Is Airtable More Than Just a Spreadsheet? My Investment Deep Dive
AirTable was founded in 2012 by Howie Liu, Andrew Ofstad and Emmett Nicholas. It is a spreadsheet-inspired relational database product that allows users to build their own apps with Airtable’s dynamic building blocks. The company operates under a freemium model and begins charging users after they reach certain usage limits. The business has seen impressive revenue growth since inception, which management attributes to the recent shift in focus to pursuing enterprise contacts.
While Airtable is a compelling product, I do not think that it is a revolutionary product that creates massive new market value from its existence. The product addresses 2 primary markets: no/low-code software and collaboration workflow softwares. Airtable has been cited as a challenger in both markets, but must compete with well-established solutions that have provided high quality solutions to these markets for many years. It is fantastic as a more "user friendly spreadsheet", but it's a long ways away from being the "building blocks" for all enterprise software.
Airtable as a product is very appealing to small teams and companies (teams under 100 people). The company wants to shift to enterprise sales, and has penetrated a significant amount of groups within Fortune 500 companies, but larger scale adoption will be challenging. Airtable takes on the risk of scaling up its engineering, sales, and customer success teams while it bets on the enterprise sales playing out. Other management teams may have chosen to stay focused on SMB, as the revenue opportunity is still mainly untapped there.
The company has raised a total of $356M at the latest post-money valuation of $2.5B. The company is estimated to have about $50M in ARR and is not yet profitable. That represents a 50x LTM ARR at the last round’s valuation.
1. Industry Overview
Airtable primarily addresses two markets: low-code software and collaborative work management. Both markets serve real needs in our workplaces and are growing healthy. I think both are compelling markets to be addressing.
A. Low-Code Software
Low-code software is defined as software that enables quick delivery of applications with minimal hand-coding. These platforms use drag/drop interfaces and third party integrations to simplify the creation process. Low-code software in 2019 was a $7.7 billion market and is expected to grow at a 40% CAGR through 2022 (Forrester). Low-code application platforms are expected to be responsible for more than 65% of all app dev activity by 2024 (Gartner).
Democratizing software: Low-code software addresses the idea that software should not only be available to coders. With the rise of SaaS, which makes software increasingly accessible to many groups, no-code and low-code softwares make powerful applications for non-coders.
Addressing specific customer needs: Customers are increasingly unwilling to pay for pre-built softwares that do not suit their needs. Low-code software allows customers to inexpensively and quickly build apps that suit their exact needs.
B. Collaborative Work Management Software
Collaborative work management is defined as software that manages work processes, databases and teams in a collaborative manner. The global market was $2.2 billion in 2018 and expected to grow at a CAGR of 10% through 2025 (IDC). This is largely driven by organizations’ goals to increase productivity and ROI. 21% of workers say that their work gets interrupted at least weekly because they can’t find or access the appropriate information they need to do their job (Forrester). Collaborative work management solutions want to be the tool within an organization that provides the operational system of record.
Greater user flexibility: Innovative vendors are increasingly providing greater flexibility to end users in designing different workspaces and dashboards.
The rise of marketplace model: More companies are adopting the marketplace model for technology partners to build plug-ins that optimize productivity. This allows companies to further customize the user experience without having to build solutions themself.
2. Competitive Landscape
Airtable’s competitors can be summarized into 4 groups: full service platforms, low/no code platforms, and collaboration work management softwares for enterprise/SMB.
A. Full Service Platforms
These are platforms that a majority of businesses, both SMB and enterprise, use to run a significant amount of their apps. Specific apps within these ecosystems have a strong advantage in that there is natural integration with existing apps, familiarity, and ease of use.
Google (Suite). G Suite is used by thousands of organizations to manage files, both static and collaborative. Google Sheets is a top solution for spreadsheet-based database building and planning. G Suite for the enterprise is only $25/user/month compared to Airtable’s $60+.
Microsoft (Teams, SharePoint, Excel). Microsoft’s suite of tools allow users to collaborate in real time and manage workflows. Excel Online allows teams to collaborate on a single spreadsheet in real time.
B. Low/No Code Platforms
AppSheet. AppSheet allows users to create no-code apps using data from numerous sources including Excel, Google Drive and Dropbox. The company was acquired by Google in Jan 2020. Google sees this acquisition as extending its strategy in no-code development along with workflow automation, application integration and API management. Google will use the acquisition to integrate more deeply with G Suite.
Caspio. Caspio is a low code platform for building online database applications. The company has raised $3M to date.
Quickbase. Quickbase, a company that spun out of Intuit in 2016, is a low code platform to build a single unified application for a business unit. Users can use Quickbase to see all of their applications in one connected software ecosystem view. The company has raised $10M to date.
C. Collaboration Work Management Softwares for the Enterprise
Asana. Asana is a work management platform that allows users to create custom templates and has various visualizations including boards, timeline, forms and calendar. The company has raised $214M with the latest post-money valuation of $1.5B (Nov 2018). The company’s ARR is above $100M.
Smartsheet. Smartsheet is an online task work execution platform that enables project management and task collaboration. The company’s market cap was $5.5B as of 4/15/20 and LTM revenue is $271M.
Wrike. Wrike is a software that manages projects and tracks team capacity. The company was acquired by Vista Equity Partners in November 2018 for an estimated $800M.
D. Collaboration Work Management Softwares for SMBs
Atlassian (Trello). Trello is a kanban board style workflow management software. Atlassian acquired Trello in 2017 for $425M.
Coda. Coda is an enriched document-inspired app that has the ability to include tables, charts, cards, calendars, and voting. The company raised a $60M Series A in October 2017.
Notion. Notion is a task management software with 30 media types including documents, spreadsheets, and checklists. The company has raised $71M with the latest post-money valuation of $2B (Apr 2020).
3. Business Model, Product and Use Cases
A. Business Model
Airtable operates a freemium SaaS model. Users get 1,200 records per base and 2 GB of attachment space per base before they need to upgrade. The pricing for users paying annually is:
Plus: $10/user/month. This option includes added storage. Target customers are individuals and SMBs.
Pro: $20/user/month. Added features include Blocks and togglable user provisions. Target customers are SMBs.
Enterprise: $60+/user/month. Added features include single-sign-on and unlimited workspaces. Target customers are enterprises.
Airtable was developed to be a horizontal, one-size-fits-all software. The inspiration for the product was that spreadsheets were originally invented for number crunching, but 90% of users today are not using it for this purpose. Instead, they are using spreadsheets as a database with multiple non-numerical data types. Airtable provides the building blocks for non-technical users to build their own custom applications.
The unit for an Airtable is a “base”, which consists of one or more “tables” (spreadsheets). A “workspace” consists of one or more “bases”. Key features of Airtable include:
Numerous Field Types: Several field types include single-line texts, long text articles, file attachments, check-boxes, drop-down lists, date and time, emails, URLs, numbers, currency, percentage, formulae and barcodes.
Multiple Views: Users can toggle multiple view types for ease of data interpretation. These include calendar, gallery (card view), grid (spreadsheet) and user created custom views.
Real-time Collaboration: Airtable offers real-time collaboration and commenting. Table and field specific collaboration permissions are available to Pro and Enterprise customers.
Integrations: Airtable currently has 32 integrations including MailChimp, Twilio, and YouTube.
Airtable Universe: Airtable Universe is a forum where individual and business users share templates to inspire others. This is a great source of organic marketing for the company.
Blocks (Plug-In Apps): Introduced in 2018 and are available to Pro and Enterprise customers, Blocks are plug-in applications built on top of Airtable. Blocks allow users to perform powerful visualization and functions on the underlying data in Airtable. Airtable has over 27 blocks including Cloud Vision, Scripting, Maps, Charts, Send SMS, and Translate. Partner Blocks are Blocks that work with existing third party programs and include Typeform, Loom, and Miro. The company’s goal is for anyone to be able to develop Blocks and have them made available in an app store. I believe Blocks will be one of the biggest drivers of enterprise revenue growth and is key to the product’s success.
C. Use Cases
Airtable was developed as a horizontal software, so it has a plethora of use cases across industries. These templates were mostly built by internal champions at the customer’s company with no specific consultation from Airtable.
Event Management: Manages events/ticketing, marketing and staff members. Customers also use Airtable’s “Cloud Vision Lost and Found” Block to tag and organize lost and found pictures. Customers include Insomniac Events, New York City Ballet, and Startup Grind.
Content Production Management: Manages staff, invoicing and the production calendar. Customers include Time, Netflix, and PBS.
Supply Chain Management: Manages, sourcing, shipping schedules, and production costs. Customers include Calvin Klein and other PVH companies.
Personal: Individuals use Airtable for apartment hunting, travel planning, and personal CRMs.
D. Key Diligence Questions
Pricing: What has been the market response to the $60+/user enterprise price point? Have you done any price testing?
4. Go-To-Market and Customers
Airtable hired a CMO, Archana Agrawal, in March 2020. This signals Airtable’s efforts to scale the marketing effort and have a clear vision going forward.
A. B2C Go-To-Market
Because of the company’s freemium model, Airtable has not needed to spend much on other B2C marketing costs. Most B2C users find Airtable through Google (paid or organic search) and word of mouth. In 2017, Airtable began paying for several billboards around San Francisco.
B. B2B Go-To-Market
Historically, Airtable has not expended much resources on winning B2B sales. Previously, Airtable gained B2B customers from internal champions who discovered Airtable and pushed their teams to use templates they created. For that reason, Airtable has gained a “cult favorite” reputation among developers and managers. However, in 2018, Airtable began shifting focus to winning enterprise accounts, which involved adding more sales team members. Since mid 2018, Airtable has grown its sales team from nearly zero to about 10 individuals and began assigning coverage areas (according to LinkedIn). The sales team consists of 4 mid-market, 3 enterprise, 2 generalist and 1 renewal sales employees.
C. Thoughts on Go-To-Market
Airtable’s enterprise sales reps will face the challenge of selling a unique product. In the past, the company has not done a great job of explaining the product. The sales team’s success will be dependent on being able to sell customers on the immense possibility of custom apps and its superiority to their existing systems.
A good source of skilled enterprise sales reps will be other collaboration/productivity software companies. Even so, I believe a significant amount of coaching will be necessary for them to really be able to successfully sell the product.
D. Customers and Conversion
Airtable has grown from being used by 30,000 organizations in 2017 to 80,000 organizations in mid 2018 to currently over 170,000 organizations. Note that not all of these organizations are paying customers. Customers span numerous industries and include Buzzfeed, Jetblue, Shopify, Netflix and Calvin Klein. The company reported adding 101 Fortune 500 companies as customers in 2018. As of 2018, Forbes reported that about 1 in 6 users was a paying user. This is much higher than many freemium model companies, which have a conversion rate of between 1-4%.
E. Key Diligence Questions
Revenue Split: What is the current revenue split between plus, pro and enterprise? What do you expect this to be in the long run?
Sales Team: What is the bookings quota per sales rep? What is their ramp up time to reach full efficiency?
Sales Cycles: How long are the sales cycles for enterprise customers?
Onboarding: What is the customer onboarding process like for enterprise customers? Which individuals are involved in onboarding and what is the associated cost?
Services: What services does Airtable offer to enterprise customers after launch and what is the associated cost?
Churn: What has churn been for customers at each price point? (Plus, Pro and Enterprise)
CAC: What is the CAC for customers at each price point? (Plus, Pro and Enterprise)
Revenue from Existing Customers: What is the opportunity to expand revenue within existing customers? How much of projected revenue growth comes from existing customers vs new customers?
5. Management Assessment
Howie Liu, Co-Founder and CEO
Howie previously founded a company called Etacts shortly after graduating from college. Etacts was a contact manager plug-in for Gmail that aggregated contacts from various applications. Howie and Etacts received a spot in Y combinator. He eventually sold the business to Salesforce in 2010. Howie has stated that the main reason for selling to Salesforce was that there was not enough standalone opportunity or clear vision for the company in the long term. After the acquisition, he worked at Salesforce for 1 year on the social CRM product before leaving to found Airtable.
While Howie has minimal experience working in product at large tech companies, he instead forged his own path of creating softwares and founding companies early on. He and the founding team took 3 years to build and release the first version of Airtable. During this time, they carefully designed the architecture while researching papers on collaborative software and aesthetic theory. They took their time in building the product because they believe quality is the most important factor in a successful product. I think this shows patience and business acumen on his part, both of which are strong qualities in a leader. Since Airtable’s inception, he has lead the company through key milestones, including raising 3 rounds of capital from top tier investors, releasing “Blocks”, and shifting focus to enterprise sales.
In interviews, Howie demonstrates a true passion for the product and Airtable’s market opportunity. Given his background of founding Etacts and scaling Airtable to its current size, I have confidence that, with guidance from his Board, Howie is the right person to lead Airtable forward.
Andrew Ofstad, Co-Founder and Chief Product Officer
Andrew was previously a product manager at Google for 3 years leading product groups for social media and maps applications. Prior to that, he worked at Accenture in their Tech Labs development group on enterprise mobile and web applications.
Emmett Nicholas, Co-Founder and Chief Technology Officer
Emmett was previously a founding engineer of Stack Overflow, which he helped scale to hundreds of millions of users. Prior to that, he was a software engineer at Microsoft.
Archana Agrawal, Chief Marketing Officer
Archana was brought on as the CMO of Airtable in March 2020. Archana was previously the Head of Enterprise and Cloud Marketing at Atlassian. At Atlassian, she lead marketing for all products including Jira, Confluence, Bitbucket, Jira Service Desk, Trello, Opsgenie and Statuspage.
6. Key Opportunities
Continue developing Blocks and open them to outside developers
Blocks enhance the value of Airtable to business users and make Airtable a more comprehensive application. The more that users can accomplish within Airtable, the more sticky the solution becomes. Opening Blocks to outside developers will also allow for Blocks to be created very rapidly with little effort from Airtable besides approval and monitoring.
Individual and SMB products require little attention
Individuals and SMB users are finding Airtable organically as a result of the freemium model and word of mouth. While Airtable focuses resources on enterprise sales, the company can rest assured that individual and smaller SMB sales will still occur in the background through the usual methods.
7. Key Risks
The management team has little to no experience in enterprise sales
The core management team has little to no experience in enterprise sales. The new CMO, Archana, does have experience in marketing Atlassian’s enterprise products, so her contribution will be integral to the success of enterprise sales.
Enterprise sales requires investment in several departments
Entering the enterprise sales realm is a large undertaking and requires engineering, sales, and customer success teams all be scaled up. The engineering team must make sure it can handle the time-sensitize and mission critical demands from enterprise customers. Enterprise sales employees have long ramp up times and should be hired from comparable software companies (this process also takes time). Finally, onboarding and customer success personnel are integral to maintaining a healthy client relationship. This is a big investment and risk for the business as opposed to continuing to focus on SMB sales.
Profitability may be far off
Airtable is not profitable today. Given the efforts to shift focus to enterprise sales, which requires significant investment in engineering, sales and support, it is likely that profitability will not occur within the next few years.
8. Funding History
Total Funding: $356M
Feb-2015 Seed: Raised $3M at a post-money valuation of $9.9M in a deal led by Caffeinated Capital and Freestyle Capital
Jun-2015 Series A: Raised $7.6M at a post-money valuation of $30M in a deal led by Charles River Ventures
VC Round: Raised $7.4M at an undisclosed valuation
Mar-2018 Series B: Raised $52M at a post-money valuation of $152M in a deal led by Caffeinated Capital and CRV.
Nov-2018 Series C: Raised $100M at a $1.1B post-money valuation in a deal led by Thrive Capital, Benchmark and Coatue.
Sept-2020 Series D: Raised $185M at $2.5B post-money valuation in a deal led by Thrive Capital
9. Public Comparables Analysis
I compared Airtable to Low Code / No Code, Collaboration, and SMB SaaS companies. The overall median valuation is 16x LTM revenue. None of these companies are earning close to the 50x revenue valuation that Airtable has earned.
About the Author
Bonnie Young runs the Amplified blog. She shares her insights on market trends from US to Asia and interviews founders shaking up the tech scene. If you want new articles directly in your inbox, subscribe to the Amplified newsletter. Bonnie is currently looking for a growth equity or VC role in the Bay Area. Please reach out to her at email@example.com