The cloud-based TestOps platform Qase.io, which helps large IT companies worldwide optimize their software testing process, was launched less than five years ago. During this time, the startup has managed to raise a million dollars and attract thousands of users.
In an interview, the Founder and CTO of the project, Nikita Fedorov, shared insights on how to enter the challenging and highly competitive IT business niche and gain investors' trust without any pitching experience.
Two years of nighttime coding
When Qase entered the market in 2018, significant and successful players had already been around for about 10 years. What new offering did you bring to the industry, and how did you plan to compete?
I started developing Qase back in 2016 while leading development teams at one of the largest hosting providers, RU-Center. One of my tasks was to improve product quality and reduce the number of defects. To achieve this, I hired a testing team. However, the existing tools on the market didn't satisfy me.
Many of them didn't meet modern usability standards: they had outdated user interfaces and overly complicated user experiences. That's when I decided that I needed to create a tool that even someone without development experience could easily start using.
The second thing I noticed was that most services offered their product in a self-hosted format for installation on company servers. However, I believed that the future belonged to cloud-based systems. Having all the data in one place makes it easier to work with. So, I made a bet on the cloud.
However, the testing problem turned out to be even deeper. When I became the Tech Unit Lead at Avito (one of the world's leading online classifieds platforms, ranked as the top shopping app by App Annie in 2021 in terms of mobile device installations), I noticed that most people were using different tools for manual and automated testing. Data was processed in one system or another, making it difficult to gather everything into one big picture. This led me to the idea of combining manual and automated testing in one place to simplify and accelerate the collection and analysis of testing data.
How did your work on the project progress and what improvements were made over the last five years?
I worked on the project for two years, coding in the evenings and at night outside my working hours. In 2018, I launched a free beta version. I spent $50 on advertising in a Telegram channel and received the first 100 registrations. Some of these clients immediately started using the product every day. That's when we realized it was time to monetize it.
In 2019, we registered the company in Delaware, USA, to make it more convenient to work with clients worldwide and attract investments. We also introduced our first paid pricing plan. Looking back, I now understand that we should have monetized Qase right away. This would have generated even more revenue and helped us find our business model faster.
Currently, we position ourselves not just as a test management system but as a TestOps platform that includes features like automatically collecting information on test runs and generating analytics. We are also working on adding an environment management option to help users coordinate all segments, such as production, staging and development.
Simple and Challenging Investments
Speaking of investments, how much money have you raised so far and how did you approach pitching to investors?
It was both simple and challenging. I had never pitched a product before. However, on the other hand, we were growing rapidly, and market feedback had always been positive. That helped.
The main principle of fundraising is that every investor you bring on board has the potential to attract the next round. And that's exactly how it turned out. I received my first $50,000 in 2019 from my ex-colleague Roman Pavlushko. He made introductions to various venture capital funds specializing in seed-stage investments. In 2021, we raised $500,000 from those funds, with S16 VC as the lead investor.
In the summer of 2022, we raised an additional $915,000, including funds from existing investors and value-added founders. Currently, we are in the process of closing another fundraising round for a larger sum.
Most investments are made through warm introductions. After all, venturer funds receive applications from a huge number of startups, and it's challenging to stand out in that flow.
How do you use these funds?
We put this money into marketing, expanding our development efforts and improving the product. Currently, our focus is on North America. We participate in global conferences as sponsors and speakers. In April 2023, we spoke at Developer's Week in San Francisco and the Selenium Conference in Chicago. In May 2023, we participated in the largest developer festival in the United States, Agile Testing Days.
"Most of our customers come through networking"
Your niche is quite challenging when it comes to product promotion. How do you bring in clients in such circumstances? In which countries do you currently have the highest number of customers?
Currently, we have over 100,000 users in more than 85 countries worldwide. Approximately 40% of our revenue comes from North America and Europe each, while the remaining 20% is from the rest of the world. Interestingly, I was surprised to see that we have quite a few users from Japan.
Previously, we primarily grew through word of mouth. It was only at the end of last year that we hired a VP of Marketing and a VP of Sales. Selling devtools is generally more challenging - just advertising is not enough. Thus, we attracted engineers and developers through a freemium model, allowing them to try the product themselves and become advocates for us within their companies. This is known as a bottom-up strategy. The second way is called the top-down approach, where we directly engage with decision-makers such as CTOs, Heads of Engineering, Heads of Quality, and QA Leads.
We found that most of our customers came from networking and personal interactions, including industry conferences.
Among Qase's clients are well-known brands such as Wolt, Asana, Chatfuel, and others. Essentially, they trust you with something valuable: new features before release, including potential innovations. This is quite a responsibility. How do you guarantee the security and integrity of the data?
We are certified according to the SOC2 and SOC3 standards by an external auditor. This means that we adhere to all necessary security measures to prevent user data leakage. Customer data is isolated from each other and encrypted. Additionally, we engage the services of penetration testers who conduct annual audits and search for vulnerabilities.
For an additional fee, clients have the option to set up a dedicated cluster with their data, completely isolated even from the internet. For example, it can be accessible only within the company's corporate network from specific IP addresses. Quite a few clients choose this option with us.
"AI is not a competitor, but a business driver"
The testing market is highly competitive. How do you manage relationships with other players?
Competition is the driving force of progress. The market only benefits from it. Different things happen. Some try to copy us, run advertisements against us, and conduct analyses and comparisons. But when the market leader starts running ads against you, you realize that they've noticed the threat, which means we're doing everything right.
There was a funny incident once. Some guys from the Middle East messaged us directly in the chat of our application, saying, "Hey, can you share your source code with us? It's difficult for us to copy it." I've seen other clones where everything is completely copied, even our brand name is mentioned. But I remain calm about it. You can copy everything except the vision. It's important to understand how you are going to develop the product.
Now there's a boom in AI-based algorithms. Do you consider AI as your competitor? How will new technologies change the market?
I recently participated in a big podcast with tech expert Joe Colantonio on this topic. We discussed it for over an hour.
First of all, we must acknowledge that AI is already here. We need to adapt and move forward. I see generative networks not as competitors but as drivers of our business growth. Yes, AI can write code. However, it still cannot execute it and receive feedback. That still requires a human.
We position ourselves as a system for test analytics. It tells us how well the tests are performing and where there are issues. These are exactly the kind of data that AI needs to improve the product it generates. And the more tests there are, the better it is for us.
"We want to reduce chaos"
You worked for three years at Avito, one of the world's largest classifieds platforms. How did you contribute to this business?
I joined Avito as an Engineering Manager and Tech Unit Lead. We were responsible for payment systems, coordinating a vast amount of data. Our task was to minimize the number of user actions required for payment.
We integrated Apple Pay and Google Pay, which increased the number of transactions. We also obtained certification for the PCI DSS standard, allowing the company to store card data internally and diversify risks. It became more convenient for users to pay with their linked cards. If there were any issues with a particular bank, we didn't lose the data but simply redirected the acquiring to another partner. We managed to reduce payment commissions by nearly half.
You have a lot of experience managing teams. Based on your expertise, what principles enable you to coordinate and motivate people?
Currently, we have 30 employees in 10 countries. The revenue team is based in the USA, while the product and tech teams are in Europe. Every two weeks, we hold a general meeting to keep everyone informed. Otherwise, I give employees autonomy. When people make decisions themselves, they feel a sense of responsibility.
Building a business is facilitated by shared values. In our company, we have five of them. 'Win as a team' - we operate more like a sports team rather than a family. Everyone is focused on results. The next value is 'Move Fast.' The competition is intense, so we need to respond to it quickly.
'Learn from Failures' - making mistakes is normal, as long as we don't repeat the same ones. 'Result starts with you' is the main principle for me. If you see an opportunity to improve something, don't wait, take action. And finally, 'Keep it simple' - complex solutions are not always the best.
How do you envision the development of your business? In other words, what's your endgame?
We aim to transform the market. Through our research, we discovered that large companies use anywhere from 20 to 40 testing tools on a daily basis, resulting in chaos. Our goal is to reduce this entropy. We want to automate processes, freeing up the mind for creativity, intellectual tasks and decision-making.
Our objective is to become the universal testing platform in a one-stop-shop fashion. We are currently the first in the market to offer an Apps Marketplace for Software Testing. This will allow for the integration of various products within a single platform.
