Sauce Labs

Sauce Labs came out of Google. One of the engineers there saw the value of Selenium, the open-source framework for automated browser testing, and he and three co-founders started the company with a single premise: automated testing should be built in from day one. Ramsey describes the founders as the absolute experts in automated functional testing. The problem was timing. They were ahead of the market, and it took years for the rest of the industry to catch up.

The market shifted about three years before the interview, when larger independent software vendors such as Salesforce and Yahoo began using Selenium. These companies built internal grids of machines, wrote Selenium scripts, and created browser and operating system images to run their tests. It worked, but it was costly to maintain, and developers were spending their time managing the hardware and software behind those grids. Sauce Labs offered to run that infrastructure for them, and that is when the company really started to take off.

The first customers were independent software companies that already knew agile development. Ramsey says the company is now seeing traditional waterfall companies move to agile, and that this transition makes automated functional testing a requirement. Growth came in two forms. Many customers started with a small self-serve subscription on the website and expanded as their teams saw build times drop through parallel testing. Larger accounts were handled by a field sales organization, with pre-sales, technical support, and customer success teams helping them integrate Sauce Labs into their deployment pipelines.

Pricing is based on concurrency, meaning how many tests can run in parallel, and that structure drove expansion as customers grew. Ramsey said annual churn stayed under 10 percent for most of the year, though it rose at year-end, and that the company was doubling down on customer success in response. The company also reported net negative revenue churn. Sauce Labs focused its energy on the 500 enterprise contracts rather than the roughly 3,000 small self-serve accounts, which typically pay less than $100 per month.

Sauce Labs now has about 170 employees spread across San Francisco, Eastern Europe, Vancouver, and Austin, with sales staff across the country. The company closed a $70 million round in November at a valuation of roughly $150 million post-money. It used that capital to acquire TestObject, a Berlin-based mobile testing company, to round out a critical area it had been investing in for some time.