Benchling’s unicorn status didn’t happen overnight. Some ten years after its founding, the company is worth more than $6 billion, and the founder sees the company going public in the future. The company’s future resembles its past: talking to customers and building for power users. To that end, Benchling announced today that it recently surpassed 1,000 customers and increased its subscription revenue by 90% year-over-year. It also has new executive leadership, including the appointment of Atlassian veteran Stephen Deasy as the company’s first Chief Technology Officer.
Benchling’s CEO and Co-Founder, Sajith Wickramasekara, recently spoke at a londonbusinessblog.com Live event with one of its early investors, Miles Grimshaw, general partner at Benchmark. Together, the two explained Benchling’s early strategy that appealed to a small entry-level market, ultimately leading to widespread adoption.
londonbusinessblog.com Live records weekly on Wednesdays at 11:30am PDT / 2:30pm EDT. Join us! Sign up for TCL Pitch Practice by filling in this application.
As Wickramasekara explained, early funding was difficult to secure. It was 2012 and Benchling was sitting alone between SaaS companies and biotech. “Every software investor thought what we were doing was small and unimportant,” Wickramasekara said, adding later, “and then we went to scientific investors, and every scientific investor understood the challenges of R&D, but they understood software.” not; they invested in medicine.”
Miles Grimshaw of Benchmark was introduced to the Benchling co-founders through a mutual friend and was impressed. “When I met Sajith and Ashu Singhal, they were two co-founders who had knowledge of bench science and had worked in those labs doing research. But they were also great engineers who could build great products and distill them into an easy user experience.”
“That’s just a really difficult and rare combination,” Grimshaw said of the Benchling co-founders.
Grimshaw noted that the current market for Benchling’s product at the time was relatively small. However, he saw the industry evolving and instead of looking at the current addressable market, he worked with the co-founders to identify the potential market size.
“I think the question is not so much ‘how big is the market today’, but rather what could the market become and what is the growth rate of that market,” Grimshaw said. “A small market that is growing rapidly is powerful for a new company to gain market share from the outside.”
Grimshaw points to Amazon and Shopify as prime examples of this strategy. The idea is to identify the growth rate of the market and record a portion of the incremental evolution each year. Amazon started when e-commerce was on the rise, but managed to capture larger shares as the market grew. Shopify did the same, Grimshaw said, by targeting the small businesses entering the growing SMB ecommerce market.
Wickramasekara explained that Benchling’s early traction came from giving the software away to academics.
“[Academics] Here we knew there were end users who could take advantage of the software and a lot of people thought we were crazy for doing that, you know, giving the software away for free to academics who have no money,” said Wickramasekara. “There is no freemium funnel where they suddenly start converting money and paying for the software.”
Academics was and still is a substantial customer base for Benchling. Wickramasekara points to Grimshaw for encouraging this strategy. The company stayed in this market, not focusing on monetization for years.
Grimshaw called this plan a slower ramp, but created a more robust foundation by creating a moat around early adoption that money can’t attack. Since these users were using free software, it is more difficult for a competitor to steal the user base. The idea was that the user group trained in Benchling would eventually be converted into commercial, professional users.
It was a long journey, Wickramasekara said. After several years of repeating with academics, the strategy paid off, and some research scientists ended up setting up new companies or joining existing ones. They brought Benchling with them.
“It was because of their love of the product as an end user that gave us the shot at the goal,” said Wickramasekara. “We found out what kind of issues these companies were facing, which led to the expansion of the platform. And from there we started to see commercial success.”
Benchling was focused on constantly talking to its end users from the start. While those early adopters did different research, the underlying technology was similar.
“The first users of the products were people we knew from MIT,” Wickramasekara said. “We were also in the Bay Area at the time. So in those early days we drove to Cal or Stanford, went from lab to lab and got introductions from people we knew. We sat down with scientists to understand why they were or were not using the products.”
This is a practice that Benchling continues today.
Grimshaw adds that once a company moves beyond early adopters, it’s important to keep talking to customers. Still, it has to be the right customer – usually it’s at the forefront of the market. The goal should be to build a moat around the users leading the market to secure their feedback in case an incremental competitor comes along and tries to steal them away.
“[This moat] ensures you have the best source of feedback on lock, and you need to keep building and staying aggressive,” Grimshaw concluded. “It’s a very powerful foundation. Sajith did really well and continues with a lot of elbow grease.”