Why Vista’s Acquisition of Applause is Bad for Applause Customers
First of all, congratulations to the founders and core team of Applause! Exits are always good for our industry, and I’ve certainly received a lot of emails from investors since the news broke yesterday. Like with all startups, it’s been a long hard slog for the team, and I have the utmost respect for all entrepreneurs living this crazy rollercoaster.
We’ve long admired the other people working hard to fix QA. Our industry is so often the underdog, and underdogs tend to stick together. There are so few smart people that truly understand the pain and opportunity in QA. For that reason, we’ve generally stayed away from targeting our competitors’ customers or aggressively going after them in our sales process. We figure that our superior product speaks for itself. And it does! We win more than 75% of competitive deals against other QA providers. We have over 30 happy customers who have come to us after churning from our main competitors, and we have yet to lose a single one. As a result, Rainforest’s revenue has grown by over 1500% in the past two years. We’ve been recognized as a Gartner Cool Vendor for Application Development in 2016 and as one of the 20 Rising Stars as part of the Forbes 2017 Cloud 100 list.
We think that focusing on innovating and investing in the future, and focusing on our culture and building a happy and healthy company is how to grow the right way. And so we try to avoid attacking our competitors in public or in private.
That said, the acquisition of Applause is a reason to break with this tradition. Ultimately what matters to us is helping software companies build great products. And while Applause wants you to believe that this private equity acquisition is great for everybody, don’t be fooled. Vista Equity Partners are the famous creators of the ‘vista playbook’. Think ‘wolf of wall street’ and you’re not far off. They’re shrewd operators, no doubt. And their playbook is stuff of legend. To quote Lawrence Coburn, “They buy an asset, typically one that they view as underperforming. They eliminate duplication, slash R&D, optimize for financial performance, and raise debt to pay for the deal. It’s financial engineering at a major league […] But technology innovation is not typically part of the equation.” And Vista Equity Partners, masters of the slash and burn school of running business, just bought Applause.
If you’re an Applause customer, be afraid. The Vista acquisition of Applause is a bad thing for your business.
You are now a customer of a company solely focused on one thing: EBITDA. Say goodbye to the shoot-for-the-moon innovation of a venture-backed startup. Say hello to cost-cutting, culling the R&D team and prepping the company for another sale.
And so as a customer of Applause you’re now stuck with a services company claiming to be a software company, who aren’t interested in taking the hard-earned cash you pay them and investing it in improving your QA process. That hard earned cash is going to MBAs who are running a crucial vendor based on short-term profit margins, not customer satisfaction. They aren’t interested in innovating. Least of all are they interested in going above and beyond to make your team successful. You’re now a number in a spreadsheet being analysed for profitability and lifetime value. Let’s hope you make the cut!
The customers I know who have come to us from Applause all say the same thing: “Rainforest is what we were hoping for when we bought Applause.” It’s gratifying to hear that despite out-raising us by an order of magnitude, and having more than 5x the people working on their team (and 5x the number of testers) our product is so clearly superior. And why is that? Simply put, we solve more of the QA problem than Applause.
I’m not here to try and sell you on Rainforest. But I would be remiss to highlight a problem without proposing a solution. So let me propose this: if you’re an Applause customer and you’re worried about what this surprising news means for your business, get in touch with our sales and customer success team at Rainforest. I guarantee you we will blow you away with how much better QA can be.
And ultimately, it’s not even about QA. It’s about your business. We’re not interested in maximising profits from you in the short term; we’re interested in making your business more successful, because we know that when we do, everybody wins.
At Rainforest we’re building for the future, where every developer in your organization can ship their code to production whenever it’s ready, while maintaining the quality bar that matters to your business. To give just a small peek into how we do things differently at Rainforest: right now we’re building the self-driving tester. You may have seen a self-driving car cruising around your city, or heard about Uber and Tesla’s plans to build a car that drives itself. All the convenience of a car, without having to drive. That’s exactly what our data science team has been working on for the past year: creating a fully automated tester (her name today is ‘copycat’) currently capable of executing over 10% of our production test volume. Every day, automated feedback loops create hundreds of valuable training data from the millions (78,253,831 as of writing, to be exact) of executed tests we’ve done in our first 5 years.
We spend every single dollar we make on building the future of QA so that your team can spend less time, less money and less distraction on checking for quality, and more time focused on delighting your customers.
Because ultimately that’s why Russ and I started Rainforest. And that’s why our amazingly hungry team is working on solving QA with us. We were frustrated with how backwards this industry was, and how complex and crappy the tools were. And we still are. Applause is the same glorified outsourcing it always was, now with even less focus on customer experience.
Give Rainforest a try, and help us build the future of QA, so that your team can focus on being the best in the world at whatever you do. That’s what we’re doing.
Note: This article was originally posted to LinkedIn on August 29, 2017.