This interview is part of the Inside the Mind of the CEO series, which explores a wide range of critical decisions faced by chief executives around the world.
Unicorns don’t hail just from California, or India, and China. They can also come from Romania. UiPath, headquartered until just a few years ago in an apartment in the capital city of Bucharest, is one of the fastest-growing software companies in the world. From its first tiny venture round in 2015, its valuation has soared rapidly — to US$3 billion in 2018 and $7 billion in April 2019. Based in New York since 2017, the company has 3,000 employees, more than 5,000 clients, a developer community of 500,000 people, and annual revenues of more than $300 million. UiPath has capitalized on the booming demand for robotic process automation (RPA). Utilizing technology that reads text and images, its platform allows users to access a library of prebuilt automation components that can be combined to automate routine company processes. In an interview in the firm’s midtown Manhattan headquarters, cofounder and CEO Daniel Dines discussed the company’s origins, technology, philosophy, and growth — and why humility is a key component of UiPath’s culture.
S+B: How did you end up starting a software company in Bucharest?
DINES: My background is in software engineering. I worked for Microsoft in Seattle for five years, between 2000 and 2005. And I left to come back home. And then I slowly went down into a big hole. I tried different products. Nothing worked. It’s very difficult to sell from Romania.
S+B: What products were you trying?
DINES: UiPath originated from a product that was kind of an online dictionary. It would allow you to click on any word you saw on the screen, and then it would pop up a definition of the word or a translation. In order to create this product, we built an engine able to detect the information behind the image of the word. The product was good, but as a business, it was a flop. And in the meantime, I basically completed my career as a software engineer. My skills had become less relevant, and I had learned a lot of things that nobody would have hired me for. A little bit of marketing, a bit of legal, a bit of finance, a bit of everything. So I was really pessimistic about the future. It is really difficult to run a 10-person company and not have any money to pay yourself at the end of the month, or not see anything in the future.
Look, in 2013, I didn’t know what BPO was. Because if big enterprises are automated, what do you outsource?”
S+B: So how did you survive?
DINES: From this initial product, the dictionary, we extracted the technology, and we started to sell it to other software companies. And it went decently well. In parallel, we were doing a lot of outsourcing. But in 2011, we scrapped the outsourcing business and focused only on software. That was the moment when we decided to build an end product on top of our technology — a B2B product. And that was naturally an automation product. So we built this product that today we call UiPath Studio. It allows someone who has some technical skill, but is not really a developer, to build automation and run it on their desktop.
S+B: What was the problem you were trying to solve for customers?
DINES: Well, I didn’t know anything about how an enterprise runs. So I thought that this would be a solution for small to medium-sized businesses that had a lot of inefficiencies, that didn’t have the money of a big enterprise to fully automate their back office or front office. I thought that larger enterprises were already fully automated. After all, this is what all the software vendors promise. So our really early use cases came from small companies that wanted to automate file processing or time-shift reporting. One of our first customers was a new, online-only insurance company out of the Netherlands.
S+B: What changed?
DINES: It’s very interesting how one’s history and destiny unfold. We got a request from someone with a Yahoo email account asking to see a demo. Normally, we knew that people writing from a Yahoo address are not buying. But I had a hunch, and we had a bit of capacity. I asked one of my colleagues to show this guy our product, and after an hour she came to me and said, “Hey, he is actually representing a big company. He is very interested in this solution.” The company was doing a pilot with one of Oracle’s partners. This man, who was in middle management, asked how we compared with its provider. And I told him, “Wait a second. I don’t know who this partner is.” It turned out this guy’s company was unhappy with what it was getting in the pilot. So he had searched on his own on the Internet for a solution and found UiPath. His company ended up asking us to do a pilot — automating a big supply chain process for a computer manufacturing company. So we sent three of our best people to India, and in two-and-a-half months, they built a pilot.
S+B: And you began to realize there was a market for business process outsourcing?
DINES: Look, in 2013, I didn’t know what BPO was. Because, again, if big enterprises are automated, what do you outsource? To me, outsourcing was only about IT outsourcing. And then we started to build our software to orchestrate our robots. In 2014, I started to talk with a German venture capital firm that had a fund specializing in Eastern Europe. After about 15 months of talking, we ended up raising $1.6 million in July 2015. That year we introduced our enterprise platform.
S+B: What was your valuation then?
DINES: Let’s say that $100 then would have given you $50,000 today.
S+B: What did you use that first round of capital to do?
DINES: At the time, we were 10 people in a residential apartment with three bedrooms. So we moved to our first proper office.
S+B: And four years later, you are up to 3,000 people and a $7 billion valuation. We know consumer-facing apps can scale rapidly. What was it that enabled UiPath to scale so quickly?
DINES: It was a combination of factors. First, the market was ready for it. Traditional automation doesn’t work for a lot of companies because you can’t always make a business case. It is disruptive and requires up-front investment in infrastructure. But with the platform we have, you can take a process, automate some parts of it, and get the benefits in two months. The second factor was the BPO industry itself. In most contracts, BPO suppliers promise customers an annual reduction in cost, which they get through optimization techniques like lean manufacturing and Six Sigma. But BPO companies had reached the limit of their techniques to keep optimizing processes. So our first customers were BPO firms. They were extremely eager to use automation to deliver on their promise to the clients and maintain profits.
S+B: And what differentiated UiPath?
DINES: There are two ways to do RPA. The first is to think like a computer. If you look at the webpage, you can right-click and ask to see the script. The second way is to look at the screen like an image. You apply OCR [optical character recognition], machine learning, and other techniques, and you discover all the data from looking at it. This is what our computer vision technology does. That was a really important competitive advantage to us. And starting in 2017 and 2018, we put AI on top of the computer vision, so it is now cognitive. We can understand documents that are structured, semi-structured, and unstructured.
S+B: What was your approach to marketing?
DINES: In 2015 and 2016, we didn’t even have a sales force. As an engineer, I didn’t understand sales. My thought was that every enterprise does its due diligence, gets the best technology, and trains its staff on the Internet. But that’s not the way the world works. When customers make such a big bet, they need to know the company, talk to people representing that company, and build trust. So for the last three years, we have focused on building a sales force. Right now, we have hundreds of reps.
S+B: Explain to me who your clients are, and why UiPath is compelling for them.
DINES: The largest financial institutions in the world are our most typical clients, as well as insurance companies, and oil and gas companies. Our platform is used for the type of horizontal processes that are functions in all companies: finance and accounting, HR, procurement. And then there are vertical processes, which are particular to certain industries. So in the financial industry, our platform can be used for credit card reconciliations. Some of our biggest customers are digital platforms like Uber, Amazon, and Google.
Think about who builds processes — and particularly back-office processes. It’s the businesspeople, the business users. If you have to build an onboarding process today, you might, after someone responds by email that they’re accepting the offer, go into Workday and create a requisition. And then you go into ServiceNow, to create the request for the letter. If it’s a sales position, you go into Salesforce and build a profile. You build the process using user-readable interfaces. And our technology can read that. So I use software that people understand, not software that computers understand. In the past, if you wanted to automate this stuff, you would go to the IT department and get put in a backlog, and wait two years, and they would say there is no business case to do it because it’s expensive. With UiPath, you start building on the platform right away, which has templates and accelerators.
S+B: So UiPath takes IT out of the equation?
DINES: IT runs the system that makes this possible, but it doesn’t deliver the solution. Our UiPath studio has drag-and-drop menus. You don’t have to know coding to make it really user-friendly, to orchestrate and deploy, and that gives you tremendous power. You have to translate the process built by business users into an API. You need a product manager who can understand the process and a little bit of the technology, and a developer who is able to build the automation.
S+B: What should we make of the concerns that automation software and automation in general is going to displace lots of good-paying jobs in companies?
DINES: First of all, if we’re talking about white-collar jobs right now, it is very difficult to replace a job with technology. With most white-collar jobs, you have different sets of activities, some you’re doing every day, some weekly, some monthly. Some of these activities can be fully automated, and this is what we do. And it’s actually liberating, because computers can automate the tasks that humans don’t like. So I think that we’re part of a job transformation movement. Some of the people will transform themselves into managers of robots, and they’ll be able to delegate a lot of request to the robots.
S+B: And how many open positions do you have right now?
DINES: Right now, we don’t have too many open positions, because we have to digest what we’ve done. Let me give you some perspective on our hiring. We began 2015 with 10 people and finished the year with 30 people. In 2016, we ended with 100, and 500 in 2017, and 2,000 in 2019. I think right now, we are almost 3,000, actually. So that’s crazy.
S+B: Among your investors are some of the leading Silicon Valley venture capital firms. What do they have to teach you about scaling software businesses? It seems like you’ve done pretty well on your own.
DINES: What I got right were some of the business decisions I made. This is the job of a CEO: to know when to push the pedal and when to push the brake. The venture people can’t do it for you. But venture people oversee many companies, so they understand benchmarks. We can have really open debates with our investors. I’ve discovered how important it is to have partners in life, whether it is personal life or business life. And the definition of a partner is really someone you can bounce ideas off without fear, without being defensive — understanding you have the same goal. A partner can openly tell me, “I disagree with you, I disagree with this, and because of this,” without me taking it personally.
S+B: Upskilling is a very big buzzword now. How do your products fit into that trend?
DINES: What we do is the core of upskilling. In other words, if we liberate people from their repetitive chores, they have time to learn new things, to connect better with customers, to develop their soft skills.
S+B: Given your company’s growth in the last four years, what do your next five years hold?
DINES: I can give you maybe a better 10-year outcome. We have a tremendous opportunity to set how new enterprise applications will be delivered. Because in a way, automation is an application. So we feel that this is a new layer of technology — like databases were, like ERP was — that sits on the top of existing technologies. In the future, there is no way that people will consume technology by entering data via the user interface. We feel people will consume technology only by interacting with smart robots using voice commands. That’s a paradigm shift.
S+B: As CEO, what do you spend most of your time focusing on?
DINES: My role is setting the strategy of the company. So I need to decide, well, where do we want to go next year? How many people do we have? How do we get there? My background is in product development, so this is my love. But I understand our technology down to the details.
S+B: The rise of AI raises questions about the responsible use of technology. Are you concerned about regulation of AI?
DINES: There are two facets to this question. One is that our business actually facilitates regulators and people working on compliance tasks. In my personal opinion on the matter, if you look holistically at our known history, like the past 10,000 years, with the invention of agriculture, we’ve been trapped in repetitive work that produced goods and then trapped more and more people in the same cycle. And I think now, we are on the verge of reversing this cycle. So automation technology will free people from doing work they don’t like, because nobody likes to plow the fields, and nobody likes to do the jobs that we can automate. My biggest concern is what are people going to do if they don’t have work to do? Because work has a fantastic positive effect on people; it gives us a sense of purpose.
S+B: What is the role of culture in enabling your growth?
DINES: Scaling a company of this size is, I think, one of the most difficult tasks in the world, not just for the CEO but for everybody else. The only way to have thousands of people all rowing in the same direction is to give them a sense of belonging and a sense of mission. And culture is the factor that helps us to achieve our goal. So I realized very early on, like in 2015 when we started to add our first new people, that we have to define our culture. We went through different stages. We are open, we are transparent, we want to be honest, hardworking. Well, every company will come up with a list of 10 or 20 of these attributes, and in the end, it’s diluted. So there was a moment when I had an epiphany — looking at our history and how lucky we were, and seeing how arrogant our competitors were, and how mediocre we were as people. We are not some kind of rocket science engineers. And I said, let’s define our culture by one single word: humility. And in defining your culture, you have to be also bold. You need to be able to make bold decisions. Make sure that they work in a pair: humility and boldness. People who have humility are able to make bold decisions and can actually drive change. They are not arrogant. People listen to them.
S+B: What is so great about humility?
DINES: I feel that this is the best trait a person can achieve in life, because we are not born humble. On the contrary, I think we are born quite arrogant. Ego is the worst enemy. And humility is like a muscle. You have to exercise it every day. But it can make you listen to others. It gives you the power to change your mind without fear of losing face. I’ve constructed a formula of general intelligence, which includes hard and soft skills: General intelligence equals IQ divided by ego. That’s a very simple formula. If the ratio of ego to IQ is over one, it reduces your general intelligence. If it’s under one, it increases.
S+B: I have to say, it is pretty rare to hear the founder of a unicorn software startup lead with humility.
DINES: I don’t buy into the “bro” culture of Silicon Valley. “We are the best. We are changing the world.” We are changing the world in UiPath, but we don’t say this out loud. Every person should have a sense of humor. A startup with five people saying “we are changing the world” doesn’t have a sense of humor. Seriously.
S+B: So beyond humble and bold, what other attributes matter to your culture?
DINES: Being fast. Because in the end, the fastest company will win. And humility can let you be fast, because in order to be fast, you need to make fast decisions with little data and change them instantly. And then we pair humility with the concept that we call being immersed. Many people talk about work-life balance. I don’t believe in this concept. What I believe in is being connected and being immersed. I believe that people can be simultaneously good parents and good employees. In this world, you cannot completely disconnect from work. We go home, we will be connected to our product. And when I’m in the office, I’m not disconnected from my family. This is what I mean by being immersed. And when you are immersed, you free up the capacity, the creativity of people, because they’re happy they’re doing what they’re doing, and you’re eliminating all the other tasks that are not so interesting.
- Daniel Gross is executive editor of strategy+business.