The most valued Indian Software-as-a-Service (SaaS) startup at $5.6 billion, Postman has partnered with companies like Axis Bank and Disney Hotstar in the domestic market, helping them reduce shipping time for new API products, allowing fresh integrations, and driving efficiencies.
“When we started, high-growth technology companies were really growing fast… Now, as the world has shifted a little bit, we actually see more of the traditional sectors modernising faster. That shift of sectors is more prominent than any broader change in the API segment,” Abhinav Asthana, Postman’s cofounder, told ET.
Financial services players and banks are one of the fastest growing sectors, modernizing quickly and adopting APIs, he said.
The remarks come at a time when SaaS companies have seen a slowdown in sales cycles from their 2021 peaks, as several enterprise customers look to cut costs and renegotiate pricing.
US tech majors like Twitter, Stripe and Meta Inc — some of its customers — have laid off on average 13%-14% of their global workforce, after overhiring during the Covid period.
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“Investments in APIs continue to be a strong theme. Of course, across the board for all the software (solutions), there is much more scrutiny, but APIs are mission critical and are not going away. There is also much more focus on productivity and developer experience and that plays to our stance,” Asthana said, referring to the impact of the SaaS growth slowdown. “Our business model is pretty resilient.”The cut in enterprise costs has hurt several homegrown SaaS enterprises, including ChargeBee, Exotel and Freshworks, which had fired sales and marketing personnel due to the hard reset of markets and enterprises moving towards profitability overgrowth at all costs.
Over the last two years, these companies had bulked their sales and marketing functions on account of higher demand and adoption of software products.
Global SaaS bellwether Salesforce, which recently laid off 8,000 people or 10% of its total workforce, has been noting measured customer buying behaviour since July 2022. It has warned the industry about elongated sales cycles and additional deal approval layers, particularly in enterprise sales.
Closer home, at Freshworks, management expects sales momentum to remain challenging going forward.
Freshworks’ chief financial officer Tyler Sloat told analysts earlier this month that the company did “not expect the expansion motion to slow down the way it did throughout the year,” and the company expects it to be a tough environment for a while.
Among other global SaaS majors, Zendesk has also slashed 300 jobs. While Freshworks listed on US exchanges in 2021, several of the other software startups successfully rode the funding wave and cornered large rounds when capital was inexpensive.
Postman, too, gained from the SaaS bull run when its valuation rose from $2 billion in 2020 to $5.6 billion a year later, as it picked up $225 million in a fresh funding round led by existing investor, New York-headquartered Insight Partners, in August 2021.
Focus on new markets
Going forward, Postman aims to invest in Japan, a geography it touts as the largest market for software buyers.
“The overall growth (of APIs) is pretty global. With our broad base, I think we are sufficiently present in a lot of geographies. The number of developers is what is happening across the world now, but we’re very interested in Japan as a geography,” Asthana added.
He declined to share the company’s fundraising and public listing plans, saying it has sufficient capital.
The company has expanded its office bases across various US states as it hires more professionals to join its workforce of over 600 staffers.
According to Asthana, the US and Western Europe continue to be top geographies in terms of adoption for the platform.
Strengthening features
Over the last two years, Postman has been working on strengthening its features for enterprise customers. Beyond API testing, Postman’s product suite has also evolved to capture designing, mock servers, documentations, monitoring, collaboration, catalogue, security, governance tools for APIs.
The company plans to foray into observability soon, which is a part of developer operations (DevOps), Asthana told ET.
Observability is a highly critical part of developer operations lifecycle, which helps visualise any software system’s internal state. It analyses the data the system generates in terms of logs, metrics and traces.
Sequoia Capital along with its accelerator programme Surge have backed startups such as Amnic, ClearFeed and Last9 in the space.
Solutions in DevOps automate the microservices architecture, on which all modern application software runs, thereby needing a fewer number of engineering hours.
“In SaaS, investors are currently actually looking at themes that are enhancing or optimising revenues for clients because macros notwithstanding those are the ones that will always get more share of the wallet from a spending point of view than cost wise. When the economy takes a hit, cost is always a pressure point… productivity tools not just improve the revenue and help close sales better but also help cut costs,” a partner at a firm evaluating SaaS companies told ET.