It’s been a good two years since a young German man sought me out to excitedly tell me about a process mining tool that was set to change how process wonks approached their operations. After a couple of beers he then ‘fessed up to driving around Germany in a crappy old car – as a twenty-something passionate process software entrepreneur – to deliver software demos driving a whole new area. This area is process mining – a novel analytical discipline for discovering, monitoring, and improving processes by extracting knowledge from event logs readily available in today’s information systems. While his firm smartly developed much of its earlier business courting customers of SAP, it is now evolving far beyond the traditional ERP platform to inspire process execution initiatives enterprise-wide as businesses move rapidly into virtual environments.
With a post-money valuation of $11b following a Series D round earlier this year, an impressive partnership with IBM, and a number 1 ranking in our September 2020 HFS Top 10 Process Intelligence Products, I was thrilled to end a forced 18-month separation with Celonis Co-Founder and Co-CEO Alex Rinke to get a real update of how his firm has driven incredible forward momentum – and investment – during this period of crazy…
Meet Alex, soon to become the youngest process software billionaire (who avoided buying an RPA product) to focus on adding value to CxOs much higher up the enterprise food chain…
Phil: Tell me how you got started in this game. Is this what you always planned to do?
Alex Rinke, Co-Founder, and Co-CEO, Celonis [Laughs]. Absolutely not, Phil. There was a lot of planetary alignment – a fancy way to say we were very lucky. I was a math student 11 years ago – and I read a paper about process mining and got really excited about the idea of extracting data from information systems and figuring out how an organization operates, and where they’re inefficient. At the time there was no practical adoption of it. I talked to my two friends, who later became my co-founders, Bastian (Nominacher) and Martin (Klenk), and we decided it had so much potential, we had to learn more about it.
We had an opportunity, through the university, to work with a business on a research project, and we applied process mining to one of their processes in the customer service and IT service domain. We were able to help them to cut their resolution times by 80% just through better process execution. Then we got so excited about it that we decided to start a company.
From boot-strapped to $1billion Series D Round
Phil: So how did you build out the firm, Alex? How has it evolved for you?
Alex: Early on, we bootstrapped the company. We raised the first round of funding in 2016 when we wanted to expand to the US market. We grew in three waves as the product has evolved. The first was an x-ray system so that any business can do an x-ray of their business processes with process mining. Then, as that got momentum, the second big evolution was to build a process data platform, to not just x-ray, but also to monitor the processes and connect to all the different data sources in a company. And then the third evolution is our execution management system, which takes this process intelligence, and turns it into more intelligent execution of your core processes – data-driven execution of your core processes.
We raised a Series C round, exclusively from private individuals. That helped us in establishing our brand further and building an executive team of seasoned enterprise leaders. We acquired Integromat, to boost our automation capability. The Series C funding round was really maturing the brand, the product, the company, to move beyond process mining. We crossed 1,000 people in headcount.
We launched our Execution Management System, in October of last year. That, plus the investments made from the Series C funding round, led to explosive growth momentum, so we decided to double down again, and raised this very large $1 billion Series D round to grow the company even faster.
We are working towards building more than a product and a company, but an entirely new software category and an ecosystem around it.
Phil: Where are you looking to invest to get you to IPO, Alex?
Alex: We have heavily invested in our go-to-market and are continuing to do so. That includes strengthening our ability to serve customers directly, but also investing in the partnerships we’re building – with IBM, and the global BPOs and SIs.
The third big area of investment (not in order of priority) is R&D. We have opened an international R&D hub in Madrid, and in the US we are expanding our resources from a product perspective. From an engineering perspective, we continuously evaluate whether to build or buy. We also continue to invest in the infrastructure of the business – HR, finance, all those things.
Meeting customers with an old Opel car to running a global enterprise company – the problems remain the same
Phil: What’s it like to start off driving to customers in an old Opel car, growing a very small business, and now being a hyper-growth enterprise software market shaper? How does that change how you work?
Alex: It’s obviously a little bit different, in terms of what you deal with every day. But it’s also not that different. Ten years ago, I woke up every morning thinking, “What do we need to do from a product perspective? What do we need to do to grow? Who do we need to hire?” The problems are very similar now – just at a very different scale.
We’ve got a really strong leadership team now, Phil, so I’m much less focused on the current quarter or the next quarter. I try to focus on doing the things that will help us in 18 months to three years from now. My focus is on building a company that stands the test of time.
Phil: You are just 32 years old. When you make a huge amount of money when you go to IPO, do you plan to stay in the technology space for the rest of your career?
Alex: An IPO is not really an exit event. It is a milestone on the journey. We had multiple opportunities to sell the company to big corporations. We just never thought that was the right thing for us. When the three of us wake up in the morning, we think about Celonis, and when we go to bed, we think about Celonis, and, personally, wouldn’t know what else to do. There is no plan B, at this point in time.
On a (fun-filled) mission to fix peoples processes
Phil: [Laughs]. It’s not all about the money, then?
Alex: Absolutely not. It’s just so much fun to be part of and to build Celonis. I always say our purpose is to unlock the world’s processes. So many processes are frustrating for people and are highly inefficient. And processes are an incredibly horizontal thing, everywhere, in every organization, touching so many consumers’ and employees’ lives. It’s both motivating and fun to be able to have a really big impact on something so pervasive.
Phil: So your life’s mission is to fix people’s processes. I love it. [Laughs].
Alex: [Laughs]. It’s pretty good, don’t you think? [Laughs].
Phil: Yes! You’ve identified something that is in dire need of fixing, and you’re out there doing it with incredible momentum. It’s great to see an independent organization building out both a successful platform and a thriving ecosystem. Am sure all of us here are excitedly watching you guys to see what’s next in this fast-moving market…