SaaS Interviews with CEOs, Startups, Founders
1355 QASymphony Tricentis Merged Entity $80-100 ARR Going After DevOps Pie
10 Apr 2019
Chapter 1: What is the background of Dave Keil and his role at QASymphony?
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Travel more. He's going after the DevOps space. It's a multi, multi, multi-billion dollar industry. He made the decision with his board recently that a Tricentis merger would make a lot of sense. They're about to pass 20, QA Symphony is about to pass 20 million bucks in AR across 648 customers, 160 employees, and the team's growing rapidly again as they work this year to complete this merger.
The combined entity call will be due between 80 and 100 million bucks. Gives them more international exposure. He'll be traveling more, but again, they're going after much bigger pie. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest-growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is David Cobb.
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Chapter 2: How did the merger with Tricentis come about?
We're about to hit that 20 million recurring revenue mark this month. We'll celebrate that in about two weeks.
And so that's exciting. And just for those of you listening later, because the episodes don't go live when we actually record them, but we're recording this here on Wednesday, August 8th. So it sounds like here in August, they'll pass that beautiful 20 million mark.
Correct.
That's right. That's great.
So you had alluded to something that is public. On June 20th, we announced a very important and strategic merger with a company called Tricentis. And so it's been a very exciting nearly two months now since that announcement. Tricentis is very complementary to QA Symphony, whereas we do focus on a test case management solution, more manual testing focused. Tricentis has multiple products, but
has especially well known for their automated solution called Tosca, which is in the top quadrant at Gartner. And so we not ironically have the same investor. So Insight Venture Partners, which is one of the largest software investors in the world, have just recently raised a $6.5 billion fund, had been investors and continues to be investors in both organizations.
So our board will remain essentially the same. And we're coming together. We expect to close that deal legally in early September. and come together as one cohesive company by the end of the year.
David, what was the spark that started that? Was it Insight at the board meeting saying, hey, you guys should look at this other company? David, if you like it, let us know. We can make an intro.
Insight played a key role, as you alluded to. And really, there was interest both sides. So they saw that Tricentis was very strong in Europe, moving into the US, very strong in selling to the C-level, very strong with systems integrators. They saw that QA Symphony had almost all of its business in the U.S. and was trying to break into Europe.
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Chapter 3: What is the significance of the DevOps market for QASymphony?
HP merged its software business with Micro Focus a year ago. And it's, again, public record that that business has been declining very rapidly. So we're really well positioned to increase our market share each and every year and lead that category.
Now, David, I want to talk about the mechanics of an actual merger, what that means. But before, you know, two months, about a month and a half before you announced that was when you were on our show. I want to make sure nothing drastically changed. Did you raise any additional capital or you still have about forty seven point five million in the company?
Well, we had raised $47.5 million, and Tricentis has been around longer and is actually a large organization. So they've raised over $160 million with Insight.
And to round out just some of your other numbers, TeamSite is still about 130 and still about 570 customers?
So every month that number will go up. So we're at about 145 now, employees. and about 648 customers as of this Monday.
That's great. Okay, great. And then, so walk me, I want to get into the mechanics of this because it's rare that we get someone right on the back of a merger, right?
So when people think about, should I merge with a competitor or someone in my space, maybe not a competitor, maybe something complimentary, the first question is, especially from an ego perspective, is wait, are they going to be CEO or am I going to be CEO? Let's just start right there. How do you handle that question?
Sure, sure. Very, very relevant question. Ultimately, what I think have used as my guiding principles are some businesses. And one in particular that I worked at years ago, I worked at a public company called Choice Point. And I saw a model there that I really saw was very successful where there was a CEO and a COO who were very complimentary and terrific business partners.
And I saw that that combination, both of those guys, by the way, were terrific mentors of mine. I saw that that combination was quite effective. So that same model is one that we've embraced here at Tricentis. The company will be named Tricentis when we close. And I will take on the COO role. And Sandeep is the CEO there. He has a background that's really unique.
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Chapter 4: What are the expected revenue projections for the combined entity?
You know, well before that.
Interesting. OK, great. Very good. Any other anything that surprised you as these conversations went down? And specifically, David, what I'm hunting and digging for here is people listening right now might be considering the same kind of thing. Is there anything they should be aware of that you weren't expecting going into this?
Well, you know, as we all know that folks have done M&A, M&A is hard. And what I would tell you is what's what's really been critical to us is to have that global coverage, which we didn't have. But certainly now being a global company with offices in Australia and offices throughout Europe and offices in India, it's just much more complex.
So I would say get ready to buckle in and make sure you've put the time in at home because the travel is ā is going to be extensive. But you know, if you're, if you're someone who loves change and likes to win and likes to be energized, then this is the right move. And you know, for us, and me personally, it's been incredibly energizing and exciting.
Do you look at things like, okay, how are tech stacks going to be combined to offer a more comprehensive product? Or will they basically still stay separate entities, but all part of one organization?
No, we're absolutely going to combine the product strategy, we'll have a combination of of the different aspects into one common platform. And we actually are going to launch the first phase of that combined entity at Accelerate in October, which is Tricentis' annual user conference. I believe it's the second week in October. So for those that are interested, make it to Vienna.
I think it's October 7th, and that's where they can learn a lot more about the combined product strategy.
What happens to the investors on your cap table that are not Insight Ventures? So people on your cap table that are not on Tricentis' cap table, what happens to them? Do they get a payout? Is there money changing hands in this merger?
In this case, all of our institutional investors have been extremely excited to remain with the company and feel very confident. So they've rolled their investment forward and that's been a very, they view it as a very positive event.
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Chapter 5: How will the merger impact the company culture and team dynamics?
It's a multi, multi, multi-billion dollar industry. He made the decision with his board recently that a Tricentis merger would make a lot of sense. They're about to pass 20, QA Symphony is about to pass 20 million bucks in ARR across 648 customers, 160 employees, and the team's growing rapidly again as they work this year to complete this merger.
The combined entity caught will be due between 80 and 100 million bucks, gives them more international exposure. He'll be traveling more, but again, they're going after much bigger pie. David, thank you for taking us to the top.
Thanks for having me, guys. Appreciate it.