From rocky start to $6.5B acquisition — How MuleSoft’s CEO turned it around

MuleSoft is recognized as one the largest enterprise acquisitions in history — the integration platform was acquired by Salesforce in 2018 for $6.5 billion. It’s hard to believe, but this stellar company actually came from tough beginnings. According to CEO Greg Schott, when he joined in 2009, the company was a bit of a “fixer upper.” MuleSoft had just laid off nearly half of its staff, leaving just 20 people in the company. “We had about $1.5M in revenue and we were selling Mule as an open-source enterprise service bus (ESB) with an enterprise edition,” Greg describes. “It had the beginnings of a strong management team and a little bit of money in the bank that was going to last us about a year and a half.”

So how exactly did an open-source tool called Mule (which btw, took the “donkey work” out of integration) become the MuleSoft it is today — all 6.5B dollars of it? I chatted with my good friend Greg about the company’s unlikely comeback at our 1to100 conference. He was quick to point out that the integration space was one of those massive market opportunities available for the taking — “nobody had really figured out how to crack the nut on it.” He also identified three key drivers of MuleSoft’s rise: a product pivot, bigger enterprise deals, and forward-looking team construction.

Product pivot — Build towards an ambitious thesis

To give a sense for the magnitude of the challenge, Greg says that there was “$700 billion in [integration] pain that we could address… it was the biggest unsolved IT problem of all time.” MuleSoft’s original vision was to solve integration issues with a flexible platform approach that eliminated the need to build specific software for every connectivity problem.

MuleSoft’s starting principles were generally headed in the right direction, but they hadn’t successfully hit significant market traction. When Greg joined MuleSoft in 2009, it was still unclear how MuleSoft was going to address the challenge; the company was “pivoting around quite a bit at the beginning.” At that point it was all about survival — “keeping the lights on” with the original product, while MuleSoft identified a new direction to take.

MuleSoft’s bold product pivot was informed by some key factors. Greg and his team were able to successfully 1) identify an impending market shift (the massive move of software to the cloud) 2) construct a thesis in anticipation (APIs would become the dominant integration protocol) and 3) build a product ahead of the inflection point (the massive growth of SaaS tools).

MuleSoft presciently built out a paid cloud platform known as AnyPoint and continued to accrue connectors to more and more SaaS integrations. “We got religion around APIs” says Greg. “That’s when things started really clicking — as SaaS got massive and as APIs became kind of a protocol. We just skated to where the puck was going on all of that.”

Bigger enterprise deals — Move up-title, not up-market

To grow their revenue, MuleSoft didn’t actually change their target customer set. In contrast to the usual up-market ambitions of enterprise companies, MuleSoft’s primary challenge wasn’t chasing bigger customers. “We were always selling to the big enterprises,” says Greg. “J.P. Morgan was one of our first customers.” But the enterprise engagements MuleSoft had been getting were small, tactical sales.

In order to grow its ASP, MuleSoft needed to change what and how they sold. First, they made their new subscription platform “something that was bulletproof” that enterprise companies could bet mission-critical operations on. But getting increasingly bigger deals required up-leveling more than just platform functionality. MuleSoft had to fundamentally upgrade how it sold its value proposition — from selling solid integration capabilities to getting buy-in from senior execs on a transformative vision of connecting the enterprise. “To be able to actually sell to the CIO and talk about transforming the clock speed of their businesses,” says Greg, “that took years of us getting the motion and the muscle to be able to do that.” The hard work paid off. Says Greg, “When I first joined, we were selling $10 to $30,000 deals and now we have many customers that are north of $5 million annual subscription revenue.”

Team Construction — Hire for the future (at least six months out)

A big part of MuleSoft’s success was the company’s ability to recruit great talent. As a CEO, Greg naturally gravitates towards building a company around people and culture — this included a close handling of hiring at MuleSoft. “I dug in there and that was my thing,” he says looking back. Greg’s focus on culture and hiring paid off, although Greg admits he wished he’d hired a talent lead even sooner to keep himself more broadly focused.

The first important feature of Greg’s hiring strategy was finding new, hungry talent: “I’m a big fan of hiring the up and comers…top caliber candidates who are on their way to greatness” he says. “Because I found that a lot of times, you hire people that have already been there, maybe they don’t have the fire in the belly anymore. Maybe they’ve got a set way of doing things and they’re not willing to change.”

Greg’s second piece of advice is to stay forward-looking and hire at least six months out, not just for where a company is in the moment. “I wish I’d hired a little more ahed of the curve sometimes… I didn’t need to hire somebody to run the job 20 years out, but [we did need to] hire people who could grow with the company’s rapid growth.” MuleSoft was growing so fast that by the time a year or two had passed, it would often scale past a person’s ability to grow and learn with the business.

Greg also emphasized making the right and timely choices for two key roles — the CFO and the head of Sales: “Those are the two roles that I think I see entrepreneurs (young, early CEOs) get wrong very frequently,” he says. “They’re often the death of those companies.”

Greg believes a successful early startup CFO needs to be able to roll up their sleeves and get the books done, but they also need to be a strategist as well. When a path to IPO starts becoming apparent, a startup needs bigger thinking — a CFO that can position the business well and understands the levers within it. Likewise, a startup sales leader needs to have a balance of big-picture strategy and front-line operational acumen. “I see a lot of CEOs who think they have product market fit and often don’t,” says Greg. “They’ll hire that big time, scale-out head of sales who is just crank turning.” The consequence is burning a lot of cash attempting to scale prematurely. In contrast, Greg chose a sales leader who had the skills to navigate product-market fit questions and deftly pivot strategy and pricing as needed.

What next? Grow aggressively and responsibly.

CEOs are often eager to hit go when they’ve found product-market fit, but don’t weigh the risks of doing so without a well-designed model — a pitfall I see a lot of companies fall into these days. Greg was extremely sensitive to premature over-acceleration at MuleSoft. “You’ve just got to know that when you’re pouring the gasoline on top that the burn is efficient. That’s the part, that’s where I think it gets so dangerous,” he says. “People get one or two big customers and they think they’ve hit jackpot, and those are just false positives.”

In order to know when to accelerate and decelerate, seeing metrics and productivity in sharp detail is essential. MuleSoft offers a perfect case study in sustainable scale and experimentation. Greg was always modulating growth — speed up as much as possible and slow down as much as needed. “We definitely re-inflected on several different occasions,” he says. “We’d find places where we felt like things were getting too wobbly (it feels very much like the wheels were starting to come off the car) and we would back off a little bit in the growth and make sure we had our feet under us, and then we would push back down again.”

The best CEOs we’ve known recognize that strategy, model, and execution are a constantly evolving target. The greatest risk? Not having the humility to realize that nothing is ever truly “figured out.” Great companies are continually seeking, learning, and adapting as they move forward. Greg characterizes this value best in his own self-assessment:

“This was my first CEO gig and so I think I made every mistake in the book…Being a CEO of a 20 person company and then being a CEO of a 200 person company, you make a whole new set of mistakes. And then when we were acquired by Salesforce, we had about 1,300 people, and I was making new mistakes at that level. So you just keep trying to learn as fast as possible and hope that the good decisions you are making outweigh the mistakes.”

Watch the whole conversation below for more insights.

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