"When you're hot you're hot," Jerry Reed sang in 1971, "and when you're not you're not." That's true for tech companies and nobody knows it better than Boston-based Kinvey, which has been on both sides of that country & western lyric and now finds itself on the upswing again.
Kinvey started in 2010 with a mobile back-end as a service offering (MBaaS). Back then, it was considered pretty hot stuff to add "as a Service" to the end of just about anything that could be done in IT. Kinvey drove its way into enterprise accounts by winning over developer teams and in 2014, raised a $10.8 million Series B with Avalon Ventures and Atlas Venture (now Accomplice), for $17.8 million total money in. In early 2015, developers used Kinvey's platform to make the 50 Shades of Grey mobile app.
Then, Kinvey got quiet. The enterprise mobility market matured and big competitors crowded in: Amazon, IBM, Red Hat and SAP. Selling to the enterprise started to look like a costly and losing proposition: "The cost of acquiring that customer is a long time," CEO and founder Sravish Sridhar told me. "The cost of getting a deal closed is a long time." For a small team going up against better-funded competitors, the road was starting to look pretty rocky. In early 2016, Kinvey laid off staff.
One of its new competitors, Amazon, had taken a run at buying out Kinvey back in 2013, multiple sources told me. At the time, Amazon did a make/buy analysis and decided to pass on the acquisition.
Then last month, Forrester came in with an analysis of mobile developer platforms that put Kinvey at the top. Even in a SaaS universe, the Boston-based IT research firm remains highly relevant to the Fortune 500, both for customer and venture investment. Sources say rumors of Forrester's interest in Kinvey were what brought Amazon knocking in the first place.
Soon after its Forrester rating, Kinvey filed a Form D disclosing its intention to raise an additional $14.1 million in a Series C. It appears even VCs may rely on Forrester's recommendations, too, though I doubt many would admit it.
"We have to figure out as a community how you celebrate the grind."
Sridhar declined to comment on my information about Amazon's past acquisition interest. But he did talk about a go-to-market pivot that helped bring about Kinvey's change in fortune.
"We’ve pivoted the company from a direct model we were pursuing in 2015 to an almost purely partner-based model," he said. "That has gotten a lot of success for us. Almost 70 percent of our deals come from partners. Last year we were almost 90 percent direct."
Partners means systems integrators (SIs) and digital agencies, mostly, Sridhar said--he wanted to "go where the apps are," recognizing that a small sales team going direct to customers is only going to sync a certain number of apps, while tens of thousands are being built elsewhere. "Partners" also means pure-play cloud platforms like Google and VMware. These firms have infrastructure offerings that lack a mobile component.
Given Kinvey's size compared to the companies they were selling to, going to market through partners seems like a smart idea. But many firms have died on the road to changing up their sales operation between direct and partnered. I asked Sridhar how they managed it.
"One of the things Kinvey did really well from day one was we built a global developer ecosystem," he said. "So now, we took that learning and instead of applying it to build a large ecosystem, we applied it to build an ecosystem with partners. All our developer marketing and developer evangelism now is focused on going into an SI, working with them, giving swag. We’re now doing it very focused. A lot of our partners found it to be a breath of fresh air."
Another thing Kinvey did was to insist on buy-in from the top down. That meant at a small customer, the chief executive had to have KPIs (key performance indicators) tied into the deal; at a large firm, they looked for that at the VP level.
That effort (and it was a huge effort, Sridhar said), has apparently put Kinvey in a position to raise a new round of financing and to staff itself back up to 43 people, equivalent to its earlier headcount, Sridhar said. He declined to say much about the financing, beyond that they plan to make an announcement about it in December.
"In Boston it’s really easy to get enamored of the hot companies but I think there’s a lot of companies in Boston that are grinding it out and building, year over year," he said. "We have to figure out as a community how you celebrate the grind."
