How unicorn Browserstack became a profitable $100 million Indian Saas company

Ritesh Arora and Nakul Aggarwal, co-founders, BrowserStack

By the time BrowserStack did a Series A in 2018—$50 million straightaway, from just Accel—it was a profitable venture with some of the world’s biggest companies as customers using its browser-testing product.

 The company was the result of founders Ritesh Arora and Nakul Aggarwal’s experience with testing code, which the serial entrepreneurs had done in their previous ventures and didn’t want to, again.

 The IIT-Bombay graduates had hit upon a problem to solve that was so relevant that they’d become profitable within the first six months of starting the company in Mumbai in 2011.

They had worked for four months to build a beta version of BrowserStack, a cross-browser and app testing platform—starting with tests for Microsoft’s Internet Explorer. When they got 10,000 beta users in the ensuing few months, they launched the commercial version.

By the time the Series A happened, six years later, BrowserStack had four products being used by customers in 135 countries, including the likes of Walt Disney, Tesco, Microsoft, Facebook, Twitter, Airbnb and Virgin Pulse. Today, “we have over a million developers who probably would be using our products on an annual basis globally, and they would be a part of over 55,000 paying customers”, says Arora, who is the CEO. “We are way over $100 million and continue to grow very well,” he says, adding that the company will cross the $200 million annual recurring revenue mark this year. And BrowserStack remains profitable, he emphasises.

“What we really want to be is the cloud testing infrastructure for the internet,” says Arora. There is a rapid transformation happening and more than half of the global economy in the next 10 years will be digital. “So how can we be the testing infrastructure for the new digital economy that’s getting created? That’s where we want to be.”

To make that happen, BrowserStack’s customers expect it to provide them many more products to help them solve ever more complex use cases around testing. In parallel, the company is investing heavily in its go-to-market efforts, expanding its reach, and further improving its customer service.

In June 2021, the company raised $200 million in an investment led by Bond Capital, with participation from Insight Partners, a US-based firm that’s also an investor in Twitter, Shopify and Udemy, and Accel India. The transaction valued BrowserStack at $4 billion.

Breakout Leader

Accel wooed BrowserStack for six years before it became the first investor in the company—somewhat reminiscent of how Accel invested in Atlassian, where another duo, in Australia, started something special.

After the June 2021 investment, that Accel joined as well, the investing partners acknowledged as much in a short blogpost. “At the core of our 2018 investment was the organic, widespread adoption of BrowserStack within the developer community,” wrote Nate Niparko, Ryan Sweeney and Shekhar Kirani, partners at Accel. Historically, software testing was relegated to siloed quality assurance teams, but BrowserStack has helped millions of developers accelerate and automate their tests, bringing testing closer to writing code. “This developer-first approach has been a common theme across our portfolio, including Algolia, Atlassian, MessageBird, Mux, Segment and Sentry.”

With growth, BrowserStack has been able to parlay its leadership among developers into the enterprise, with customers like Google, Amazon, Microsoft, Twitter, Spotify and Expedia, they point out. “In just a few years, we’ve watched BrowserStack establish itself as the breakout leader in software and application testing,” the Accel partners write.

“BrowserStack offers a best-in-breed product validated by a massive, highly referenceable customer base of developers globally,” Thomas Krane, managing director at Insight Partners, tells Forbes India in an email. The company is leading a growing market that is experiencing multiple tailwinds, he says.

These include the increasing heterogeneity of application user interfaces (device + browser + operating system), secular growth in software applications and developers, and growing DevOps adoption—DevOps refers to a way of software development that brings development and operations people together—resulting in more frequent application testing, he says.

BrowserStack’s scale and technical depth make for a sustainable competitive advantage, according to Krane. They deliver the broadest device and browser coverage (95 percent-plus of device and OS combinations), rapid integration of new and emerging testing frameworks such as Cypress and Appium, and superior performance with 15 data centres around the world, he says.

“Their biggest opportunity is to expand their product portfolio and deepen their value proposition for customers, both through product development and M&A,” Krane says. While Arora and Aggarwal have demonstrated their ability to acquire and integrate companies successfully—for example, with Percy, which brought visual testing capabilities—“executing on a product expansion and M&A strategy always presents challenges”, he adds.

Surge in Demand

In recent times, the Covid pandemic meant that developers couldn’t access the devices on which they were testing their software in their offices. That also contributed to “a surge in the demand for our products”, Arora says.

There are two tailwinds or market shifts that are helping BrowserStack grow. The first is just the digitalisation. If one talked to banks, or retailers, for example, “a lot of them now understand they’re actually a tech company that happened to be in finance or retail” and that’s pushing the digitalisation agenda around the world, which in turn is a big boost for BrowserStack.

Second, the shift of consumer behaviour towards mobile devices and the high level of dependence on them is pushing companies to invest in mobile applications, “and that inherently is helping us”, he says.

And the company has also made acquisitions to strengthen its position. For example, Percy, one of the acquisitions, expanded BrowserStack’s capabilities in what Aggarwal called “visual testing” and more recently, Nightwatch brought the company into test-writing frameworks as well.

BrowserStack is now solving more complex problems for its customers, like how should mobile apps behave based on how Wi-Fi networks are set up in different scenarios—from an office conference room to a sports stadium that can accommodate tens of thousands of people, all carrying mobile phones. Or in the case of streaming apps, for example, the apps might look the same to the end users, but BrowserStack is working with customers to make those apps more efficient with respect to bandwidth use or on making them more responsive and so on.

“From a big-picture perspective, what we really want to be is the cloud testing infrastructure for the internet,” Arora says. There is a rapid transformation happening and a significant portion of the global economy over the next decade will be digital. “So how can we be the testing infrastructure for the new digital economy that’s getting created?”

To make that happen, in addition to bringing ever more sophisticated products and capabilities to customers, BrowserStack is heavily investing in its go-to-market efforts, expanding the scale of operations and in continuously improving customer service.

Evolving Talent Base

While finding the right talent at the right time remains the biggest challenge, “this is something I’ve seen as a big shift in the last two to three years, where three years ago, people working in large companies would really stay away from joining startups because they were unsure and there were very few of us”, Arora says. “But now I think it’s just far easier to hire from a large organisation and people are also very much willing to contribute back, in the spirit of make in India.”

Part of this shift is that, in the past, leadership level recruits were hard to find or to be convinced to join startups. Today, more senior executives with training and experience in larger organisations are very much open to taking up executive roles in startups, he says.

This augurs well for the entire ecosystem, while the flood of funding has also begun to surface undesirable behaviour, he says.

At BrowserStack, the last 12 months have been phenomenal. A Series B round was closed, acquisitions happened and growth was very strong, and the founders expect the trend to continue past 2022. While they expect to make a couple of acquisitions this year, unless there is a very large and strategic deal on the horizon, they don’t expect to raise any more VC money.

In the foreseeable future, “I truly believe we will see billion-dollar-plus revenue companies from India. We would like to be one of them,” Arora says. “It’s a journey and when that will happen isn’t important. We think in terms of how to build BrowserStack for the next 30 years, and crossing a billion dollars in revenue would be just one of the milestones.”

Going ‘Remote-First’ Permanently

This model has brought flexibility to the employees and globally expanded the talent pool for important roles as BrowserStack grows at a fast clip

Last year we decided to be a remote-first company, permanently,” says Ritesh Arora. “I think the first 15 months of the pandemic were probably like an eye-opener for us like, ‘Hey, this is another alternative way where people can get together and work’.”

At BrowserStack, ‘remote-first’ means two things: Employees have flexibility to work remotely from wherever they want. And second, staff get together frequently, which helps with instilling the company’s culture and ensuring collaboration through in-person opportunities to get to know one another to build trust and relationships.

The flexibility means staff get to be wherever they want to be, so long they can meet their commitments. Therefore, there’s more flexibility to organise time with families, parents and so on.

And, at the same time, once it’s settled down into being remote, it becomes far more productive than being in office, Arora says, counter-intuitively. “Then for us, it also opens up a larger talent pool to hire from, and really deep tech talent, probably on the go-to-market side, which helps us back as a company to make better products and serve our customers better.”

“We recently crossed a thousand employees globally,” says Nakul Aggarwal, who is co-founder and CTO. In the US and Europe, where BrowserStack has had sales and engineering operations, the company continues to add people.

The company has multiple data centres in the US, and Ireland, Netherlands, Germany and Sydney, and in Mumbai, India, where it has its biggest employee base. It now hires from a large number of cities and towns, the founders say.

“And market dynamics have changed too, with people being more comfortable joining startups, so that’s helped in expanding the talent pool as well,” Aggarwal says.

The company had to find new ways for people to collaborate and stay creative, Arora reckons, but over the last two years, “we have worked towards that and we’ve now smoothened out the collaboration”.

And everyone in the organisation has now adjusted and moved towards how to be really collaborative, while still being remote, he says. And by bringing people together in offices frequently, it will probably solve the creativity part. “So it’s a win-win situation both for the business and for the employees.”

‘Worried About Toxic Environment Growing’

With easy money, has come enormous pressure to deliver, and some are cutting corners and worse, beginning to hurt the ecosystem, Arora warns.

I think I’m really worried about where the startup ecosystem in India is heading towards,” Arora said in a recent conversation with Forbes India. An ominous note amid the general bonhomie over India’s startup scene. “There has been, like, insane amount of free money that has been coming in and there’s so much pressure on investors and startup founders to deliver that it’s resulting in bad behaviour and poor governance across a lot of startups,” he adds.

In recent times, some of India’s startups have been in the news for various wrong reasons—from tax evasion to padding the books to allegations of misappropriation of funds. “I feel like this is just the beginning of a lot more to come,” Arora says.

And BrowserStack itself has been at the receiving end, he says. “A startup in India, having one of the best investors on their board, and they’re trying to steal our IP, they’re calling our employees to share the code base and the list of all the customers we have,” he says. “It’s happening with us, we are seeing it, and it has started to probably grow and create a toxic environment in the startup ecosystem.”

Many of the company’s staff are young, and some may be easily influenced by quick money or other enticements, Arora says. Internally, the founders have started to talk to their employees to get them to understand the importance of steering clear of any unethical behaviour, but this undesirable behaviour from outside just isn’t stopping, he says.

Arora believes that the investors at the other company may even be complicit. “So I think it’s maybe the time for us to externally share it, that what’s really happening.”