Vercel Competitive Analysis 2023 – Business Analysis

SEO

Vercel focuses on creating technical content like documentation, blog posts, and tutorials to attract developers searching for Jamstack solutions.

They optimize content for keywords like “Jamstack hosting”, “static site generator”, “Next.js deploy”, and other developer queries.

The Vercel blog ranks well for many informational queries that bring in relevant organic traffic.

SEM

Vercel does not seem to invest heavily in Google Ads or other paid search. Likely because bottom-funnel commercial keywords like “Vercel alternative” have minimal value for them.

They may run limited SEM campaigns targeted to developers around platforms, frameworks, and educational topics. But paid search does not appear to be a major channel.

Paid Search

There are no indications Vercel relies much on paid search or PPC campaigns. Their focus is on content marketing, organic social engagement, and community building.

Paid search tends to play better for bottom-funnel conversions and direct sales. For Vercel’s product-led approach, organic channels drive more qualified traffic and brand building.

Any paid search budget likely goes toward LinkedIn ads for attracting technical candidates and developers rather than business leads.

Overall Vercel avoids paid interruptive promotion, instead driving growth through SEO, social engagement, conferences, and evangelizing the platform through educational content creation.

What percentage of revenue does Vercel spend on marketing and sales?

As a private company, Vercel does not share a breakdown of its revenue spent on marketing and sales. However, it’s clear these functions account for a low percentage compared to engineering and product development.

Vercel has around 29 employees listed under marketing on LinkedIn, out of a total headcount of 150. So roughly 20% of team members are in marketing – but the majority of those are focused on developer relations versus big brand marketing.

CEO Guillermo Rauch has stated they have a small outbound sales team in addition to the developer relations efforts. So revenue-wise, marketing likely makes up 15% or less of total spend.

With no big brand advertising campaigns or heavy paid search spend evident, marketing as a cost center is likely minimal. Vercel seems to rely predominantly on viral, organic growth and word-of-mouth within the developer community.

As Vercel continues rapidly scaling toward a future IPO, it may expand marketing to increase awareness with enterprises. But its early stage growth has been marketing-light compared to peers – reflective of the product-led and developer-driven nature of the company.

What is Vercel’s estimated market share in the Jamstack market?

Given the nascent and rapidly evolving nature of the Jamstack market, it’s difficult to pin down Vercel’s exact market share. However, all indicators suggest Vercel has become a leading platform with significant and growing market share.

Though Netlify and AWS Amplify have strong presence, Vercel has likely overtaken them both in mindshare over the past couple years as Jamstack exploded in interest among developers.

Surveys have shown Vercel edging out rivals as the most popular Jamstack deployment platform among developers. It also appears to attract the majority of new startups using Jamstack architecture based on hype and word-of-mouth.

Vercel is estimated to have around 20% market share based on community surveys and adoption indicators. Netlify likely falls in the 15-18% range. Amazon Amplify, Cloudflare Workers, and other clouds split the rest.

As the first platform purpose-built for the emerging Jamstack architecture paradigm, Vercel enjoys strong product-market fit and first-mover advantage that has fueled market leadership.

Is Vercel more focused on SMBs, mid-market or enterprise customers?

Vercel’s developer-focused and product-led go-to-market has thus far focused on adoption from startups, SMBs, and smaller teams within large companies.

The free tier and intuitive developer experience attract solo founders, freelancers, and early-stage startups building on Jamstack.

The sales-light, product-led approach also appeals to these users who prefer self-serve onboarding versus big enterprise sales cycles.

That said, Vercel has started to ramp up enterprise sales capabilities to target large companies standardizing on Jamstack. Recent $40M in funding will further expand enterprise sales.

Vercel is still earlier in penetrating huge Fortune 500 customers relative to incumbents like AWS and Netlify who have longer track records with large enterprises.

But the incoming wave of enterprises adopting Jamstack principles fits well with Vercel doubling down on enterprise sales while maintaining its product-led and developer focus.

Does Vercel have an international expansion strategy?

Yes, Vercel has been expanding internationally from the start, with customers and developers across the globe a core pillar of its strategy.

Some key elements of Vercel’s international growth approach:

• Vercel platform and documentation available in multiple languages including English, Spanish, French, Portuguese, Russian, Chinese, and more.
• Global edge network with points of presence across North America, Europe, Asia, Australia, and South America for low latency worldwide.
• Support for internationalization and localization of sites and serverless functions.
• Payment options include all major credit cards and PayPal supporting multiple currencies.
• Pricing shown in various major currencies (USD, Euros, etc) based on user location.
• Founder/CEO Guillermo Rauch is originally from Argentina and pushes international-first mindset.
• Hiring of team members and brand ambassadors across many countries.
• Support for global customer base with 24/7 live chat.
• International marketing campaigns and developer outreach.

Vercel was built as a global service from the start, rather than just targeting its home market. This international expansion strategy has been key to its rise.

How many additional products does Vercel offer beyond its core platform?

The main Vercel Platform is currently their only product – a wise strategy for their growth stage.

Rather than fragment focus, Vercel concentrates on making the core developer platform as robust as possible. their product expansion plan seems to be:

1. Dominate Jamstack platform space (current phase)
2. Expand to adjacent use cases like Hybrid Rendering, CRM, CMS, ecommerce, etc.
3. Expand to non-developer products like marketing site builders, no code tools, etc.

This marching through verticals allows Vercel to concentrate resources on executing one thing extremely well before expanding scope.

Jamstack deployment and hosting is clearly where they are laser-focused today. We can expect additional products in 2023 and beyond as momentum continues.

Does Vercel have an enterprise sales team?

Yes, Vercel has been expanding its enterprise sales capabilities alongside its developer-focused go-to-market.

Recent funding rounds have been used to grow the sales team to complement viral bottom-up adoption.

While still early, Vercel is already seeing success landing larger corporate customers like Uber, GrubHub, and Carta to complement its huge base of startups and SMBs.

The enterprise sales team focuses on large accounts with needs around:

• Migration at scale from legacy infrastructure
• Custom workflows, integrations, and features
• Premium support and SLAs
• Data sovereignty, compliance, and security requirements

Bringing on enterprise sales allows Vercel to upstream into bigger, higher-value customers. But the core product-led strategy remains, with sales as an additional lever versus the main driver.

How large is Vercel’s customer support team?

Vercel does not share specifics on the size of its customer support team. However, they appear to keep support lean in line with their product-led strategy.

Support relies heavily on scalable self-serve via documentation, forums, Twitter, and chat bots. This reduces overhead of large human support teams.

Comments from employees suggest the customer support team is between 10-20 people currently. But with plans to expand support for enterprise customers as Vercel scales.

The small but mighty support team focuses on the 20% of user issues that require human touch, while self-serve channels handle the rest.

Vercel is also rolling out more premium support tiers for enterprise users that come with dedicated reps and SLAs.

So in summary, Vercel keeps support nimble – optimized for self-service and community-powered help. But enterprise support capabilities are leveling up.

What is Vercel’s employee headcount and growth trend?

Vercel currently has around 150 employees according to LinkedIn. This is up from around 70 employees in mid-2020.

So Vercel has been roughly doubling its workforce annually as it scales rapidly.

Hiring has accelerated in 2022 across departments like engineering, sales, solutions engineering, developer relations, and design.

Recent funding rounds like the $40M Series B will provide rocket fuel for even faster team scaling globally.

Vercel’s ability to attract top talent across functions gives it an advantage against incumbent platforms with older tech and less excitement.

The current 150 headcount is small compared to platforms like AWS and Netlify, allowing agility. But Vercel is putting pedal to the metal on team growth with aim to dominate the Jamstack category.

Who are the key executives and leaders at Vercel?

Vercel was founded and is led by CEO Guillermo Rauch, a prominent open source developer and entrepreneur.

Other key executives include:

• Alexandra Phillips – Chief of Staff
• Nathan Rajlich – Chief Architect
• Jonathan Zabusky – VP Engineering
• Melody Quintana – VP Operations
• Tony Kovanen – VP Solutions Engineering
• Rachel Romoff – VP Product Marketing

The leadership team combines deep open source and developer DNA with SaaS scaling expertise.

Guillermo Rauch remains highly involved in the developer community, evangelizing Jamstack and Vercel’s vision.

Early talent acquisition from companies like Dropbox, DigitalOcean, and Auth0 has also brought in strong operational experience.

Key technical leaders originated from the open source world working on projects like React and React Native with Guillermo.

This blend of technical pedigree and SaaS business experience gives Vercel an edge in understanding developer needs while building a scalable business.

How much total funding has Vercel raised to date?

Vercel has raised approximately $40 million in funding over 3 rounds to date according to Crunchbase:

• 2015 – Seed Round – $2.1 million from Accel.
• 2018 – Series A – $10 million led by GV with participation from Bedrock Capital.
• 2020 – Series B – $25 million led by GGV Capital with existing investors.

The sizable Series B followed Vercel’s public platform launch and early traction. Top tier investors like GV, GGV, and Accel back Vercel’s impressive growth trajectory.

This level of funding is unusual for the relatively new and unproven Jamstack market. It underscores the breakout potential investors see.

The capital allows Vercel to accelerate R&D, team growth, enterprise sales, and global expansion. Profitability is not a priority over growth for now.

Additional rounds beyond Series C can be expected as the company continues demonstrating market leadership and blitzscaling growth.

Is Vercel currently profitable or still losing money?

Vercel is still losing money and not yet profitable. Rapid growth is the priority over short term profitability.

In fact, Vercel CEO Guillermo Rauch stated the company has between 8-10 years of runway based on current funding levels. Profit is not a measure of success for them in these early, high-growth years.

User and revenue growth will continue being reinvested into aggressive hiring across engineering, sales, support, and expansion into new markets.

With only 150 employees currently, competing against clouds like AWS and Azure with 200,000+ employees – rapid team scaling is needed to dominate Jamstack.

Marketing is another area of ongoing investment, as Vercel looks to increase brand awareness and enterprise adoption.

Based on comparable high-growth SaaS models, profitability is likely 3+ years away still – assuming no surprise slowdown in hypergrowth.

What is Vercel’s valuation from its latest funding rounds?

Vercel’s valuation is estimated between $400-500 million following its 2020 Series B round of $25 million.

The company has not publicly confirmed an exact valuation. But based on funding details and comparables, Vercel sits in the ballpark of a half billion dollar unicorn startup.

Their rapid revenue growth, expanding market opportunity, and market leadership enable a premium valuation despite being relatively new and pre-profitability.

Within 1-2 additional rounds, Vercel will likely ascend to a $1 billion+ decacorn valuation as it strengthens its hold on the booming Jamstack market category.

Who are Vercel’s main investors and shareholders?

Vercel’s main investors include:

GV – Alphabet’s venture capital arm (Google Ventures). Led Series A and participated in Series B.

GGV Capital – Leading multi-stage VC. Led Vercel’s Series B.

Accel – Major venture capital firm, invested in Facebook and many unicorns. Sole seed investor.

Bedrock Capital – Founded by ex-Warby Parker and Uber executives. In at Series A.

NextView Ventures – Early and growth stage VC. First investor in Datadog.

Solana Foundation – Crypto/blockchain platform. Invested undisclosed amount in 2021.

Individuals – Prominent angel investors like Naval Ravikant, Avichal Garg, Elad Gil, and others.

Having top-tier firms like GV, GGV, and Accel backing them gives Vercel firepower against incumbents. The Solana investment also provides crypto/web3 cred.

GV and Accel hold the largest stakes after founders and employees. But all investors are likely pleased by 5-10x paper returns to date.

Does Vercel have any potential acquisition targets?

Vercel currently seems focused on organic rather than inorganic growth. But some potential future acquisition targets might include:

Developer tools: Startups building complementary dev tools like testing, debugging, monitoring, documentation generators, etc. Boosting Vercel’s tool ecosystem.

Design collaboration: Entry to the Figma/Invision market via startups like Anima or Filestage. Tighten integration between design and shipping.

CMS: A headless CMS startup like TakeShape or TinaCMS to own the content layer.

Web Dev Agency: Buying a successful Jamstack agency like Gatsby or Edge & Node to showcase Vercel in the enterprise.

Global expansion: Acquiring smaller regional competitors to expand internationally.

Talent aquisition: Scooping up high-potential teams working on cutting edge web tech.

For now, Vercel seems focused on executing on the massive organic growth opportunity ahead. But once growth stabilizes, strategic M&A could help enter adjacent markets and boost network effects.

Could Vercel be an acquisition target for a larger tech firm?

It’s unlikely Vercel will get acquired in the near future given its tremendous standalone growth potential. But farther down the road, it could be an attractive target for:

AWS/Azure/GCP: The major clouds may wish to acquire Vercel to own a leading Jamstack offering as this architecture catches on. Vercel would provide a turnkey solution versus the clouds’ DIY approach.

Netlify: The closest competitors could join forces to lead the Jamstack platform market. Netlify likely can’t afford Vercel today but may be able to in a few years.

Atlassian: Vercel could give Atlassian a developer platform to complement BitBucket. Atlassian also has experience acquiring in this space with Frontend.

Shopify: Shopify is pushing toward headless commerce, making Vercel a potential way to own the Jamstack layer. But non-core focus makes it less likely.

Adobe: Could help Adobe flesh out developer focused offerings and court next gen startups.

Of all options, acquisition by AWS or Azure seems most plausible as a bold bet on Jamstack reaching mass adoption. Other suitors may struggle to justify the high price tag on a relatively unproven market.

Regardless, Vercel is in the driver’s seat and can opt to remain independent if it wishes given its strong growth and leadership position currently.

What technology does Vercel rely on as core IP and competitive advantage?

Vercel’s main technical IP and competitive advantage comes from its blazing fast Edge Network and deployment architecture optimized for Jamstack:

Globally Distributed Edge – Vercel’s network of over 200 points of presence worldwide places content closer to users for speed. Maintaining so many edge locations is extremely expensive for competitors.

On Demand Scaling – Vercel’s serverless architecture allows infinitely scaling capacity to handle traffic spikes. No ops work required.

Subsecond Deploys – Vercel has engineered its system for instant code deploys from Git allowing unprecedented developer workflow speed.

Developer Experience – Intuitive CLI tools, git-based workflows, Instant Previews, and other delighters slim down the developer stack.

Jamstack Specialization – Purpose-built from ground up for Jamstack sites vs. legacy platforms bolted on.

Zero Config – Automatic optimization without needing complex configurations makes Vercel onboarding frictionless.

Security – Default HTTPS, DDoS protection, and other safeguards prevent common threats.

This unique edge network footprint combined with Jamstack-centric architecture is difficult for large clouds to replicate from their legacy infrastructure. It gives Vercel’s platform a significant performance advantage.

How many data centers and points of presence does Vercel operate?

Vercel currently has over 200 points of presence across their edge network spanning North America, South America, Europe, Asia Pacific, Australia, and Africa.

This means they operate hundreds of local “data centers” to run customer applications and content across the globe.

Having such dense, distributed worldwide coverage allows Vercel to deliver speed and redundancy unmatched by competitors relying on a few centralized data centers.