ThoughtSpot Raises At $4.2 Billion Valuation As It Wraps Up Transition To The Cloud – Forbes

CEO Sudheesh Nair joined ThoughtSpot in 2018 and immediately began plans for a cloud transition. At … [+] his previous company, Nutanix, he says he saw firsthand the growing pains of implementing the same pivot on the public market.
In May 2020, data analytics startup ThoughtSpot laid off 85 employees. The pandemic had forced companies in less stable financial positions to cut staff, but ThoughtSpot was not one of those companies—it was still flush with hundreds of millions in untapped capital. But the startup was executing a pivot to the cloud and had decided to let go of workers whose jobs were too deeply embedded in its old business model. 
“I was thinking, is there a worse time to do this?” says CEO Sudheesh Nair. “But if we did not do it, we would not have been able to change the company’s course to become a cloud company, and Covid could have wiped us out.”
The cloud transition came just in time to avoid falling behind in the market. In the ensuing months, the pandemic accelerated digital transformation across enterprises, resulting in rapid adoption of cloud software. ThoughtSpot released its first piece of subscription-based software last fall, and a year later, its cloud offerings make up the majority of its revenue.
On Monday, the Sunnyvale, California, company announced its first round of financing since the pivot: A $100 million Series F round led by a $45 million contribution from new investor March Capital. Existing investors including Lightspeed, General Catalyst and Khosla Ventures also participated in the raise, which more than doubled the valuation of the startup to $4.2 billion. Some 85% of new customers are coming for its cloud products, and ThoughtSpot, which ranks No. 42 on Forbes’ 2021 Cloud 100 list, says it is on track to exceed $100 million in annual recurring revenue in less than a year.
ThoughtSpot’s software allows employees at a company to ask questions into a search box, whether they are experts with data or not. The AI-powered technology then analyzes the massive amounts of data stored in sources such as Snowflake and Databricks, and provides insights such as reports and summaries about the data in real time to help the employees to make business decisions. About 100 enterprise companies are using ThoughtSpot’s cloud software, including T-Mobile and energy conglomerate Schneider Electric, the company says. Streaming service Hulu uses ThoughtSpot’s app to measure how successful a specific show is in driving subscriptions, enabling its employees to make adjustments on how to present shows and movies to users.
The core function of the software hasn’t changed with the shift to the cloud. Rather, the pivot opens ThoughtSpot’s market to the growing base of companies that are putting their data in the cloud instead of the older solution of storing data in “on-premises” data centers. “There’s no real future for companies ‘on prem,’” says Nair, who joined ThoughtSpot as CEO in 2018 after seven years as president at Nutanix, a software company that underwent its own transition to the cloud while answering to shareholders on the public market. “When I left, Nutanix was a $10 billion business. If you look at the valuation now, it is still transitioning,” he says. Nutanix is trading at a $7.5 billion market cap today, and dipped as low as $3 billion last year.
After taking over as CEO at ThoughtSpot from cofounder Ajeet Singh (himself a Nutanix cofounder), Nair spent six months mapping out the cloud transition road map. Key decisions included uprooting the old sales and go-to-market teams and replacing them with people with expertise selling cloud-based subscriptions, as well as crafting new alliances with other companies in the cloud ecosystem, including Snowflake (which earlier this year invested $20 million into ThoughtSpot), IT giant Wipro and cloud provider Amazon Web Services. Two years later, Nair considers the transition “almost all complete,” a relatively quick turnaround that comes with the help of being a nimble startup.
“I talked to [Splunk CEO] Doug Merritt the other day, and he said I’d never do [a transition to cloud] again as a public company,” says March Capital managing partner Jamie Montgomery, who led ThoughtSpot’s latest round. Montgomery says his firm began paying attention to ThoughtSpot toward the start of its transition, and arranged for one of his fund’s limited partners to acquire secondary shares of the company earlier this year. That familiarity allowed him to swoop in and offer an appealing term sheet once Nair began to approach VCs about a potential fundraise.
The new funding will go in part toward sales and marketing efforts for ThoughtSpot’s new features that are geared toward engineers and developers. But another reason for the fundraise was simply to rewrite the narrative around the company. “When people think about us, they might still know us as an ‘on-prem’ company,” Nair says.
Another piece of signaling he hopes will change: questions of whether ThoughtSpot will be acquired, as happened to its chief rivals, Tableau (bought by Salesforce for $16 billion in 2019) and Looker (bought by Google for $2.6 billion last year). “The noise will go down a little,” says Nair, whose ambitions are turning to an IPO now that the cloud transition is near completion. “Markets like this usually have multiple multi-billion-dollar companies, and right now there are no real public companies in this space.”

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