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Segment raises $64M led by Y Combinator

segment.com

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Re: Segment raises $64M led by Y Combinator

#51

Post by cyberferret »

mijustin wrote: post #8

I've been a Segment user, and advocate, from the beginning. It was highly recommended in the book Marketing for Developers. One thing I'd like to see is a better free tier for developers starting new projects. Currently, you're limited to 1000 visitors per month. Even indie projects can quickly run up monthly costs of $100+. As a comparison, Mixpanel's free tier gives devs 20 million data points per month.

This was my take when we investigated integrating Segment into our SaaS app too. We are purely boot strapped, and at the level where our monthly site visitor are building up at a great clip, and we would be occasionally pushing the free limits of Segment into real dollar that would eat up a chunk of our slowly growing revenue.

Re: Segment raises $64M led by Y Combinator

#52

Post by gamache »

irq11 wrote: post #29
pclark wrote: post #18

I'm a massive fan (and user!) of Segment. I think it could be revolutionary. I do worry a lot about how they tell the world about what they _are_ though, it's an inherently complex and technical product - and often the buyers of this software may not be technical enough to appreciate the sophistication of this product. In my experience Segment is confusing to explain until you actually use it, then you love it.

I keep going back and forth between understanding the value of this product (dashboard for marketing to add integrations w/o dev time; better integration of analytics), to wondering why technical people pay for this. It doesn't seem cheap, and you're throwing a lot of control over latency-sensitive data to a black box. The founder straight-up admits in this article that the problems they're solving are largely simple…

I use Segment, I love Segment, and I love the fact that the problem they're solving is forehead-slappingly simple: data fanout and delivery is a pain in the ass, fix it. It's one of those "but I could have done that!" businesses that just comes down to foresight, acumen, and most importantly, execution.

Analytics.js could be replaced by a self-hosted/bundled solution in theory, but Segment's server-side integrations are an extremely valuable piece of network plumbing. It's awfully nice that I was able to set up a few endpoints on our API (quick) and went through the approval process (sorry, not quick) and now my customers have a super-easy option if they want to point their data hose at us.

Re: Segment raises $64M led by Y Combinator

#53

Post by cyberferret »

From the discussion here, it appears that a lot of 'picks and shovels' app tool providers seem to expect that their customer base will be well venture funded companies.

Their pricing plans seems to reflect this by have a 'free' tier that supports nothing more than a quick test MVP, then a paid plan in a VERY high price range that would be considered negligible for someone who has just secured $100M in venture cap.

Feel for we founders who want to stay bootstrapped, and who will be paying for tools out of nothing but slowly trickling in revenue from paying customers. For us, $250+ per month is a real cost, and not a flippant consideration in the early stages of our growth.

I'd much prefer to see vendors have more gradually tiered pricing plans, or else peg the cost to a meaningful metric, such as 'per paying customer' rather than 'per anonymous site visitor' etc.

Re: Segment raises $64M led by Y Combinator

#54

Post by [deleted] »

bendavis381 wrote: post #32
jaequery wrote: post #10

Earlier quoted context omitted.

this is definitely a deal breaker. other than server-side, are there any other work arounds? like roll your own domain proxy or something?

Just bundle it in with the rest of JS payload with something like webpack. Individual calls to certain domains (GA, Heap, etc) might still get blocked, but the payload itself will be fine.

[deleted]

Re: Segment raises $64M led by Y Combinator

#55

Post by andrenotgiant »

tonydiv wrote: post #14

Had nothing but problems with their product over the years. In 2012, they had a bug in their analytics.js which resulted in me losing about 10k new users. Last year, I was experiencing multi-day delays between an event and it appearing in Mixpanel, Intercom, etc. Prior this year, I was using Branch and then realized how many sacrifices you make when you use Segment – they will never be up to date with all the most re…

Just to offer perspective from the other side, we've been using their product since 2015, we send millions of events through Segment every day without a problem.

There was one short outage I can remember in 2015, the only other issues we ever had, we traced back to misconfiguration on our side.

I think Segment's core code is _really solid_, it shows in how fast a relatively small company is able to iterate, update and release new product.

I think their biggest challenge is educating potential users on what they do (no exact competitor) and educating new users on how to set it all up properly (gotta read the documentation.)

Re: Segment raises $64M led by Y Combinator

#56

Post by sorich87 »

pkrein wrote: post #22
mijustin wrote: post #8

I've been a Segment user, and advocate, from the beginning. It was highly recommended in the book Marketing for Developers. One thing I'd like to see is a better free tier for developers starting new projects. Currently, you're limited to 1000 visitors per month. Even indie projects can quickly run up monthly costs of $100+. As a comparison, Mixpanel's free tier gives devs 20 million data points per month.

thanks justin! would you be open to putting a badge on your site (similar to mixpanel's)? we also have an incubator/accelerator discount for pre-series a, just email friends@segment.com and we can get you set up.

I'm not the GP but we would totally be open to putting a badge!

We got 3 months free from Founderskit (via Startup School). Is there a better discount than that? If yes, that would be helpful!

Re: Segment raises $64M led by Y Combinator

#57

Post by harrisreynolds »

slkdjf wrote: post #46

Not really a segment user anymore but I'm desperately lonely and want someone to reply to me. So i will say something negative about it, hopefully a segment employee will reply. I was a segment user for years and then analytics.js murdered my pet pig, then bragged about it on twitter. Users worried about the security breach in my young startup all vanished and I received a Series B funding of negative 7.5million, ban…

Did you at least BBQ the pet pig?

Re: Segment raises $64M led by Y Combinator

#58

Post by pkrein »

jgalt212 wrote: post #50
calvinfo wrote: post #42

Earlier quoted context omitted.

This comment might be in jest, but we've actually been working on a few different ways to help optimize [1] and manage our AWS spend [2]. That said, there are quite a few places left for us to optimize. We're hoping to share more of the techniques and architecture we've used to get better performance in upcoming blog posts. [1] https://segment.com/blog/the-million-dollar-eng-problem/ [2] https://segment.com/blog/spot…

yes, sorry for the snark. It was more about, how does one go about spending $94MM in this day and age? And even after reading your well written post on AWS cost control, I still can't figure out how to spend that much money on a software biz other than given the lion's share to AWS. e.g. even if your engineers and salespeople cost (all in) $200K a year. $94MM = 470 person years of expensive staff.

completely theoretically with nice round numbers, let's say a SaaS company has $50m in annual revenue, and they want to grow to $100m in annual revenue next year. lastly, let's assume time required to pay back the cost of customer acquisition (marketing, sales, setup support) is 24 months, and customers always pay annually up front. (24 months is kind of a long payback time, so this is a bit extreme.)

doing the math... you have $50m in revenue so you can buy another $25m in recurring revenue with that. and then you need another $50m in capital from somewhere to add the other $25m in recurring revenue to get to $100m ARR total.

it also follows from the math above that the faster you grow revenue, the more capital you need. :) saas math is a bit funky.

Re: Segment raises $64M led by Y Combinator

#60

Post by jgalt212 »

pkrein wrote: post #58
jgalt212 wrote: post #50

Earlier quoted context omitted.

yes, sorry for the snark. It was more about, how does one go about spending $94MM in this day and age? And even after reading your well written post on AWS cost control, I still can't figure out how to spend that much money on a software biz other than given the lion's share to AWS. e.g. even if your engineers and salespeople cost (all in) $200K a year. $94MM = 470 person years of expensive staff.

completely theoretically with nice round numbers, let's say a SaaS company has $50m in annual revenue, and they want to grow to $100m in annual revenue next year. lastly, let's assume time required to pay back the cost of customer acquisition (marketing, sales, setup support) is 24 months, and customers always pay annually up front. (24 months is kind of a long payback time, so this is a bit extreme.) doing the math.…

fair enough, but sometimes no matter how much you spend you won't be able to double revenues from $50MM to $100MM. Will the market allow you to grow that fast? So yes, the math is funky.

As a counter example, many companies are using excess cash to buy back stock and not grow the biz.

As another example, what did Github did with their $100MM? I'd argue that the Github product and client base looks substantially similar to what it did before a16z gave them that chunk of change.

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