Asana, Inc. (ASAN) Earnings Call Transcript & Summary

[Presentation] Hi, everyone. Welcome to Asana Investor Day. I'm Catherine Buan, Head of Investor Relations at Asana. I know many of you know me already, and I'm super happy to be a familiar face hosting you for the day. So before we begin, we have a couple of reminders. First, management may be making some forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or performance to be materially different from those in the forward-looking statements. For a more detailed look at our safe harbor, please refer to the slide on the screen. Also, we may be referring to non-GAAP financial measures. These non-GAAP financial measures should not be considered a substitute for GAAP financial measures. And a reconciliation of GAAP to non-GAAP is available at the end of this presentation. And actually, most importantly, as you can see, we're broadcasting live from our San Francisco office. This office has been empty and our office is closed since we had to do work from home for the protocol for COVID-19. We just have a few members of our leadership team here and a small production company on-site. And for the safety of all who's involved, we're following strict COVID protocols, including sanitation, temperature checks, masking, social distancing. And the only time that we aren't in mask is when we're on the air. Okay. Well, let me know -- let me show you who's here today. We have Dustin Moskovitz, our CEO and Co-Founder; Tim Wan, our Chief Financial Officer; Chris Farinacci, our Chief Operating Officer; and Alex Hood, our Head of Products. And we all have been wearing masks until this moment. All right. So let me provide a framework for today. Our mission at Asana is to help the world's teams work together effortlessly. We value clarity and we prioritize the customer experience in everything we do. So in that same spirit, we thought carefully about how our objectives for this event today would be. We have three. First, we know you need critical information about our company, our business and our products. Second, we know you need Q&A. You want to get to know our management, understand what drives our decisions and informs our strategies. And third, we know you needed to be in a concise and engaging experience because I'm sure you've been sitting in the same home office for 6 months, sitting probably in the same seat and engaging with the world through this video screen. So from our Asana home office to your home office, thank you for joining us today and we hope that this event will accomplish all of those things and provide you a great experience. Okay. Well, let's take a look at the agenda slide. We have 3 major sections. First, the overview of Asana and our products. Next, we'll go through our go-to-market strategy and our culture. And finally, our financial overview. So for each section, we'll have prepared remarks, we'll get some insights from our customers and then, of course, we'll take Q&A. Also note that during any point in the program, you can send a private chat to IR. There is a chat mechanism on the right side of your screen and you can send me a note. You can queue up your questions and you don't have to wait until the Q&A session to queue up your questions. So feel free to queue that up. All right. Well, before we start our first Q&A session, we'll begin with an overview of the Asana story from our CEO, Dustin Moskovitz, followed by a product overview from our product leaders, Dana Barrett and Alex Hood.

All important projects in the world have one thing in common. They all involve groups of people coming together to achieve a shared goal. Our Co-Founder, Justin, and I started thinking about this idea while we were at Facebook. I was leading the engineering team there and we're both just consistent shocked and frustrated by how difficult it was to coordinate everyone. We're wasting an incredible amount of time in meetings, these long e-mail back and forth. And so we ended up building an internal tool to help everyone track their work. And the results were really great. Almost immediately after introducing it, everyone was much more on the same page about our plans. And the time spent on the coordination itself, the work about work, dropped off a cliff. We recognize that the problem is universal, and so we left Facebook and created Asana to bring the solution to the rest of the world. We launched the paid product in April 2012 and we've been growing quickly ever since. Just 8 years later, we've grown to over 82,000 paying customers and we serve millions of people across 190 countries. Last year, revenue grew 86% to $143 million. We've been helping to introduce the world to the new work management category and analysts have consistently recognized us as a leader in that space. Everything we do here is grounded in a focus on our mission, which is to help the world's teams work together effortlessly. So if we succeed at our mission, the work we do here can make every one of those groups vastly more leveraged and effective. To understand how to deliver that value, it's vital that we have an extremely well-functioning team ourselves. That gives us more credibility when we talk about best practices for teamwork in the market, and it allows us to intelligently integrate those practices directly into our product as we learn and grow. And of course, it helps us achieve our own business objectives, which is the same value that we're working to create for our customers. With that in mind, one of the most important values at Asana is clarity. We try to ensure that everyone on the team understands their responsibilities, the tasks and processes that fulfill them and how they relate to the surrounding work and ultimately to the strategy and mission of the company. When we succeed, it means that everyone understands where they should focus their energy so they can stay in flow. They work more effectively because they understand the plan. And importantly, they're more engaged with their work because they understand why it matters and exactly what's expected of them. So that clarity is a key way that we're able to move really quickly. We're proud that today Asana is often recognized as an outlier work culture. But if we succeed at our mission, that means helping every one of our customers similarly become the best possible versions of themselves. So now let me tell you about work management. The biggest thing slowing down teams today is the fact that they now spend more time coordinating work than actually doing it. This is a graph representing data from a survey of over 10,000 knowledge workers, and it shows that the average one is spending most of their time, about 60%, coordinating work. So that means they only have 40% of their time left to spend on the strategic and role-specific work that drives results for the business. Imagine how much faster the world's teams could be if we could increase that number. So how did it get this bad? Well, in recent years, we've seen a huge increase in collaboration, thanks to introduction of powerful communication tools. But productivity has only increased very modestly in comparison. So all this collaboration generates a firehose of information for people to have clarity about what's most important and where they should focus their attention. This makes team leaders feel disorganized and they worry about missing deadlines and having work fall through the cracks, and everyone on the team feels overwhelmed with requests. You're unsure if they're working on the right things or if they're doing a good job. We designed Asana to solve this problem. Effective team collaboration includes the 3 Cs: content, communication and coordination. Teams have invested heavily in technology for the first 2 categories, but in most cases they haven't invested in the coordination layer. Coordination is all about clearly answering the question: who is doing what by when? Teams that haven't invested in that coordination layer have had to resort to makeshift devices to coordinate their work. Things like long status update meetings, shared spreadsheets and sticky notes on whiteboards. Those solutions just don't scale. Spreadsheets were designed for financial modeling, not for team orchestration. And other teams have invested in traditional project management tools, but those require special training and so they aren't used usually beyond professional project managers in a centralized part of the org. And more importantly, they're not connected to the underlying work because they aren't up-to-date enough to be the source of truth about what's actually happening in a team. So that's why we built Asana. Asana is one of the pioneers of work management, an entirely new category of software designed to give teams clarity of plan, process and responsibility. So we're solving the problem of team coordination and creating a living system of clarity for work by bringing team's structured and unstructured work data together. We're helping our customers create a complete map for how work happens in their organization. Asana helps teams orchestrate their work. We use Asana to manage everything from employee onboarding to product launches to marketing campaigns. Each team member can see the work in whatever view they prefer, for example, a task list, a Kanban board or a Gantt chart. and Asana provides a suite of features to help teams plan, manage and automate their workflows. And finally, since workflows often span several applications, Asana serves as an integration hub with the other apps teams used to complete their work. We support over 100 integrations, including products from Microsoft, Google, Salesforce, Atlassian, Adobe, Dropbox and more. The work graph data model enables our core differentiator: a complete, fully connected, accurate and up-to-date map of the work happening in your organization. The work graph represents all the units of work like tasks, ideas, goals, agenda items, information about that work like relevant conversations, files and status information and how it all fits together. By keeping all that data in one place, you get a single source of truth about project progress, which means teams eliminate the work about work previously required to share information. So the big picture of our vision is to create a platform that combines human and machine intelligence to automate all the work about work that makes working together so difficult today. And that means giving teams time back for the strategic and role-specific work that drives results. Our North Star for that vision is what we call the pyramid of clarity. We know organizations work best when everyone on the team has clarity on the company's mission, its objectives, the projects and strategic initiatives needed to achieve those objectives and who's responsible for each individual task. So everyone on the team should know what their team is trying to accomplish and how their own work ladders up into those higher-level goals. We built Asana because the work people do together matters. We're proud of how often teams tell us that Asana gives them the clarity to make their work today more effortless, and we feel like we're just getting started.

Hi. I'm Dana. I'm the Head of Product Marketing at Asana. I'm going to walk you through a product demo to show you how Asana gives teams clarity at every level of the organization. Meet Chris. He's a graphic designer at Portoa, a fictional company. He used to struggle to keep his work organized. But since Portoa started using Asana, coordination has become so much easier. This is the Asana home screen where Chris starts his day. It brings together his most important tasks and projects. From here, he can access My Tasks. Asana's work graph gathers all of Chris' tasks in one place, helping him stay organized. Here, we see a task, the main unit of work. It begins with an assignee and due date. This is the essential information every knowledge worker needs to be successful: to answer the question who is doing what by when. Further down, we can find details about what Chris needs to do to complete this task. All the content he needs is right there, thanks to our native integrations with services like Google Drive, OneDrive and Box. Gone are the days of searching for files. Tasks are also where collaboration happens. Teams can discuss and share ideas to drive work forward. Now that we've seen how My Tasks helps each individual, let's move up the pyramid of clarity and see how teams use Asana for their projects. Meet Michelle. She's the Marketing Director at Portoa. Michelle's team is working on this year's brand campaign. Here is the campaign project in Asana. Anyone on the team can see the different tasks for this project in the list view. But this is just one of the views that the team can use to organize a project. They can also see this project as a Kanban board. In this view, tasks are represented as cards. Each column shows what stage of completion each unit of work is in. And here is the time line view. In this view, Asana helps teams see task dependencies. Before, teammates would need to schedule a meeting to update due dates and get on the same page. But now it's automatically done for them in Asana. And in the calendar view, teams can easily see key dates and manage deadlines. With these views, teams can organize their work data in the way that best suits each project. This helps them stay coordinated and better collaborate. Conversations that impact projects can happen anywhere: in e-mail, meetings or chat, on desktop or mobile. Asana helps teams capture these updates so that information doesn't get lost. Let's take this message that Michelle just got over Slack as an example. Michelle and her colleagues align on the assets the marketing team will need for the brand campaign. With Asana's integration with Slack, Michelle can create a task based on this chat and add it to the campaign project. But since this task also requires support from the creative production team, Michelle multi-homes it to both the brand campaign and the creative production projects. This multi-homing functionality is a unique differentiator that is enabled by Asana's work graph. Now teams working in either project know next steps and can stay on the same page. Asana automatically assigns this creative request to a graphic designer, in this case, Chris. Designers like Chris do their best work when they can focus on their craft. With the Asana for Adobe Creative Cloud integration, Chris can work in one of his favorite tools with important context on his current task right at hand. This means less time searching for details in e-mails and spreadsheets and more time for the work itself. Once Chris has finished his work on the creative request for the brand campaign, he attaches the requested asset to his assigned task. Asana automatically kicks off the review and approval process. Let's jump over to Michelle, the Marketing Director, to see how this works. Asana gives Michelle everything she needs to review Chris' work: the image, collaboration history and the ability to approve over any device anywhere. With Asana, teams can have fun and can celebrate a job well done. Let's move up the pyramid. Asana helps entire organizations align to accomplish their mission. To organize Portoa's marketing initiatives, Michelle uses Portfolios. Portfolio helps teams track the status and progress of multiple projects at once. Michelle can view resource allocations across the team, and with a simple click and drag, reassign tasks to create better balance. Thanks to the work graph and Asana reporting, she has visibility into the status of all of the team's projects. And with our integrations with advanced analytics tools like Microsoft Power BI and Tableau, organizations gather important insights that can drive business outcomes. This takes us to the top of the pyramid where leaders can track company goals and all the work needed to achieve them. From individual productivity to company objectives, Asana gives teams a living system of record. With this, organizations have greater confidence and clarity so they can move faster and accomplish more.

I'm Alex Hood. I'm the Head of Product here at Asana. I lead the teams who are thinking about the future of work and how we can build it to really change the way that folks are working for the better. The majority of our R&D efforts over the last decade have been to build out the features based on the work graph technology. This core architecture allows us to offer benefits that others can't. Asana solves the problem of work about work in some unique ways. Number one, it's very easy to use. So if a team lead selects Asana, their team can get onboard and get traction, create shared victories fast. Number two, we actually care about individuals and there's a broad set of tools in there that allow for individuals to be clear on what they need to do and their priorities. And number three, it actually helped link strategy and execution. Other work management solutions force teams to work in one particular way called the container model and that's where a project lives only on one construct, a single Kanban or a single spreadsheet. And it only works for one project. That's a big inhibitor. At Asana, we do something different. We have a unique data structure called the work graph. The work graph does 2 things. Number one, it allows anyone to see how the project or projects are coming together in any view they want: time line, Kanban, spreadsheet view. Secondarily, it allows a single task to live in multiple different projects. And that just means that teams who are working interdependently can then have the information that they need in their own workflow, in their own form. Our product vision is in 2 phases. The first phase is what we've been working on to date. That is building the pyramid of clarity powered by the work graph. That means everybody knows who's doing what by when up, down and across organizations. When that work graph is created, we're able to have our second piece of our product vision and that's to become the navigation system for organizations. That navigation system allows organizations to set their goal, get turn-by-turn guidance on how to get to that goal as fast as possible and then automate the core workflows that teams struggle with to get that work done. The great thing is that customers see value. You look on Twitter. You meet customers for real. They adopt Asana and it's changing the way they work. And then they can't imagine going back to the old way. That, for me, is very satisfying, and for our team, gets them fired up every morning.

I am Christina Campbell, and I am a Design Operations Manager at Slack. Slack is a channel-based messaging platform for the enterprise. I keep people informed by using Slack and Asana. I use Slack for communication, keeping people up to date. And I see Asana more as our Holy Grail of information. It's where people can always refer back to for any project information. What is the brief, any dates, any helpful docs, we stick that in Asana? Asana usually gets adopted by design first because it's gorgeous. It's user intuitive. Of course, design is on it. They love it. Engineering was using a more traditional project management tool. And once they saw what was possible in Asana, they really got excited. And what was really exciting for them was ability to collaborate with other teams. What used to take us 1 week to get all together and agree on a time line, it now takes us 2 days. Before Asana, project management was kind of painful. And now that our team is on Asana Portfolios, I'm able to get them to look just in one place. The thing I really love about Asana and the way our teams are truly collaborating on one tool, it's not about launching more projects. It's about launching complex projects and really being able to see the issues ahead of time. When we're talking about launching global campaigns, that means not only are we talking about 3 teams, we're now talking about 6 teams and then we're talking about different languages. So we need to be able to look to one place and be speaking the same language. I love Asana because it's made my life easier. It's made my team's life easier. I've been able to really share efficiencies with teams and get them excited about process, which is very hard to do. Asana is the tool that helps me bring projects to life and then keep moving on to creating bigger and better and more complex projects.

I love hearing our customers talk about Asana, especially when they talk about how complexity is solved and managed and enables -- and Asana enables them to make better decisions. All right. So let's move to Q&A. We've got Dustin Moskovitz and Alex Hood here.

All right. Okay. Our questions are queuing up. Dustin, the first question is for you. Why is work management important? And why is it mission-critical, especially in a tough macroeconomic environment?

Yes. Thanks, Catherine. So our research shows that the average knowledge worker is spending 60% of their time on what we call work about work. And if you think that that's just sort of an intrinsic part of collaboration, then you might not think something like work management as critical. That's just a tax that everyone has to pay. But if you think we have any hope of chipping away at that pie, then there's an incredible opportunity to make your teams more effective and more productive. And we really think that effective collaboration involves what we call the 3 Cs: so content, communication and coordination. And in most cases, teams have invested heavily in technology for the first 2 categories, content and communications, but they haven't invested in that coordination layer. Now everybody has to do coordination. But without a product like Asana, they're just doing it in long meetings and e-mail back and forth and shared spreadsheets, and it's not effective. And when you're doing it that way, the other 2 categories can actually be counterproductive because all your communication channels and those documents that you're working on end up becoming part of the firehose of information and disruptive notifications that's distracting from your work. But once you add a product like Asana, then everything works really well together and it really amplifies the power of each of those technologies, and Asana becomes more than -- sorry, the whole becomes more than the sum of the parts.

I know what you meant. Okay. The next question, actually another one for you, Dustin. You mentioned that the work graph is your key differentiator because it enables many different views and workflows. Can you elaborate on that? What makes Asana unique and different?

Sure. So the work graph is really enabling what we think of as our key differentiator, which is a complete, fully connected, up-to-date and accurate map of the work in your organization. The alternative to this is a container model where workloads and silos and teams organized around discrete projects. The work graph isn't a concept in the project itself. So the way we hear this play back from customers is that it's really enabling the best customer experience and it works for the entire organization. When you think about it, the most important coordination use cases are almost always cross-functional in nature. So for example, to produce this Investor Day, it involved a huge collaboration between us, our marketing teams, the finance teams and really a shocking amount of contribution from the legal teams as well, as you can imagine. And they're all working together, organized around the same work. And so the work graph empowers teams to work well cross-functionally because it enables many different views and workflows to be built around the same underlying units of work. So that means each of those teams was able to build the views that made sense for their workflows in their context. And Asana itself was able to tailor the best experience for each constituent on the team rather than just optimizing for the project leader. So that flexibility combines with a deep investment in interaction design to make the project experience really nimble and scalable. It's easy to use and adopt when you're getting started, but it also has powerful enterprise capabilities that a customer can integrate as they deepen their engagement. And finally, the work graph connects work top to bottom, from the atomic unit of tasks all the way up to the highest-level objectives and the mission of the company. So that creates dynamic clarity for the entire organization and really connects strategy and execution for the first time.

Well, architecture does matter. Okay. The next question. Alex, can you talk about your integration strategy and how you work with other products and platforms?

Sure. As Dustin said, the best teams have 3 things. They have a place where the communications goes on, they have a place where the content lives and then there's a coordination layer. That's where purpose, plan and responsibility lives. That's what Asana is. It's critical, though, that the plan of record be deeply integrated where communication is occurring and where all that content and context live so that people can do their jobs well. So an example is our Slack for teams integration. When there's chat going on amongst the team, there could be tasks that come up or a plan of record might evolve. And with one click, then that plan of record or that task gets swept over into Asana and it becomes additive to the plan of record that everybody is looking at. So Asana ends up being very complementary to the existing tools out there where teams house their content in communications. And I'll also give a slightly more technical answer. The work graph data model is the important infrastructure that powers our system. It does something uniquely well. It takes the unstructured data about work and makes it structured. Our integrations allow us to assemble much more of that unstructured data about work, which allows us to create a much more active, real-time map of how work gets done in an organization allowing the tool to be more powerful and ultimately intelligent.

Wonderful. Okay. Alex, one more question for you. What does your organization look like? And is there anything unique about the way you approach your productization?

Yes. Great question. There might be -- there's 2 things I think I would mention about my organization, makes it distinct. So the first is customer focus. We have a robust user research team. And usually, that ends up being a service organization that lives under another organization like, say, design. In Asana, product management makes the decisions on what we build, design which creates the experience itself and user research our peers. That means that when the road map is being created, the customer and the most important insights are there, have a seat at the table, so we're making the right decisions on behalf of our customer. Second thing I'd mention is design. We have a world-class design team that's made up of folks from various backgrounds, but many have backgrounds in the best-in-class, best-of-breed consumer applications. And that's because Asana needs to be very easy to adopt and we care about how the customer experience manifests itself. That's how we grow.

Actually, I see the next question. A couple of questions down is actually a great follow-up to what you just said. This question is about the individual experience. Alex, the first thing you always highlight -- so they must have met with you before -- is how Asana prioritizes the individual experience. Why is that so important in an enterprise software business?

Yes. I mean great question. The individual experience, I mean, having the folks who end up using the product feel delight in using it is really important. I mean if -- the platform is meant to be real-time and the real-time source of truth across an organization, then it's got to be easy to use. And that's what fuels individuals to add their work to the plan of record. Also, we are taking the great things that exist in project management offices, the ability to better organize work, and we're democratizing that for the world's information workers, right? And that means that project plans, the plan of record, who's doing what by when, the context around tasks, that is co-created. So it's really imperative that the individual feels like they get a massive benefit from Asana. Secondarily, though, that focus on the individual experience drives growth. When the individuals who are on a team, they get together, they have a shared victory, they knocked out all of that -- all those cycles around trying to determine the plan of record and they have a win, that brings them together and they want to have a shared victory like that again. So the next team that they're on, they use Asana or recommend Asana to other folks. That's the flywheel of our growth. Chris Farinacci, I'm sure, is going to talk about that more. But teams that succeed end up being the best marketing tool for Asana as we grow.

That's great. I actually see a great question that comes up pretty frequently when people are still getting up to speed on our business. So let's put this one out for you, Alex. How are you different than other work collaboration software tools, whether it's e-mail, Slack or any other tool that a knowledge worker traditionally uses?

Do you want to take this through?

Yes, I can start maybe. So I already said this a little bit earlier, but we really think collaboration involves the 3 Cs: so content, communication and coordination. And so e-mail and Slack really fit into that communication category and they're absolutely essential to collaboration. We use Slack especially very heavily ourselves. But it doesn't help -- they don't help you answer the coordination question. So coordination question is who is doing what by when: what steps are left between now and accomplishing our next milestone, who's responsible for each of those steps and when are they expected to be done? And communication tools are great when you're discussing things, but you have to go through the entire history of your conversations in order to answer those questions. So it's really tedious and it doesn't represent the current source of truth on what's actually happening with the project in progress. So we really think that these things work really well together. And in fact, you just heard from Slack in the earlier part of our investor video about how they use Asana to make their work more effective.

Yes. This is an emerging category. Massive TAM, massive customer pain point and some of the solutions are starting to emerge. Here's what we're seeing. We see that spreadsheet -- and spreadsheets and e-mail don't scale. There are a series of project management tools out there really made for single team, single project. But the pain that we're solving in this category is cross-functional in nature. So those types of solutions don't scale well. There's also industry-specific, functional-specific solutions out there. And those work very well for bespoke needs of organizations that are functional, say, software development or others. And those, while great for that function, don't enable that cross-functional driver-ship, cross-functional success, which is really how work gets done. And then the last piece is there is existing project management software out there. And that is used largely by project management offices, not by the folks who are really becoming more and more accountable for not only doing the work, but managing the work and having accountability that the work gets done across their team. Even though they don't have authority, they have that accountability. So to have the benefits of knowing who's doing what by when, to take that coordination layer off of the plate of maybe an accidental project manager, that's a new benefit that's differentiated.

That actually leads right into this next question. In fact, there's 2 follow-ups to your recent answer. One is, is there always a project manager role in Asana? Or can peers work with another -- without a project manager?

Yes. Well, Asana project -- often how technology emerges is that humans do work and then technology understands the benefits that those humans are creating and augments that, right? So project managers have a great function because they make sure the trains are running on time. They create clarity of who's doing what by when, we keep saying that phrase, the purpose, plan and responsibility. We're democratizing that. So a project manager certainly can use Asana and have a lot of success with their team. And often, our biggest advocates are project managers who want to scale up their ability to have impact. But also project manager is not required for Asana to be successful. Teammates are co-creating that plan. They're getting that work done. They're seeing the bird's eye view and their own distinct views of the plan and they can see how their pieces fit together without a human who's helping them do that. And that's really the benefit that we're offering.

Makes sense. This next question is actually a double-click into your point about the capabilities and cross-functional capabilities. This question is, can you explain what multi-homing is and how someone uses it?

Sure. You want me take it?

Sure. Yes, why not?

Yes. Multi-homing is one of these like aha delightful moments in the project. When you're using Asana and you experienced it for this first time, that's the, oh, I see what they're doing here. We describe it as the work graph data model. That's the technical version of it. What it really is, is, say, a marketing team has a cross-functional project that they're running. They've got a task, which is to get a website done as a project. And there's task in there around design. Well, because they're creating those design tasks in the marketing team's construct, on their pages, in their domain, in their workflow, that means that the design team has to come over to the marketing team's place and work within their workflow. And that's a source of friction in work about work. What often then happens is that the design team is like, you know what, let's just make a copy of all those tasks that live in marketing team's domain and we'll put that into our own design workflow. And then you get those version control issues. Work about work and friction just manifest from that, right? So multi-homing is that same task around designing the website is in the marketing side and is click-able, available in the designer's workflow, too. Same bit of data, same exact test lives in 2 workflows. That technological innovation there, that data structure that we started with here at Asana is enormously powerful because the world's projects are cross-functional. The biggest pain points are around handoffs, things not falling through the cracks as an example of how the work graph data model delivers clarity.

And if I may add on to that since I think this is really important. Once you've broken out of that container model, you also have the opportunity to multi-home that in as many places as you want. So in addition to the marketing and design team, you might, for example, multi-home it into -- the designer might multi-home it into a meeting agenda with their manager so they can discuss it when they have their one-on-one. And additionally, Asana has -- we talked earlier about the importance of individual experience. There's a great sort of personal individual work management tool built inside Asana for every one of our users. This is something that is really quite unique to our product. And it's basically another version of multi-homing. So not only is it in the project, but it's in your personal workspace organized your way. So you can say this is the stuff I'm going to do today or maybe this is the stuff I'm going to do next time I'm in a certain location. And that's really powerful and gives people a lot of control over they organize themselves.

Oh, yes, the personal view is a very unique view for us. That's right.

Yes. That personal view is just -- there's the Kanban view and the calendar view and the portfolio view. Basically, these are the same underlying data that's painted across unique, bespoke views for every individual is the power of the work graph.

Fantastic. Okay. Well, Dustin, you mentioned that Investor Day was an example project. So I think that this is where this question comes from as well. Dustin, as you prepared for this Investor Day, were your outside partners able to work with internal people on the Investor Day project? And how are you using Asana for the direct listing project?

We decided to use spreadsheets for the direct listing. We're using Asana very extensively, including with our external partners like our video production agency. And they're able to just join as guests inside our workspace and collaborate in the same project views that we're using as well as create their own if they'd like to. So it works really well, both internally and externally. And then for the direct listing, I mean, we've been working on this for 6 or 8 months already and have a number of projects and a number of portfolios dedicated to this project. And it made it seem, frankly, much more straightforward. So I've never had the opportunity to do this before. Very few people have done direct listings at all. But we were able to just lay out the plan, know exactly who is responsible for each piece and get to work.

Perfect. Let's see. Another one from the audience. The work graph model is a terrific concept, but does Asana really have the right or best perch within the enterprise to actually assemble and manage the flow?

Yes. Well, I think traditional enterprise software is sold tops down, and that is sold to folks who may not ever use it. Asana was created so that -- created starting with tasks and projects. And that means it was really created for people trying to get work done on the ground, individual contributors working together maybe with the team lead. So Asana is adopted bottoms-up by teams themselves. That positions it perfectly because the rest of the organization then relies on that information about the work going on that's added to the work graph by individual contributors. Then you can have bird's eye views across maybe matrix organizations, all different views of that same work that's going on. If you started at the top, then you need to have a lot of folks running around assembling that information that's work about work. But by starting at the bottom, you're positioned to have the map of how work gets done, the work graph actually created and co-created by teams. That's what makes it enormously powerful.

Wonderful. I think we have time for 2 more questions. So what are the top 2 or 3 product-related selection criteria that customers have?

Yes. Good question. When folks try out Asana, they need to be convinced pretty easily that their team is going to have success in it. And that's why we focus so much on design, the customer experience and ease of use. Because if a team lead is trying something out, they're kind of putting themselves on the line a bit like I'm taking a risk to get my team to adopt this thing. We only have so many chips to wager to ask them to do things, and I'm going to put my chip on Asana. That means that Asana needs to show benefit quickly for all the team members. Team members need to be able to see -- to really have the chaos of how they worked before turn into clarity. They need to be able to see work get done, maybe see their first like nag-free project completion or task completion in the program. And then they need to see the results, right? We got this done easier, more quickly, without less work -- with less work about work because of Asana. That adoption experience, ease of use ends up being a competitive differentiator and a must-have for those who are shopping in this brand-new category of work management.

So the world is not just top down. It's changing, bottom up. Wonderful.

Exactly.

All right. I think we have one more question for this last section. This is really a good one to end on. Dustin, what keeps you up at night from a competitive market dynamic standpoint? What are the things that give you a sustainable competitive advantage?

Great. Thanks. So we talked some about the fact that our addressable market is really 1 billion knowledge workers globally. And the vast majority of them are still doing coordination through the status quo of one e-mail threads and meetings and shared spreadsheets. And so what keeps me up at night is less actually our direct competitors getting to that market first and more of this idea that the status quo keeps getting a little better. So e-mails and documents are a lot more powerful than they were 20 years ago. And I think there's somewhat of a risk that this lulls potential customers into a sense of complacency because they see some of their coordination pains getting solved and they lose the motivation to seek out what could be radically better. I've definitely worried about that less and less over time as we've had -- as we've seen the category develop and we've had more time to tell our story. But nonetheless, that's the thing I tend to think about the most. In terms of our direct competitors, what gives us a sustainable advantage is the fact that we have a deep, highly differentiated vision built around the work graph model that we've been talking about. So flexibility of that model means that we're capable of scaling from small teams all the way up to large enterprise organizations. So it's easy to use and adopt, but it's also extremely flexible, customizable and powerful. And we've been building and strengthening that advantage over the past 10 years as we've invested hundreds of millions of dollars in R&D. So customers love the Asana product experience today and they rely on it for critical workflows. So it's extremely sticky. We have a large and quickly growing community of Asana evangelists all over the world that help us drive awareness and adoption. The ones that have been with us for a while can see that the product keeps getting better and better. So we have the credibility to keep building and delivering that vision for the long run.

Thank you. That's great. And that's actually a perfect segue since our product and our go-to-market strategies are married together. Let's segue into the next section. Thank you, Dustin. Thank you, Alex. And let's go to some prepared remarks from our team, starting with Chris Farinacci, our Chief Operating Officer.

My name is Chris Farinacci. I'm the COO at Asana and I'm responsible for running the business. I've been in enterprise software for over 28 years. Most recently, I was at Google running marketing for their cloud and education businesses. These days, I think everyone realizes they don't have clarity, particularly post-COVID. They spend all their time trying to solve it with e-mails and sticky notes and meetings instead of knowing like you don't actually need to do all that stuff. You could spend way more time on your craft. Asana has a large and diverse customer base globally across regions and countries, from early adopters into mainstream verticals and also broadly across use cases and functions with that company. Our customers span from really small companies to the world's largest. Asana has more than 82,000 paying customers, many with multiple teams and some with hundreds of teams using Asana, and that's on top of a base of more than 3.5 million free activated accounts. We have more than 1.3 million paying users. Regionally, 40% of our revenue comes from our customer base outside the United States. And we have users in 190 countries. Let me tell you about some of our amazing customers. So Autodesk creates software for people who make things. They use Asana for general work and project management across sales, marketing and operations. The global customer events team tracks all their event time lines and requests in Asana, so everyone's working off the same information. Viessmann, headquartered in Germany, is a leading manufacturer of heating and refrigeration systems with over 12,000 global employees. Their CEO, Max Viessmann, initiated a company-wide digital transformation initiative to bring team agility to the whole company with Asana as its foundation. We're also wall-to-wall in companies like Fireclay Tile and G2. Fireclay Tile, a leading tile manufacturer, uses Asana to centralize and manage all their work from strategic planning to team meetings. G2 is a leading B2B software review site that uses Asana company-wide to help them hit their revenue, review and website traffic goals. We reach and support our customers via an intentionally hybrid, self-service and direct sales business model. This is a bottoms-up seed, land and expand experience across the customer journey. Seed corresponds to our self-service business where we see high volumes of small, free and paid teams adopt across companies of all sizes. Our land and expand motions then correspond to our direct sales business.

Hi, I'm Dave. I'm the Head of Marketing.

Hi, I'm OJ. I run our sales and partnerships teams.

Our self-service and direct sales models work together. And it's how we reach millions of teams all over the world and turn them into successful customers. Self-service is our high-velocity engine. Every month, millions of visitors come to asana.com, and hundreds of thousands of people sign up for the product. Anybody can sign up for a free trial and get started within minutes. Teams pay us a subscription, which is price based off of the number of users they have and the level of service and that determines what features they have access to. The beauty of our model is as teams collaborate, they add more people. As their needs get more complex, they need additional premium features and their investment with us grows. Our lead scoring algorithms use that data to identify which teams and which companies represent the best opportunity to land and expand through our direct sales motion.

Yes. And the self-serve model gives us a massive edge in market development. It helps develop our brand before we even spend a $0.01 in that market. Then we can bring in our regional sales and marketing and customer success teams to actually accelerate Asana's presence in those markets. Our direct sales model is built directly on top of our self-serve model, which gives us a great advantage because by the time we engage with customers, our customers are already using Asana. We have a 2-phase selling model: land and expand. Typically, we land in organizations by powering critical workflows in a few departments, departments such as marketing, design, operations and account management. During this phase, we not only develop internal case studies of success with Asana, we also develop a network of champions who advocate for the product on our behalf. Then comes the expand phase. In this phase, it's very, very common that adjacent teams start to hear about Asana through word-of-mouth or they're invited directly into the product. Once we reach a critical mass of users, it's very common then, and increasingly so as the work management category is maturing, that companies that are looking to standardize on one platform. And we're very well positioned in those situations. Let me give you an example of a customer life cycle. One of my favorite customers is a Fortune 500 insurance company. This is a company that came to Asana as part of a bigger digital transformation initiative. The initial teams organically found Asana and our internal algorithms identified that this team and this account were starting to have some momentum in their success of using Asana. So we immediately connected this customer and this specific team with a customer success manager and helped them onboard their workflows into Asana. Very, very quickly, a word-of-mouth effect took place. And what started with one team ended up being hundreds of teams also migrating their workflows into Asana. And we are very, very well positioned in that situation because we had already developed a network of champions. We had a number of case studies, internal case studies of success how this company was able to deliver and execute on Asana. And ultimately, the customer signed a multiyear enterprise agreement with us. And more importantly, our customer was able to launch a brand-new product, ideation through execution, all in Asana. And IT teams love supporting the usage of Asana because it's so easy to use. The deployment is seamless. It's hands-free. The IT department rarely has to get involved, if at all. And like that's another big reason why people choose Asana. So I just gave you an example of one -- just one customer. We see a massive opportunity to expand in our customer base.

One of the metrics that we look at on the health of our expansion is how many customers are paying us more than $50,000 per year. And our direct sales model has been really successful in growing that number every single year.

Last year, we grew the number of $50,000 spend accounts by 250%, and we expect that number to continue growing.

Our customer champions are super important. They bring on additional teams, both inside their company and outside. That creates a virtuous cycle, which really takes us back to the beginning of the customer journey. They also join our Asana community, which is incredibly vibrant. And I think it's that customer advocacy that has helped us reach teams in 190 countries. Our business is incredibly global. Over 40% of our revenue now comes outside the U.S., and one of the beauties of our model is we can see where there is traction within our self-service model, which is a good indicator of customer demand, and that is our guiding light to where we put a local presence.

And that's why we've decided to open up offices in strategic countries like Sydney to cover Australia; Tokyo to cover Japan; Munich to cover Germany; London for the U.K.; and also an inside sales office in Dublin, because we had already seen so much traction in those regions and we wanted the opportunity to execute a more localized sales and marketing strategy in those regions for us to continue expanding in those accounts and in those geographies.

That moment when you no longer have to send an e-mail or look at a spreadsheet to know who's doing what by when is the magic moment people are converted.

Our competition is the status quo of e-mails and spreadsheets and sticky notes and status meetings. And we believe that the vast, vast majority of information workers don't yet have work management tools. So it's a largely greenfield opportunity. We see large levers for growth in front of us along many vectors. In many ways, we're just getting started. First, we're focused on acquiring new customers. This is an emerging category with the vast majority of the world's information workers suffering from lack of clarity. Also, we have more than 3.5 million free activated accounts to focus on converting to our paid product. Second, there's a large expansion opportunity in our existing paying base of more than 82,000 paying customers, where we're less than 3% penetrated today. Here, we're growing our direct sales team, roughly doubling them year-on-year, and developing solutions to address this white space. And lastly, we see a huge opportunity to provide cross-company clarity use cases, starting with integrated goals and OKR management.

My name is Anna Binder. I'm the Head of People here at Asana. There's a lot of things, a lot of ingredients that go into the recipe of a culture. So let's start with some of the most important things. People want to know that they're working on something that matters. They also want to feel like their work matters. One of our goals is clarity. And what that means and how it manifests for us as a company is making sure that people understand how their day-to-day work, every little task, connects up to the objectives of the company and ultimately, the mission. So if you think about Asana the product and Asana the culture, you can't have one without the other. The way that I think about it is the product allows us to make sure that everyone is clear on who's working on what, by when. But it's not enough to just have the product. You have to have a culture that supports it, that reinforces it, that makes people committed to using the product and ensuring that everyone is collaborating well through that clarity. From the very beginning, our founders invested in culture. They saw culture as a key driver of our business outcomes. It was never an afterthought. It was never this secondary thing. And the work that they did very early on helped us set the foundation that we now, as a collection of employees, build upon. The ultimate validation of that investment in our culture is our business results and the fact that our customers can better achieve their own missions. But of course, we love the external industry validation that we get from places like Glassdoor, Inc. and Fortune magazine. One of the things I'm particularly proud of is our Glassdoor rating. Both the company culture and the CEO have really high ratings there. And of course, that matters because it gives people externally an understanding of how employees feel. But the reason that our employees give us such high ratings externally is because we create space internally for people to participate, for people to voice their concerns, for people to identify the bugs in the culture and work and co-create the solutions to those bugs. We've got people that stay here and are committed for the long term because they're bought in. They're bought into a way of working. They're bought into a product that impacts the way people work. They're bought in to co-creating this culture with us. That's why we're going to be successful.

I'm Ashlee George, and I work at Impact Justice. I'm Associate Director, and I lead our Restorative Justice Project. Impact Justice is a nonprofit organization that centers innovation and research in order to seek a system of true justice and accountability. We have 2 headquarters, 1 in Oakland, California; 1 in D.C., and we also have several employees that work remotely. Working at a nonprofit organization, we're strapped for resources and it's really important to be mindful and very thoughtful and strategic about how we use our resources -- our financial resources and our human resources. So it's important because the work is so large, I mean we could be working all day, all night that it's clear on how much work that we're able to do in a specific amount of time given the limited resources we have. So my team, we run pretty much everything on Asana, from hiring to our check-in meetings, to our big department goals. And so we use it to communicate, we use it to see the progress of what we're doing and we also use it to create templates and to create opportunities for like things to be replicated. We've had people who've come on to the team who have never used Asana before pick it up pretty quickly. And it's really fun when you find out like new features and new tricks and we share those new tricks with the team. But it's pretty -- it's been pretty intuitive. And even for folks who were like, I'm not really sure of this new platform. Once we start doing it and incorporating into our processes, it just becomes like a second nature. During like COVID, it's been super helpful because we're not -- we don't have as much face-to-face contact. And so the conversations that you would have where you just stop by someone's desk, you're not able to have. And so having a platform, where you can send a message, you can create a task, a project, create a description, the time line, that's going to be a starting place for conversations that may have usually or typically have happened when we're face-to-face. I cannot stress how important it is to have all of your information into one central place. Asana, we use it as a tool to like capture all of our documents, to capture our notes, to capture our mix set so that we have -- so that if anyone on the team were to transition, we were able to keep consistency. We're also able to then inform our new hires. So we like have our whole onboarding process where they go through the whole Asana thing and then take all these tests, and they do their readings, and they're supposed to have meetings with different people, but all of this is laid out beautifully in Asana. So it allows us to be welcoming and inviting and also be effective in like getting stuff done.

I love that. I love how organizations like Impact Justice are using Asana to change the world. We support actually a lot of organizations that are mission-driven, and it ends up doing good is good for business. So that's a good segue into our next Q&A session with Dustin and Chris.

All right. Okay. This is a really good question to start with because everybody wants to know this answer. Chris, can you answer, what are you seeing in the competitive landscape? Given the pandemic, has anything changed in the competitive environment? Who do you see most frequently?

Yes. So this is -- as you've already heard, this is a large greenfield market opportunity. Most of the world's information workers don't have work management tools yet, and they suffer from lack of clarity. And the business imperative for this problem we solve is only accelerating. So the largest competitor -- with that as a backdrop, our largest competitor by far in that context and going after that opportunity is the status quo, as we already mentioned, of spreadsheets and e-mails and sticky notes and meetings. That's sadly the way that most of the world is trying to get clarity and trying to coordinate these days. And that's mostly what we're competing with and what we're replacing. And then I think you asked, when we do see work management competitors in deals, which is a minority of the time, we don't see one in particular. There's not one that sort of we see more than the others.

Oh, interesting. Okay. And how about -- the next question that comes up, how do you think about Microsoft, friend or foe?

Yes. So when you look across our customer base, most of our customers, or just almost all of them, are either Microsoft or Google shops for core e-mail management and calendar management and more often than not, for managing and creating documents. And so they turn to Asana for clarity and coordination and work management. And so because of that, we -- because of the customer base, we have lots of integrations with different products from Google and Microsoft. And in the context of Microsoft, we actually have a really strong partnership. In fact, this past quarter, in Q2, we shipped a new and improved integration with Microsoft Teams between Asana and Microsoft Teams, where Asana provides the capabilities around organization and coordination and Microsoft Teams provides the capability around communication. And we've seen really strong pickup in interest from that integration in our base.

That's interesting. This is actually a pretty good follow-on, too, and people ask this often. Can you talk about the customer journey? I guess they really want to know about like how the customer adopts it and how that feeds into our hybrid self-service model that you talked about in your prepared remarks.

Sure. So we talked about this a little in the video. So we have a very intentionally hybrid business model and go-to-market model of self-serve and a direct sales business that's built directly on top of that, and they go together. And that directly maps to the customer journey, how customers find us and adopt us and then grow with us over time. And so typically, almost all customers start self-serve. And self-serve is -- that business is all about acquiring small free and paid teams across companies of all sizes. And then our direct sales business corresponds to -- sits on top of that and corresponds to land-and-expand motions. And so land typically looks like when we see signal in that self-serve base of strong adoption and strong demand, land typically looks like finding a champion and establishing and deploying in a critical workflow tool within a department. And then expansion typically is when we grow beyond that, typically cross-functionally, engaging with IT and other decision-makers to expand more broadly.

Wonderful. Thank you. The next question -- I'd like the next question. It means somebody probably picked up the S-1, which was just updated yesterday and has clearly been through it. In sales and marketing, where are you investing? Are you investing mostly in direct sales? How many reps do you have? Maybe we should just peel that one apart and just first talk about where you're investing in sales and marketing.

Sales and marketing. Okay, sure. So as I mentioned, we have an intentionally hybrid business model and go-to-market model. And we are absolutely investing for growth in both and they feed each other. So that again, that direct sales business, as we move upmarket and expand within companies is built on top of that self-serve business. So self-serve is all about this huge market opportunity we talked about with over 1 billion information workers, and it's really focused on acquiring new free and paid teams, small new and free and paid teams globally. And there, we're investing in marketing, in top of funnel and the self-serve engine to drive growth and acquisition of customers. And then our direct sales business, we're investing as well aggressively. There we're roughly doubling our sales team year-on-year to take advantage of this global growth opportunity, ensure we have the coverage to do that, especially with quota-carrying reps. And we also have -- it's worth calling out like, as we see -- as we move upmarket and we see cross-functional collaboration, we do tend to find sweet spots where we see really strong adoption within companies. Typically, departments in some cases, cross-functional use cases. And so we begin -- we began over the last 1.5 years to offer solutions there. So departmentally, we've launched Asana for marketing and creative, Asana for sales and account management, Asana for operations. And then more recently, this summer, we launched our first first-class solution, providing cross-company use cases and solutions for the whole company with goal management that's integrated to the work craft that Dustin talked about.

Wow. Okay. So the investments are really across the entire go-to-market chain?

Yes.