How Druva went from hard pivot to $200M+ ARR

TL;DR:

• In 2014, investors pushed Druva to follow the market in delivering traditional backup software and in developing a backup appliance, but the team saw the opportunity to be an early mover to the cloud.
• Even though they had achieved $10M in ARR, the team pivoted their endpoint security solution to build a SaaS-based platform that secured and backed up SaaS applications and data across public clouds, private data centers, and the edge.
• Due to this pivot, the team reached $200M in ARR in 2023 – in almost the same amount of time it took them to garner $10M in ARR previously.

Startups are celebrated as having found initial product-market fit when they’ve hit $10M in annual recurring revenue (ARR). That simple metric is a green light to investors and companies leverage it to attract the capital needed to scale and capture real market share. That wasn’t the story for Druva founder and CEO Jaspreet Singh. Once Druva hit topped $10M in ARR, he and his team decided that if they were going to “skate to where the puck was going,” as hockey legend Wayne Gretzky was famous for saying, then they would have to wind down their initial products that got them to that initial milestone and move the company and its technology in a different direction.

We literally said, ‘We don’t care about that revenue.

“We literally said, ‘We don’t care about that revenue,” says chief operating and financial officer Mahesh Patel. “We’re going to let that 10 million ride away and tell those customers we’re not building that product anymore. We recognized what we wanted to be. It was great revenue, but at the same time, it was not where our future was.”

Less than a decade later, Druva has topped $200M in ARR. A tiny fraction of tech startups ever attain such heights, and an even smaller fraction do so after pivoting away from millions of dollars in initial market traction. This pivot to the cloud wasn’t a sure thing. Despite its pervasive use today, in 2013, the market was skeptical of the practicalities and capabilities of cloud services. Hindsight being what it is, it’s safe to say Jaspreet made the right bet on the company’s future.

Like many cycles of hype in technology, with the cloud, a few saw a gold rush and prematurely declared on-prem dead while others clung to legacy tech as the stable, known solutions. Amidst the turmoil, Druva took a moment to pause and take stock of what was really happening. At the time, an influx of SaaS and mobile applications like Microsoft 365, Slack, and Box were also flooding the market—pushing the perimeter walls of enterprise networks. As the company continued its “soul searching,” as Patel puts it, these macro-shifts shaped the executive team’s vision of the opportunity.

“Our view was that the concept of a data center was becoming a misnomer,” he says. With the proliferation of laptops, mobile phones, tablets, watches, smart devices, and sensors, “More data was sitting outside the data center than inside. We saw that security and risk would become a bigger and bigger challenge for enterprises. And none of the legacy data protection players could support all these new workloads.”

Here Druva made a rare leap transforming both their tech architecture and their business model. The moved from a traditional backup software with a hardware appliance in the works to an entirely cloud-native, SaaS-delivered business model. Shortly thereafter, they released a solution that would guard the “vertical stack” so that no matter whether a customer was running SaaS applications, public or private cloud environments, or edge computing solutions—everything was backed up and protected by a single piece of cloud-based software. That strategy may sound obvious now, but then, this was an uphill sell; there was a prevailing logic that if an enterprise was using, say, Windows365 and Azure to run and backup applications, the enterprise was taking all necessary measures to protect and maintain access to their data.

So Druva had to “nibble around the cookie,” as Patel likes to say of the market. They sold with an eye on simple, small use cases and grew from there. The first was a focus on compliance. CTOs were watching their company’s data spread farther afield. Druva could step in and provide one of the few end-to-end watchdog and reporting tools.

As companies scaled their global cloud footprint, Druva also offered them an out-of-the-box security solution that didn’t require on-site installation and maintenance. Anywhere AWS had an availability zone, Druva could be up and running in a few weeks. Any Fortune 500 company with employees across the globe could suddenly protect their data while also complying with each respective nation’s data sovereignty laws.

‘Hey, let’s attack this part of the market where we can actually bring value to these customers extraordinarily fast and monetize it as well.’ So it’s a win-win on both sides.”

The last selling point was simply cost. Being software only, Druva could easily undercut a competitor offering on-premise appliances or hybridized solutions.

“Those are the three reasons a customer’s going to change: simplicity, support, and cost,” Patel says. “And those were our founding principles: that we’ll handle all your modern workloads, we’re going to make it easy to use, and we’re going to save you 30 to 50 percent of your data protection costs. It became an identity shift. We thought, ‘Hey, let’s attack this part of the market where we can actually bring value to these customers extraordinarily fast and monetize it as well.’ So it’s a win-win on both sides.”

They’ve been skating to where the puck is heading, and that puck is ahead, but as Patel puts it, ‘Now we’re a lot closer to it.’

Despite their recent hockey stick growth, Druva still sees today’s success as early stages. The convergence of lower cloud computing costs, higher network speeds, and increased software deployments means the size of that cookie will only grow. Or, to mix analogies, they’ve been skating to where the puck is heading, and that puck is ahead, but as Patel puts it, “Now we’re a lot closer to it.”

“Cloud adoption is here, and we have the opportunity to reap the rewards for the next ten years-plus,” he adds. “All the steps we’ve made, all foundational decisions to rebuild our platform over the last five to seven years, are now the advantages that frankly nobody’s going to be able to catch.”