SaaS Scaling Secrets
The SaaS Scaling Secrets podcast reveals the strategies and insights behind scaling B2B SaaS companies to new heights. Dan Balcauski, founder of Product Tranquility, leads conversations with successful SaaS CEOs, exploring their challenges, triumphs, and the secrets that propelled their businesses to the next level.
SaaS Scaling Secrets
The Energy Equation Critical to Scaling SaaS with Dominik Obermaier, CEO of HiveMQ
Dan Balcauski speaks with Dominik Obermaier, CEO of HiveMQ, a leading enterprise IoT platform. Dominik discusses his transition from CTO to CEO, the surprising benefits of growing HiveMQ from a small town in Germany thats led the company to serving Fortune 500 companies globally. Key points include the significance of personal growth for leaders, the importance of energy management, the benefits of bootstrapping before raising capital, and HiveMQ's approach to open-source and enterprise sales. Dominik also highlights the company's role in the evolving AI revolution and the need for interoperability in industrial IoT. The conversation includes insights on team building, maintaining focus, and the philosophy of lead, build, love.
01:25 Introducing Dominik Obermaier and HiveMQ
02:06 The Internet of Things and AI Revolution
06:38 Dominik's Transition from CTO to CEO
11:25 Lead, Build, Love: Dominik's Guiding Principles
19:28 Building a Global Enterprise from Bavaria
21:24 Bootstrapping vs. Raising Capital
23:02 Early Customer Acquisition Strategies
25:09 The Role of Investment in Company Growth
28:17 Open Source and Enterprise Sales Strategy
32:52 Balancing Free and Paid Features
37:53 The Importance of Understanding Customer Needs
40:48 Rapid Fire Questions and Closing Thoughts
Guest Links
the limit of the growth of the company is the limit of the CEO and the founders. the ultimate currency that every leader has is energy. If you're running out of energy, it shows up. At some point of time when you are working very hard, and you don't recharge and you haven't found what gives you back energy, you will run out of energy and it's very hard to inspire people to change or to end doing any something epic. Like overall, when a company starts, the very first thing is one must build things that people want, produce value for them, even if they don't pay you money it will pay back. Growing is the fundamental thing in life. This is how life works. A look at a plant either grows or it dies. There's nothing in between. And the same, I believe is true for humans. The conversation that you are most fearful of having is the one that leads to the most growth and will very likely solve one of the issues you currently have in life.
Welcome to SaaS Scaling Secrets, the podcast that brings you the inside stories from the leaders of the best scale up. B2B SaaS companies. I'm your host, Dan Bakowski, founder of Product Tranquility.
Dan Balcauski:Today I'm excited to welcome Dominik Obermaier, CEO of HiveMQ, an enterprise IOT platform serving Fortune 500 companies like BMW, Mercedes-Benz and Lilly. Dominik, co-founded HiveMQ and recently transitioned from CTO to CEO. After 11 years, he's built a global enterprise software company generating over 50% of its revenue from US customers, all from a small town in Bavaria, Germany. Dominik, welcome to SaaS Scaling Secrets.
Dominik Obermaier:Thank you, Dan. Excited for the conversation.
Dan Balcauski:happy you took the time to join us. I'm very excited to learn from you. Let's start with a quick overview. Could you give our audience just a brief introduction to HiveMQ. What do you do? Who do you serve?
Dominik Obermaier:Yes. So having you building the central nervous system for our world. So what we're connecting is like the actual things in the world, like machines industry, computers inside factories. Cars and like, pretty much like variables and also what people interact with every single day with the internet and with applications. And so we are at the forefront of what's called the Internet of Things. And we are the messaging backbone for the largest enterprises in the world. So they can produce faster, they can produce with more. We help with things like you can actually unlock your car on any place on the globe. And yeah, at the end of the day, it's about really connecting people, applications, and humans. And now since a few years we are also at the forefront of the AI revolution because what's happening then is the AI revolution. 1.0 was chat interfaces like humans. Speak or write with applications that look like, like interactions, like chat would be one of them. And now what's happening in the same revolution. These so, so-called large language models, they can interact with the world with with things like what's called MCP or to communication. But this is still all the digital world, like we make AI interact with the digital world. And what we at HIV you do is. We let AI also interact with the physical world, with machine robotics and so on. So, we are actually considering us as one of the people and one of the companies who are trying to define the second AI revolution that is about to come.
Dan Balcauski:I wanna just for the benefit of our audience if you can two things. One just in terms of HiveMQ you are a pure play software provider, correct? You're not actually selling And then as well, could you just unpack the world of IOT a little bit more? You used the example of unlocking your car around the globe. I'm not sure if I have that particular use case, but I know you're selling to some very large enterprises.
Dominik Obermaier:Yeah,
Dan Balcauski:for the What that world looks like and why the need for a solution like HiveMQ even is needed within that world.
Dominik Obermaier:Yeah. Then what's very interesting is the world doubles the amount of data that is being produced and consume every two to three years. This is like exponentially high. We have so much data at the globe already. It's incredible and it's just growing and growing on the other end. We currently have more than three times the amount of internet connected devices, which could be anything from a car to to small gadgets like some people have smart watches and others. Two machines in the factory. We have three times the amount of connected devices than humans on the globe. And growing and growing without end. And so what's required is you need an extra backbone or what we call a central nervous system that routes the data, brings the data where it should be, but also governs the data. Just imagine you're a company, you're a manufacturing company, you have supply chain to manage, and of course you want to have all of the data of your supply chain, but you also wanna make sure it's your data because this is your let's say competitive advantage. And you want to get insights out of this. As an example, why is there a delay in shipment? Why can't I produce more? Why do I have so much downturn that I could prevent in the manufacturing settings? And in order to do that, you first need to bring the data into single platform, which also having helps you need to bring the data to the applications that can actually do something with the data. But then you also need to have a sample of time some actions on top of it, what's called AI ahan actions to say, okay. Now something's happening. And I want a system to autonomously do things like shutting a door stop producing or double down on producing things. And all of this requires actual data pipelines. And this is what KU does. So we do everything that's under the hood. So we make the world run by providing this data, type data pipelines, and also the runtime for these kind of ancient actions.
Dan Balcauski:massive increase in data you have machines that are now spewing off data streams that are on production lines
Dominik Obermaier:Yeah.
Dan Balcauski:But, as companies sort of wrangle with this. You mentioned a couple of things of just the sheer volume and velocity of that data as well as the governance and ownership and control over that data becomes important. Did, and correct me if I missed anything in there, but that was my takeaway for what you said. Perfect. Perfect. Well, I'm curious I'm talking to you at an interesting time. I heard you on a couple of other podcasts and not too long ago you were the title on those was you were the CTO and now you are the CEO. Walk me through that transition. I guess what prompted it and let's dive into that a little bit more.
Dominik Obermaier:Yes. Yes. So the company was founded in 2012, which is quite a long time. And we took a very different approach than many companies these days because what we decide is to bootstrap. This means we were founding the company. Out of university and we were trying to win customers based on an early product and based on this scale, the company based on more customers. So it's pretty much like a customer funded business. This is how we started. And in hindsight what was happening is we were way too early to market, way too early. And and so, but the great thing about it is we could, as a company, already build a product. That's really working for us. Trust and reliability are the core promises. So we are at the critical path. We are in the value chain of largest companies in the world. So, if our software wouldn't work properly. People on the airlines, they wouldn't be able to board. They wouldn't get tickets, like luggage wouldn't show up. Basically logistics providers like UPS FedEx are also customers of ours. Like packages wouldn't show up at the doors of customers. So that's really high stakes. And so, what's important for us is to get the engineering right and. I think you mentioned this, like we founded a company in Germany and Germany. I mean, there's a few things we are good at and a few things we aren't good at, but one of the things that German has a good reputation in the world is for German engineering, and I think this applies also to Hy mq. And so in the early days we nailed the product, but our go-to market was something that needed to pick up because we were a bit too early to market. And so I was taking care of the product for the. For the last 10 years, I would say a bit more than 10 years. And I also make sure that the services on top of it. I also ran marketing before we, we scaled the company and hired a chief marketing officer. And now also services is run by some somebody else. But I was pretty much involved in all the strategy as well as the product and engineering. And now since, since this year, I also took ownership of all our go to market marketing again, and also all other functions of the company. And now I am, I'm steering it also towards even further growth, especially in the US and also in Europe.
Dan Balcauski:I definitely second Germany's strong reputation for rock solid engineering. And I'm curious about your transition in, the person who, I mean, obviously you, before you said you, you were running some of the marketing function before you scaled. And I think
Dominik Obermaier:Hmm.
Dan Balcauski:could Reflective of a lot of experience of co-founders where they're,
Dominik Obermaier:Yeah,
Dan Balcauski:their, head janitor at the same time. Right. For,
Dominik Obermaier:exactly. Yeah. Yeah.
Dan Balcauski:curious, as you've now taken the CEO reigns of scaled organization, what surprised you most about that shift?
Dominik Obermaier:So being a co-founder and also being on the board for like, since forever not a lot of surprised me, but there were a lot of things that I wanted to give it a difference spin. And so this is the thing about companies like you companies go like through the stages of maturity. And there is a saying that you need to reinvent the company every single time you're going through something. So, I mean, there's a lot of data out there. Like when you're in a seed phase of a company, you have very different problems to solve. Like finding product market fit is the most important one. Like having something like build something people want, this is the very first thing to focus on. And then the next thing is. How do you scale it when you go into a growth stage and then at some point of time it's about, okay, how, not only how can you scale this, so, but how can you scale it efficiently when you're going more towards public markets and the thing is, what I learned from a lot of mentors is. And I experienced it myself. You, it's not the company that needs to reinvent. It's the people running the company that need to reinvent themselves, which in our case is founder led. This means personal growth is not optional. It's mandatory because the limit of the growth of the company is the limit of the CEO and the founders. And so the actual work is to working, of course, on the business, but the actual work is inwards. To actually become the person that can grow the company.
Dan Balcauski:you think about that growth, and I know you're still early in, in your transition, although, obviously you've been involved as a co-founder and at the board level for a while have you pinpointed any mindset shifts or growth areas that have been particularly important in your new roles?
Dominik Obermaier:Yes. So I have I have some rules in my life that I used for many years used and I also brought it to the company. And I mean, people around audio won't be able to see that. But I have a medallion with me that I have like every single day and. It says lead, build, love. And I think these are the three things that define that, that I use as guiding principles for myself. And I decided to use them also for the company. And what I mean with this so, so lead. So first of all, one must lead your, you must lead yourself in order to be able to lead others. The work with leadership always starts first. Inwards and then also outwards and basically as a company leader, this is the obvious thing because you're leading others, but it's important. It's important to, to understand. This is not a hostage situation. People can free, can choose where they want to work. And so leading also means inspiring for action and for positive action for the world. But it must start inward. You cannot inspire others if you don't draw from the inspiration by self and getting the pros and that can inspire others. This is lead and build is, I mean, this is what. What founders do they build companies. It's very straightforward, but it's also building a life. It's like we, we have limited time on earth. Very limited. There are some people these days who believe we can live forever, but I mean, we don't know at this point of time. At least it looks like people won't live forever and most people won't live, live forever. So time is limited and so we should make the best out of it. So, so what we do is build, so build a life, family. Your body, respect your body, like all of these kind of things that also start inwards. And this results in this, my belief results in creative energy that can be unleashed in a company to build something epic. But again, it must start inwards. And the third thing is love. This is the reason why we exist. And even in business and love shows up as empathy. And as I said, this is not a hostage situation. This is work and. And if you, and the very most important thing that I learned from many of my mentors is love starts from the inside. If you don't start you to love yourself, you cannot show the empathy towards others, in a way that also inspires others. And so, and love in business shows up as custom obsession and all of these kind of things that are important. But again, it starts the words and. And I brought this philosophy into the company. So, so we are leading with high standards. We are building with urgency and we are loving with empathy. And these are really the areas that, that we look at as a company. And that I also look at, and these are the three guiding principles. How I'm looking at things and. And yeah, so some of it we're not a big change, but at least we surfaced it and now this is then also a culture change that, that comes from that because as I said, it starts inwards and then it shows up in the company and then you have a, this kind of new set of standards that are emerging.
Dan Balcauski:Lead build love. I'm curious on the first thing on lead. I mean, I definitely agree with the sentiment that it's difficult to inspire others if you've. sort of feel that inspiration. I'm curious though, everyone's, CEOs, have nothing. It's a, it's the old problem of being the leader of an organization or a country. It's like the easy problems don't make it to your radar, right? Like the wins are, at any given eight hour workday or 16 hour workday, whatever it might be. I'm sure everything is like burning fires. And so I imagine sometimes that inspiration is maybe hard to come by. Or. Or maybe it's just not, not there. Just naturally are there any ways that you found that either sort of keep you in check of, like, like making that sort of obviously you have the medallion, so that's a, I think a probably a powerful reminder that's always with you. But like, like how do you think about sort of, staying in that sort of or generating that inspiration for yourself?
Dominik Obermaier:It's a okay. It's a very interesting question. I think it starts with purpose for me, every. Every single day when I wake up, and I would be lying if I would say I wake up full of energy and conquer with the world mindset every single day. But what works for me is really coming back to the basics. What, why are we doing this? And most so, especially when you're on a mission that's larger than yourself, most of the actual problems are very small. Even in the moment, they're big, obviously, otherwise there wouldn't be issues. But, but working backwards from the mission, it's always like, will I care about this in two years? Is this really relevant? Is it make or break? Sometimes it is, by the way. When it's really make or break, then you should actually work it. But very often it's really just focus. There is so much distractions everywhere. And it's not only distractions by, oh, there is whatever social media and office I'm talking about in work escalation here or there. This doesn't work. Somebody needs help here. All this kind of things. But the ultimate currency that every leader has is energy. If you're running out of energy, it shows up. It's not the time because like people say, ah, you just need to work whatever, 24 hours. Yes, you can do that in case you don't run out of energy. At some point of time when you are working very hard, hard, a lot and you don't recharge and you haven't found what gives you back energy, you will run out of energy and it's very hard to inspire people to change or to end doing any something epic. If the leader doesn't show up with energy and there's suffering philosophies like it, it works for some people by whatever, pressuring and other things. I don't think this is the best tool for at least what I found is showing up is the best. Manage all your energy and then drive positive change, and then also focus on what needs to be done and simplify. Simplify, simplify. Everybody will convince you or try to convince you. The world is complex. It is, but actually life is very simple. And our brain tries to make it even more complex and complicated and so on. But at the end of the day, it is simple. And for some of the listeners would say, ah, Dominik, I don't believe that stuff is complicated. Imagine a following. It happened to be multiple times that when I had an issue in what my private life, something, a complicated situations on there. When I talk to a friend for advice, people say, don't make this. It's simple. Why don't you just do X, Y, Z? And then I'm like, yeah, you're right. And just making it up in my head and making it more complicated. And the same is true for business things. Things are not complicated. Things are simple. But since we are the protagonist, they're often in our problems. We are very often part of the issue, and this is where our brain strikes us. And so this is for me, a bit of a constant struggle. But it seems to be a constant struggle with most people.
Dan Balcauski:love what you said there around focus because I think, you know where that energy drain sometimes comes from is you feel, there's so many things burning. You can't fix all of them. You're sort of constantly sort of pushing on everything just a little bit at a time. But if you're able to sort of focus, you're able to actually make, be like, well, all those, all these other things are secondary and make progress. There is something. Really energizing and sort of reinforcing about that focus area. And I used to have, I used to be a product leader in different organizations and, product leaders, not exactly like a CEO, but in many ways, there's all these voices telling you what you should do, what you should focus on. And I always had this experience as like, if I was ever in that situation. The
Dominik Obermaier:Right.
Dan Balcauski:and I'll give to other product leaders, like go talk to customers. Like if you are in that
Dominik Obermaier:Yep.
Dan Balcauski:cause always found that incredibly clarifying because like, oh, all this other stuff is noise inside the building about what people's opinions are. And as soon as I talk to
Dominik Obermaier:Yep.
Dan Balcauski:like that would Also it would have that impact, right? I mean, tying it back to your idea of like, mission and why are we doing this? It's like, well, like these people on the other side need us. They're getting, they're excited or satisfied, like we're solving real problems for them. And that always was really clarifying and energizing. So I love your answer there. I do wanna shift a little bit. So, hi, MQ is based in I pronounce it correctly?
Dominik Obermaier:Yes. Yes.
Dan Balcauski:which is outside of bunich in Bavaria. It's not exactly a major tech hub yet you are generating over 50% of your revenues from US customers. I'm curious how you built a global enterprise software company from a small German town. I.
Dominik Obermaier:Yes, it took us quite some time as I mentioned earlier because we were a bit too early to market and so we needed to figure out a lot of things along the way. I think the first 10 years, these days could be compressed actually into two to three years easily of fi figuring things out. But also we didn't do animation investments. Like the very first investment round was in 2021. Where we got out the capital mainly to, to go fast into the US and the essence then we raised quite a bit of capital. We were able to deploy this properly and then also scale also in the us. And these days KU is a US as well as a European company. So we are not, while technically we still have our beautiful headquarter here in, in, in Germany, which is very close to the Munich airport, which is one of the features of the town. Actually it's closer to the Munich airport than mch. And since we are a international company, it makes travel really easy. This is why we chose that, that as a hub. But yeah, it's it's just like we are located there, there was a university there, and so we started the company out of there. And this is why we technically we are still here, like the headquarters still here. We got a pretty good deal to, to have one of the, a beautiful office here and one of the three. Very iconic buildings in the town. It's an 80,000 people town. And so yeah we like it here. People, all hiv qs coming in globally for meetings and events. They also like it here. So we are happy, but we are a global company. We are, we have people, like more than one third of the people is in the US and we expect the maturity of people is going to be in the US in the future.
Dan Balcauski:Well, you've talked about this fundraising element. So boot your bootstrap for nine years before taking institutional money. That these days it seems like people are raising money before they even necessarily have a product a lot of times in the us. I'm curious your perspective on the advantages of that approach, did that approach allow you to build in a way that you couldn't have if you had taken capital earlier?
Dominik Obermaier:I mean, it's an interesting question. Like overall, when a company starts, the very first thing is PE one must build things that people want, build things, people want. This is basic why Combinator? What? Teach, why Combinator things I think they want build something people want. And I mean, it depends a bit what kind of business you're in. Like if you are building a software business like a SARS business. Or on cloud infrastructure, like there is, okay, you need a laptop. Most people have a laptop these days, even if they don't find a startup. Cloud infrastructure is really easy these days with AI coding tools cranking out a prototype that doesn't even need to work just to, to pretty much like structure the ideas is extremely easy. So I'm wondering like why in order to build something people want, why would you need a lot of capital? What you need us? You'll have a raise against time. And you need to, nobody's going to hire people before you find product market fit. I mean, some people do, but for most software companies, they don't need that. This is why you have a founding team, or at least you can bring in a very early engineer, but having a, but,
Dan Balcauski:is, is probably longer than most people would think that the
Dominik Obermaier:yeah.
Dan Balcauski:you probably hit product market fit well before the end of the nine year period.
Dominik Obermaier:Yeah. Right. I would say we hit that in 2000, I would say 14, 15 when we got the first customers. Like we got BMW as a very first customer for all of the car sharing Mercedes-Benz for the manufacturing sites. We also very early on, got customers in the US, like Dell and others, but this was based on a product, and this was all inbound. We didn't build enterprise sales. We built a product, we positioned the product, we. We did some very, let's say, capital, inexpensive things to, to get in front of these people so that they learn about it. We did, build, building a thought leadership brand. Back then blog posts were one of the things, there was not a lot of content out there. And so we built like a lot of the initial content around one of the technologies that we helped pretty much promote, which is called NQTT. And we are still benefiting from this, so, so we made sure, okay, that we are all of the keywords that somebody. In the problem domain possibly ever would go after they would see us. So building a magnet, pretty much like, from a marketing standpoint, it's not expensive to do, but it's it takes a lot of time and it also requires expertise. We didn't do any ads or anything like this for a very long time. And so the majority of, let's say the first one or 2 million of recurring revenue was all done organically by pretty much. Not even trade shows. It was by speaking in front of our target audience at conferences was by blog posts, was by educating the market and evangelizing the market, which again, was the playbook that worked in 2014 to 16 These days, the playbook would of course, look different based on today's technologies. I would not focus on SEOs as much these days anymore if I would found a startup right now. But I would absolutely look at, Hey, how can I make sure that chat BT shows me as a trusted source versus the competition, these kind of things. So it requires different tactics but again, it comes back to a philosophy. Build something people want. Even marketing, don't just tease them and do this kind of understand things. Build something people want. Produce value for them, even if they don't pay you money it will pay back. This is how you build something that's growing and I still believe the tool is there.
Dan Balcauski:Well, when you did finally decide to take investment as I understand it, you were already profitable and and growing. I'm curious
Dominik Obermaier:Yeah.
Dan Balcauski:money change the company?
Dominik Obermaier:It changed the company. In very good ways. So first of all, if you're taking institutional money, you have a better access to talent pool. So especially if you're looking for senior leaders very often the senior leaders in the market, especially in the SARS market and software market, they are looking for companies that might be the next unicorn. So you won't be a unicorn, by definition, you can be a unicorn. If you don't raise money, because the valuation is based on what external sources say. And if you're just a private company, if you owe money, what are you worth? Nobody knows except if you, IPO obviously. But in order to go there, you need talent. And so this was one of the reasons why we raised the money, because it was clear to us to attract the, also the leaders that we want to have in order to grow the business. We also need to be present in the capital market. And this also helped us. And the, the other thing is it allowed us to go faster. So if you just need to make, earn Monday in the enterprise sales, you have, depending, in our case, you have more than six months sales cycle. This means even if you are about to close a deal, then in six months, and then it takes another three months until they pay you. So, until you, if you bootstrap, if you don't have the money in the bank, you can't invest it if you're very conservative. But if you are taking. Capital and whatever. You raise a few millions of dollars, you have them in a bank and you can spend them. And then you're with your expectation that at leads to, to, to growth down the line. And I mean, in our case it worked really well. But there's also risk attached to it. So if you don't have anything customers want, the risk is pretty high. Like build, like raising capital without having product market fit is something I'm not quite sure if I would do that. This would be way too stressful because you're. You're try, you're selling and you're building at the same time. You have a non-function go to market engine and a non-functioning product, likely also non-function and functioning. You have, everything is dysfunctional at this point and this is a mess that like leads. To a lot of founders, and I have known many founders personally, it leads to things like burnout of people. It leads to bad decision making, and finally it leads also to a great opportunity and great idea that just vanishes because it couldn't be executed against. So I think some people can do this, but in, in my case, I prefer building something people want and then scale it from there.
Dan Balcauski:Well, that's fantastic and I can understand I guess all those transitions. And definitely the access to better talent as you have the verification or stamp of approval on a term sheet of what your valuation is. I could see how that was being incredibly helpful. And just also fascinating that you were able to grow. Fast, organically especially with enterprise level customers through through the methods that you mentioned. Yeah. We are in constantly changing worlds with now needing
Dominik Obermaier:Mm-hmm.
Dan Balcauski:the we're worth reaching out to. It's a, it's an interesting world. I for one, welcome our new robot overlords. Well, that foundation that you built through I guess bootstrapping it, building through your receivers have set you up well for your current. market approach. I'm curious about your strategy because you have this in interesting combination of open source with enterprise sales. So like you have you have a product high VE q Edge that's free at open source as I understand it. I guess what what drove that decision to pursue the open source route with that offering?
Dominik Obermaier:Yeah, so I'm having to access a product, what we call is in the data acquisition layer. So you have if you look at a factory, you have a lot of history in there. And the thing about a factory is usually you don't change things that work and very often you don't change things that don't work by the way. De depends on the company and. And also the what's called the PLCs. These are pretty much the small computers that interact like with robots and other things. They're designed for a very long lifespan, so it's not unheard of that you have a PLC from the eighties or nineties in the factory today. And the thing is, if you look back at the world in the nineties and the eighties, this was a very different world of than today. It was not built for interconnectivity in all of this. And so. This results in more than 150 languages of these devices in factories that they speak. It's like, imagine, like, like humans speak, like I would, if I would speak German, you speak English, we would've a very hard time understanding of each other's. And so what you require is you need a common language. So the reason why the both of us can communicate is because we chose to speak English. You might have it as a native language. I do not, but I still can speak the language so we can interoperate and we can convey ideas and things our language. And so the same is happening in the factory. And we found there's not a lot of companies who try to tackle the problem of making all these things speak to each other for multiple reasons. And if I look, if you look at historically all of these different vendors, they have no intention to make their data accessible to other vendors. Because if you buy from this company, the hardware, you also buy the software because it works. You can buy other software because it doesn't work. And so they, they pretty much build very large, almost like empires ba based on their proprietary nature. The thing is, and if the, looking back at the history of compute and internet, it shows us one thing, interoperability is the winning technology. Always, this is the history of the internet and it repeats and repeats all over again. And we, we thought why is nobody tackling the problem? Like we, our customers are begging us to help them to get insights based on your machine data, but the machine data is not accessible. And some of the players who want to play in that space, they build again, a proprietary platform and doesn't make it accessible to others. And w. And our core belief is in open standards and interoperability. We believe the world should be able to communicate in a way that even outside of HighQ, really like, I have no problem if people use competing products as long as it is using a, an open standard, because this is how we advance, advance humanity. And so long story short, we decided, okay, why don't we build. That component that makes the data accessible. It gets the data out into our central nervous system. This build open standards, but can also push the data back. And and we decided to do this o open and free. First of all, because there is not a lot of money in the market to be very frank. This is operations technology. This is very conservative. There's no lot of budgets. And the other thing is we want to make the data free and accessible. To provide value. And so, free and open source is absolutely fine for us. We figured out while making it free and accessible, customers wanna pay for that because of support and other things. So we make actually a lot of money there. But the initial idea is still the same. Take it, every OT engineer listening to this can take home to edge and can free all of the data in the factories and make it accessible to other systems. Do analysis, do AI and other things. And we think this is important because we think it must exist.
Dan Balcauski:so there's a massive protocols, languages, sort of a Tower of Babel situation. None of these systems talk to each other and
Dominik Obermaier:Yeah.
Dan Balcauski:that layer but then also all the adding into that, all the elements of, yeah, there's not really industry wide push to make these systems interconnected because they can create vendor lock in within their own sort of,
Dominik Obermaier:Right.
Dan Balcauski:or empires to sort of push that out. And then, with the other side that it's budget. So these, the folks who are in that world don't really have, money to spend in that side. You do said that they do, like folks do pay you. I am curious about that tension. So, within, so you have the open source platform. I'm curious how you've thought about, okay, what do, what is the barrier between what we give away and what we charge for? Is it purely like, more like Red Hat Linux model where it's like you're just paying for support contract? Or is it, are you actually building additional monetized features and capabilities on that platform that you charge for Additionally?
Dominik Obermaier:Yeah, so how we look at things is like for whom is that? And. And what kind of value does it provide? So as an example, if somebody is an OT engineer and they really want to experiment we make it as easy as possible. I mean, you can get from hq, you can get HQ Edge for free. We also have what's called a broker, which is like the component that also distributes the data to the cloud and back. For free. You even get the cloud for free at Hyper Q. It has limitations because like we, we pay for this. And, but we support the community here. And it's design that a single person can get value. This means they can get the data, they can do something with the data, they can route it to their applications. They can even, whatever, route it to a dashboard so they can show their boss what they've done and so on. But we also know there is not a lot of money in there because there's no budget. Because like in order to get to budget some at some point of time, these people are very often innovators in this company. And so they need to, first of all pretty much learn about technology, prove the technology, and then also bring it into the business. But. The, but frankly we have every month every quarter, tens of thousands of people are signing up for our, even for our free cloud, home automation. Other universities, lot of professionals, sometimes without a real project, they want to also do something and just educate themselves. So, and we are updating, supporting all of this. The next thing is that the professional tier, this is really built for teams, small teams that try to innovate. They try to do something and also have a project, usually a bit of a budget also available because they get asked to solve a problem very often. It has to do with digitization. Very often it has to do with acquiring the data and actually making, demonstrating that they can use the data for AI use cases. It is a big driver these days. And there, there's others. And we also designed off the features as for them, these guys don't need single sign on. They don't need chief information Security signing off on all of the security things. Why? Because it's small scale. It's not enterprise wide, and they're still proving a point or have a small production installation. This means they're connecting a few factories. One factory usually having a live dashboard and then also showing to the leadership, Hey, this is what you can, what we could be doing. And then Enterprise is really like full platform Enterprise Square security. We can scale across hundreds of factories with customers with more than 300 factories that connect all of the data. Happening on the shop floor and bringing it together, using it for ai, machine learning, generating insights and improving overall equipment efficiency and other things. And this wouldn't be possible with the free tier, obviously, but we decided carefully so we can help. A company and also the individuals in the company guide them through the journey to unlock the value. And then also at the end of the day, you still need budget. I mean, we are a company. We're not a charity. Not everything is for free, but also the approaches and the value we unlock, like we, like literally we save, serve our customers millions of dollars. We help customers produce. Medication six months before their estimated timeline and bring it to market saving and saving millions of people's lives by doing that. And I mean, this is our, but this is our enterprise tier. You wouldn't do that with open source.
Dan Balcauski:Dominik if you were here, I would hug you right now. And maybe that wouldn't be a proper German thing, but I love what you just said. So I, when I'm not doing a podcast, I spend all my time in the pricing world and what you just outlined and what you just was beautiful articulation of why I, what I try to get into people's heads. When you're thinking about your bundles or your offers. What you described, there was a perfect example of aligning those two customer segments with defined contexts and defined needs. It wasn't
Dominik Obermaier:Yeah,
Dan Balcauski:hey,
Dominik Obermaier:I,
Dan Balcauski:like might pay for this, so we put it at the upgrade tier. It was very clearly defined in terms of is this feature for this person in this context, and therefore it goes in this plan. I am
Dominik Obermaier:yeah.
Dan Balcauski:often there Even with there, so like, maybe this applies to either your enterprise or your professional segment. So I'm curious if you've run into this situation where potentially is a capability that would, be needed in those environments, but also like, can be incredibly impactful just at the open source layer in terms of driving. Value across the ecosystem. I'm curious how you've thought about, like, I, I dunno if those situations have existed for you. Sometimes they come up more,
Dominik Obermaier:Hmm.
Dan Balcauski:or not. guys have had to make sort of those trade offs and like, yeah we could charge here, but it actually makes sense for us to put this in the, into the open source overall just to drive the overall health of the ecosystem. Instead here's how you navigate those trade offs.
Dominik Obermaier:So one of the things is, what I found is in 99% of cases, everybody's wrong, and the only way to validate is with, not by having a strong opinion that's articulated in a fancy way, but by actually trying it out with customers or the target audience, which could also be, in this case, community, open source. It's very surprising very often, especially also other things like UX and other things, like, it's very surprising when people do have a product, when they don't know how the people building it think that it should be used. It's very surprising. And so it's all about understanding, know your customer. Know your customer is so important, and either by doing it, especially for early stages, be with a customer. Observe them. Ask them. Sometimes people, but people don't, people lie all the time. They say, oh, I would need that. Understand Why do they need it? What's the problem they wanna solve? I want this feature. Interesting. What do you try to achieve? Oh, this is what I want to issue. Okay, cool. Here's another way of doing it. Hey. Perfect. And so it's not like building a software is not order taking. It's not being an Ivo tower and just coming up with a fancy idea and build it. It's also not order taking from a customer. It's deeply understanding the problem to solve. And also the other, the next question is, should we as a company even solve the problem? You can't solve, you can't solve world hanger with software as an example. This would be very bad. This is obvious obviously but, this kind of franking products exist where, where you add and add and add and so validate with the market where they, with the customers. And la last point on this, there is one way door if you make something free and available and then take it away. Is much, much worse and almost impossible sometimes than doing it opposite, being conservative, and then add more value to the three tiers over time which is what I would recommend to people instead of going the opposite route.
Dan Balcauski:In earlier in the conversation we were talking about AI and you mentioned the idea of MCP, which I think was, is an interesting example that maybe other people can relate to because is anthropic the makers of Claude came out with the MCP standard much like, USB,
Dominik Obermaier:Yeah.
Dan Balcauski:idea of anything in anything unless you're Apple, of course. And then they hate everyone. They make you buy$90 connectors. But everyone else has
Dominik Obermaier:Yeah.
Dan Balcauski:hey, we want Every device to every device and not have to have. Custom
Dominik Obermaier:No.
Dan Balcauski:for it. They were like, Hey, we're, there's this broad universe of ways we think we could add capabilities to LLMs and we could make this sort of, we could build direct proprietary connectors or we could create this thing and then release it to the ecosystem. And I think it's just had such a positive impact on,
Dominik Obermaier:Mm-hmm.
Dan Balcauski:still And TBD, like what that will evolve
Dominik Obermaier:Yep.
Dan Balcauski:But I think Example that maybe is a little bit more relatable to folks of like, yeah, they could have just sort of built that proprietary, but like, it is there, there is that sort of like, okay, the whole ecosystem will benefit for it. Dominik, this has been awesome. I would love to talk to you all day. But I wanna be respectful of your and the audience's time. I want to close it out with a couple of rapid fire questions. You ready?
Dominik Obermaier:Yeah, I am.
Dan Balcauski:When you think about all the spectacular people that you've had a chance to work with is there anyone that just pops to mind that's had a disproportionate effect on the way that you think about building and growing companies? Now?
Dominik Obermaier:First of all, my wife. Not that we discuss building companies, but I am learning more and more the more I learn about myself, about relationship, about humans. The more I learn about building companies. And the second thing is a bit more tactical is I a lot of mentors along the way. I had so much great people that helped me. There is people like I mean
Dan Balcauski:Name them. Go ahead.
Dominik Obermaier:well known, so, so people like all of Schmitz as an. I'm currently learning also a lot from our new chairman, Barry Liebert. One of is one of them. So there's a ton of people. Also, I learn a lot from the investors. I learn a lot from my executive team, at the end of the day. Like growing is the fundamental thing in life. This is how life works. A look at a plant, a plant either grows or it dies. There's nothing in between. And the same, I believe is true for humans. And the day you stop learning, the day you think you've figured things out, this is the day you stop growing. And and so yeah I'm trying to learn as much as possible because the thing is. I try to be more right than wrong but on average I am too often wrong and so I want to learn much more.
Dan Balcauski:so, so props to your wife. I do wanna concentrate on the next person you mentioned. So, Olaf Schmitz, I believe you said his last name was. If you think about, conversations you've had with What's the best sort of direction or piece of advice that, that he's given you as you've grown as a leader?
Dominik Obermaier:When I started working with him, he said, Dominik, all of the organizational problems you will ever face are HR problems. And I was like, what? This doesn't make any sense. It turn, it turns out most of the distractions, most of the issues of a company, the reasons companies grow or die, happen with the people. And this is culture. This is who you bring in, what you accept, what are the standards? How do you structure work? Very important. You can have the best people in the world and you have a crap organizational structure, and then people fail. At the end of the day, building a company is over proportionately hr. And the thing is, many leaders, and especially founders that just don't care about hr, somebody should do hr, but it turns out that actually this is the way how you not doing the details are very important. Solving the detailed problems is not what I'm talking about, but setting the tone, setting the culture, be 100% intentional. How you structure the company, who you're bringing and why.
Dan Balcauski:Well, if I gave you a billboard, you could put any advice on there for other B2B SAS CEOs trying to scale their businesses, what would it say?
Dominik Obermaier:If I would have a billboard I think it, it wouldn't only be for SA CEOs, the bill I think it would provide on the billboard. God put what you're looking for at the other side of fear.
Dan Balcauski:deep. I like it. Was the the what the treasure seeking? Is it the darkest part of the forest? Something along those lines, I think is another way to,
Dominik Obermaier:It
Dan Balcauski:that
Dominik Obermaier:is it's always, I think there's also this it's in life in general. The conversation that you are most fearful of having is the one that leads to the most growth and will very likely solve one of the issues you currently have in life. It's always the same.
Dan Balcauski:Dominik, this has a joy. If listeners want to connect with you, learn more about Hi. HiveMQ. How can they do that?
Dominik Obermaier:The internet like mq.com is our website. I am on LinkedIn, just put in Dominik Meyer. Happy to connect. Also yeah, happy to exchange any further thoughts about building SaaS companies and some of the other things I talked about. So, yeah, so people can reach out if they want.
Dan Balcauski:those links in the show notes for listeners everyone that wraps up this episode of SaaS Scaling Secrets. Thank you to Dominik for sharing his journey and insights For our listeners, if you found Dominik's insights valuable, please leave a review and share this episode with your network. It really helps the show grow. Thank you so much.
