really matter if you went public as long as you had great growth rates, but today I think the public markets are demanding a path to profitability. In the last couple of months the rules of what you need to do in order to become public have changed. We are ensuring that we are compliant with what the market is demanding and building disciplines within the company to ensure sustained profitable growth.

Having had a successful corporate career over 30 years, why did you jump on board and start waving the Anaplan flag? 

Yes, I did not need career enhancement and was in a comfortable position. The reason I took the SAP job was because I knew we were changing the way transaction systems were built as we went from mainframe to server, and that was successful. Then the opportunity came up at Ariba, to build a global network around procurement and change the way global companies buy and sell, and we did that, I stayed there for 15 years to take advantage of this amazing opportunity where SAP ended up acquiring Ariba.

I moved into private equity, which was pretty boring. One day I got a call from one of the board members who told me to check out Anaplan. I honestly did not know who they were. Initially I thought, corporate performance management, its an old space, very crowded with IBM, SAP, Oracle, Hyperion and others, just a boring space. Then I did due diligence and started looking into the company and I realised those companies just mentioned had not reinvested in their technologies. Once Oracle bought Hyperion, SAP acquired Business Objects and IBM acquired Cognos, innovation completely stopped in 2010.

Then you look at the business problem over the past 25 years, the biggest planning platforms for the largest companies is Microsoft Excel—its unbelievable. For example, companies are doing their incentive compensation planning and putting their most sensitive data in Excel spreadsheets and on flash drives. It’s amazing that the business problem has not already been solved and no one is tackling integrated business planning across the enterprise. I joined Anaplan because we can actually solve this challenge for large, global companies.

The Anaplan platform was build from the ground up a few years ago and truly is the only solution that addresses integrated business planning for Fortune global companies across every industry. It’s the only platform that enables smart planning and advanced decision-making across every department. It’s truly transformational.

Anaplan is going to be a billion-dollar software company—and that excites me, that’s why I joined.

We spoke to Paul Melchiorre, just prior to Anaplan CEO Frederic Laluyaux stepping down, with Anaplan explaining they are focusing on growth at scale as the company prepares for the next important phase of profitable growth.

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