Confluent CEO Jay Kreps on a $50 billion market for cloud data services and the company's strategy to blend self-serve growth with enterprise sales. He wants Confluent to be the central nervous system connecting applications and data systems, and says product-led growth alone won't get there.
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Jay, quite the growth numbers here. You seem to be on a beat and raise pattern. I've seen a few of those, but tell me about what kind of demand you're seeing and from the customer side, what seems to be driving this outperformance?
Yeah, we were really happy with the results. You know, I think the big picture is it's a $50 billion market opportunity and category, and these cloud services are an amazing way of delivering new capabilities around data to companies. And, you know, I think that we're seeing really explosive uptake of that in our customer base.
And what about the customer ad number? To what degree is your customer size and the size of the commitments shifting? I think you had about 190 customer ads in the past. You've had 290, you've had 440. What should we read into that?
Yeah, you know, we have a self-serve part of the product that tends to dominate that because people can show up and sign up. And we also have a sales team team that goes out and closes deals. So, you know, depending on our tactics, it'll be higher or lower each quarter. But we were really happy with the growth that we saw.
And that's that kind of product-driven, you know, sales motion similar to what we've seen from Atlassian, I think, which also had some big outperformance. To what degree is that going to be able to continue to drive growth as expectations rise, as those revenue numbers rise, how much do you think you're going to have to put more wood behind the arrow with the traditional sales force?
Yeah, it's, it's really a mixture. And that's what I think you would see in Confluent or really any of these high-growth software companies where, you know, there's a self-service aspect, there's a product-led growth side of this, but that works hand in hand with a sales team that can take the technology and make it something really strategic. You know, our goal with customers is to grow over time into a role where we're the central nervous system that connects all the different applications and SaaS layers and data systems. And to get there, you know, it's not just a matter of product-led growth. You need to interact and have strategic relationships at the company. And those two things really go hand in hand.
So, Jay, we were talking earlier this show about how some tech stocks have really seen this massive acceleration due to the pandemic and some of those changes in the way that people and companies interact. But I'm wondering if, as you look ahead to next year, how much you think you'll be able to maintain this growth rate and how much you think that perhaps some of the growth you saw this year was a pull forward or whether or not these trends are going to be sustainable.
Well, the world of data and infrastructure, it does move a little bit slower. So, you know, maybe 3 days after the pandemic, the CEO buys Zoom, but it takes a little longer to shift the digital strategy. And I don't think that that's a shift that anybody wants to reverse. So we're seeing continued acceleration in investment in the digital side of businesses. I think because the reality is this is an investment that probably should have happened at this scale even before the pandemic. And that was kind of the nudge that got it started. And so we're very excited about what lays ahead. I think that's interesting. I mean, the point that they're not done reinventing their digital infrastructure. But then, I mean, Jay, you look at like corporate sentiment or CFO sentiment, is nowhere near what you would expect given the cash levels at the big companies.
What do you think that says about pricing for cloud in the year ahead?
Yeah, I mean, look, the area of cloud has gotten competitive. There's multiple cloud providers. I think the reality is this is such a better deal as a way of getting data capabilities and trying to hire a team of high-end engineers to run software in your data centers. That's a very expensive proposition and it's gotten more expensive as The cost and demand for engineers has gone up, which is something, you know, any company that employs software engineers is facing. And that's really, I think, even accelerated the rise of these cloud services, which allow you to do more with the people you have and have them focus on the part of the business that really differentiates you.
