Project Earth
An update on our company
Prefect has a culture of transparency, which involves sharing news — both good and bad — with our employees and investors. In keeping with those values and the spirit of open-source, we’d like to also include the broader community when possible. This post is from our March 2020 investor update.
Exactly one year ago, we launched Prefect Core as one of GitHub’s trending projects, and we’ve maintained that level of success ever since. Just last month, we released Prefect Cloud to the public and crossed a major milestone in ARR. More importantly, our users and customers are excited and engaged to a degree even we did not anticipate.
I am incredibly proud of our team’s work over the last twelve months, and we have taken steps to ensure our continued success in this uncertain time. COVID-19 represents a unique challenge for every business. Fortunately, Prefect is well-positioned; in fact we stand to benefit from businesses’ renewed focus on expense reduction and efficiency. Nonetheless, COVID-19 provides a good opportunity to reexamine our business plan and improve our standing.
In this letter, I will review the four key drivers of our strategy’s success and provide an update on the steps we’ve already taken to secure our position.
Strategic Drivers
The most important question for our company is the strength of our belief that negative engineering is a huge unsolved problem. The answer is emphatically yes; we are showered in evidence that it transcends industry and size. We continuously discover new markets and new customers, and our hybrid model has allowed us to engage them all. Every day, we grow more certain that we have uncovered an incredibly attractive, if nascent, market opportunity. COVID-19 will only increase our customers’ focus on this topic, given its implications for wasted engineering spend, and we plan to position Prefect as the perfect solution.
The second question is whether we have a winning product, and again we have no doubt that we do. Our open source community is thriving and Cloud received a perfect NPS score in its first user survey. Our competitors have even started referencing us in their designs. In light of COVID-19, we will be re-emphasizing our product’s ability to reduce cost and drive efficiencies. We have collected benchmarks that demonstrate teams can benefit from six figures of tangible savings by deploying our software. In the last week, our open-source user engagement has jumped and we completed our fastest-ever commercial close: just two business days from warm introduction to signed contract.
Next, we need to think about funding and ensuring that our finances are aligned with our corporate strategy. I spent my entire career managing financial risk and am always thinking about downside protection. It looks different in a company than a portfolio, but the core principles are the same: make conservative assumptions, prepare for many outcomes, and do not be surprised. For these reasons, Prefect has always maintained a cash reserve and we have never included any revenue in our 24-month budget forecasts. Beginning two weeks ago, we took aggressive steps to further preserve our capital and extended even our zero-revenue runway.
Finally, we must ensure that we select a go-to-market and commercial strategy that will best accelerate the growth of our user base and company. This is an important topic that frankly we’ve grappled with in the past, especially as market expansion, enterprise customers, and the hybrid model have all allowed us to continuously experiment with different delivery mechanisms and pricing models. Our evergreen debate is how much of our platform should be open-sourced, as opposed to retained for our proprietary platform. The COVID-19 crisis helps clarify this point because businesses will increasingly choose the system that delivers savings as quickly as possible. Consequently, our commercial strategy is coming into focus. We have decided to release an open-source version of our platform in order to deliver value to businesses at a time that they desperately need it.
We call this effort Project Earth.
Project Earth
In The Hitchhiker’s Guide to the Galaxy, a supercomputer was commissioned to find the ultimate question of life, the universe, and everything. The computer was called Earth, and it was so large and powerful that it was often confused for a planet. Unfortunately, Earth was destroyed in a cosmic accident, and a new Earth must be built to complete the original mission.
At Prefect, we also have a large and powerful system, Prefect Cloud, and COVID-19 is our cosmic accident. We must reposition our product to maximize its efficacy in a business environment newly driven by cost savings and efficiencies. Through Project Earth, we will add a version of the Prefect Cloud platform’s API and UI to our open-source offering. This will address the most common friction we hear and allow a far greater number of businesses to immediately adopt Prefect software.
We have channel-checked this strategy with current customers and prospective ones and found the response to be overwhelmingly positive. An open-source version of Cloud would smooth Prefect’s adoption in large enterprises while reducing time-to-value for customers with limited time or resources for exploring alternative solutions. It provides a more natural on-ramp to enterprise service contracts and, critically, it will permanently eliminate the sole advantage of our fully-open-source competition. Our strategic goal is to use this approach to disproportionately substitute user growth for customer growth in an adverse economic climate. For avoidance of doubt, we will continue to offer our paid platform and features, as well as a new support product, for businesses with needs beyond basic workflow management.
Open-sourcing Cloud is a massive undertaking that would normally require months to plan, coordinate, and execute. However, we will be ready to release it next week. By operating at this pace (typical at Prefect!), our software can become available to any business that needs it, at exactly the moment businesses are demanding efficiency the most. Allying ourselves with our partners at the earliest possible moment — for free — is the ultimate expression of our commercial directive: deliver value, don’t extract it. Relatedly, we are advancing plans to formalize a non-profit/open-source program, working with partners like the Special Olympics.
Thank you for your continued support and please contact me with any questions about our updated strategy or anything else. We remain highly enthusiastic about Prefect’s mission and market opportunity, and more conscious than ever about the need for strategic and financial discipline and focus in these uncertain times. We hope you and your families remain safe and healthy.
Happy Engineering!
Update: Project Earth has been released!
