Similarly, class-action lawsuits often require sign-in through filling in some sort of questionnaire. Previously, these questionnaires would be handled through live phone interview, which is obviously very intensive for both the interviewee and interviewer. The questionnaires are often quite interactive, with different questions being asked dependent on answers to previous questions, or aggregates of previous questions. It would take skilled interviewers a while to learn to interview for any one questionnaire. Qualtrics (and similar survey software) makes this process much, much simpler.
You then also have your regular marketing research, the value of which can be debated... but it is obvious people are willing to pay for the creation and distribution of such questionnaires.
Beyond this, I'm sure there are a bunch of other applications of the software.
This is, in my opinion, the biggest use case for Qualtrics - customer experience research based on surveys or data gathering methods managed from within the platform. You can think of it as Survey Monkey on steroids with some SPSS-lite data analysis functionality built in.
I just recoiled in horror at the thought of my car company asking me to fill out a survey like this and mentally closed the window on it.
The fact that iOS 12 now supports 3rd party apps (==Google Maps) on CarPlay has been a life saver.
First world problems, I guess.
In a world where every other site tries to infer what I like or I want or what they think i want to see on my feed next, or put me in some marketing bucket, it's a breath of fresh air to just be asked what I like or don't like or may be interested in.
As for customers few companies if any in the world has customer service approaching 'entailing differences in customer perception', most are quite happy to have people wait on phones endlessly or fail to address glaring deficiencies in products or services.
With so much low hanging fruit waiting to be addressed in customer service this obsession with surveys and 'customer experience' seems to be driven by other forces ie continuing obsession with data and metrics by sections of the workforce as panacea and distraction from real changes. But great exit for the brothers, nice targeting, if there is a demand why shouldn't they benefit.
I never understood , why would anyone waste their time answering 20+ questions for free?
* Help products/companies I like to improve
* Help products/companies I dislike to get less bad
* Increase the chances that the product/company will skew towards my preferences
* Hope someone might answer my questions some day (reciprocal altruism)
* Basic decency, helpfulness
* In rare cases, curiosity as to what the questions will be
However, the industry as a whole has been coping with something they call "survey fatigue" which is reflected in a lot of the comments here. There has been a general backslide in survey response rates, though as of a few years ago, it had mostly stabilized around a new normal that was still plenty good for generating excellent data sets to understand the customer experience.
Why do we produce free content for YCombinator? People like to pontificate.
If you want a product to be better how else do you expect it to happen if you don't give feedback? It's certainly better than just waiting and hoping some random improvements appear.
I don't do all surveys or even most but more than 0.
EDIT: And that SAP is not buying the software per se. They're buying the customers and credibility.
You want to build a couple new features. You have 60 person-hours at your disposal. Which one do your users want?
Build two quick prototypes and see which one people actually use more.
You need to convince people to give you money (aka "get customers"). You're not sure what the best way to convince them is. Try 3 different approaches (Landing page with tech details? Youtube ads with customer stories? etc) and see which one works before you spend all of your budget on something nobody uses.
Out of a thousand people walking down the street, only one _might_ be interested in what you do. How do you make sure you focus your efforts on that one person?
Or "we have a million f2p video game players. 99% of them will never spend a dime. 0.1% of them will buy a $100 package once. 0.01% of them will buy a $9.99 package three thousand times. When should we present this package to them? Will we sell more $100 packages if we ALSO have a $200 package? Will we sell more $100 packages to Jane Doe who takes the bus to college at 8:45 AM and plays for 34 minutes 5 days a week?" (obviously that one gets a bit more troublesome)
The above comes with some severe implications re: privacy, filter bubbles, etc. but it's not there for no reason. Though there's plenty of people who just want pretty charts for their own sake; having worked in analytics the toughest question is "we have these charts.. umm... so what now?"
"Once I have these, logging/counting usage is simple. The decision is made with a one-page Excel sheet with the raw numbers."
I think a lot of people would get the data in to excel and not know what to do next. Also, implementing tracking of views, clicks, etc. is non-trivial for a lot of people. Or just a hassle.
Really? In "enterprise" class companies? Managers who can't use Excel like this should be (and probably are) fired quickly and for tracking there are plenty of solutions any junior web developer can implement and report on.
For not spending their time dealing with random excel files being thrown around full of raw figures? It's a common way businesses work but it's an absolute nightmare.
Dashboards mean a bunch of things, one is that people are all seeing the same figures. Another is that people aren't reimplementing the same analysis code (where you can easily get errors, because it's not necessarily going to be obvious how to do the stats on the results). And a very obvious one is the time it takes.
Give me an excel file full of raw numbers and sure, I can pull something together. I can even do it quickly. But I'll bet a boatload of cash I can't do it faster than I can open a link.
I could get another dev to spend the time doing it, but without knowing how much Qualtrics charges it's easy to view this as simply being cheaper.
The first group is worth $1MM, the second $3MM. I think it's likely you'd be able to afford to create both packages, regardless of what time any of your players take the bus.
Mind you I'm not endorsing this approach. But it does make a lot of money.
Often for chips it’s a B2B transaction so you can probably mobilize some of your go-to salespeople or sales engineers and ask them what customers are saying about next gen.
Now what if your customer base were 100x-1000x larger? You might need automated tools to ask your customers what they’re worried about, what issues they have, whether or not they like certain features, what what the relative make-up is of the customer base.
We all know customers don’t always tell reality so this becomes one data point in many in determining product direction.
For every chip you make, you have some expectation of how it will perform, which is its "value proposition."
You want to see if your chips are performing as you predict (fulfilling the value proposition) so you need to interact with a large number of the people whose brains are measuring the true performance of your chips. Since you're dealing with thousands of measurements, you summarize them using math. That's where "stats" come into play. A "metric" is any quantity that is supposed to reflect a measurement, but it usually refers to one specifically designed to be useful. For example, for your chips, the 99th percentile power draw experienced by your users might be a metric you use to guide your design process.
Imagine further that your chips perform differently for different groups of people. Figuring out the best way to divide people into groups to understand how your chips perform is "market segmentation." You probably care about some groups more than others, and depending on how well your chips perform for different groups, you may need to strategically change those priorities over time. That's "targeting."
Meanwhile, different versions of your chips are continually becoming available to people, and you want to detect as soon as possible if a new chip has an unexpected performance regression (or an unexpected improvement!) So you make the latest metrics available in a way that's quickly visually digestible, usually at the expense of all subtlety, but hey, your brain's executive function finds it gratifying. That's a "dashboard."
They have 200+ brands sold over about the same number of markets.
Its useful to provide high level dashboard summarising key metric.
The alternative was some god awful platform without a WYSIWYG editor where you have to code surveys by hand, an enormous waste of time and very inflexible compared to Qualtrics.
Qualtrics basically brings the concepts from that field down into SaaS products and makes them more approachable.
A more typical business is building for a wide variety of people from heterogeneous backgrounds and selling during relatively low-touch encounters. There if you want to know what is going on with customers you need ways to find out and ways to sift the data into useful forms. It's not an easy problem.
I consulted for one company in a consumer-focused service business. They were very energetic users of Net Promoter Score  surveys as their default measure. New product? Everybody gets the 1-question survey option after using it. They'd see how that compared to their other products and to competitors. If scores were too low, they'd dig in with other research tools to find out why; new product revisions would be made and measured similarly. It worked very well for them, in that it kept people focused on actual customer experience and not on the HiPPOs .
It was such a core part of their culture that they went for related tools internally. When they were changing their software development process, they used NPS scores and other internal surveys to see how it was working for their thousands of developers. To my surprise, I saw the executives taking the numbers very seriously, well aware of the limitations and risks with surveys. I expected to be kinda BS-ish, but I didn't see that at all.
As to your terms:
Value proposition is basically, "What's in this transaction for the customer?"
Customer segmentation is where you notice your customers respond differently to stimuli, so you divide them up into groups. For example, just yesterday we were talking about fancy LED Christmas lights.  One customer segment is general-audience consumers who want fancy light displays at the press of a remote. But our customer segment is people who like hacking things, the computer-skilled DIYer. So the value prop for the first segment is something like "make your Christmas tree interesting and different", while the value prop for the second is "this year, hack your Christmas tree!" There are other segments and other key value propositions, which is why there are more kinds of Chrismas lights on the market.
Targeting is just taking particular actions in terms of a particular customer segment. For example, if were making hackable Christmas lights, I wouldn't buy a superbowl ad. I'd use very targeted advertising to reach my computer-skilled DIY market. As well as content marketing, where I'd have somebody write good blog posts about exactly how to hack the lights, so that the posts would end up on HN, Slashdot, Reddit, etc.
Is that helpful?
I guess as companies spend vast amounts to get visibility online (e.g. where Google and Facebook revenue comes from) they need to be able to measure what they are getting for all that money.
I imagine, based on my own experience, the average tech worker thinks of surveys as small sets of questions used to easily and quickly collect a few data points. SurveyMonkey is fine for that. But for the types of real surveys that provide the data for serious research, Qualtrics is what you need. I've used it for government surveys, sociological, health/medical, etc., web and in-person, with lots of flow control, randomization, and all the other features needed to produce robust and accurate data.
1. It gives a great morale boost so many other not so sexy US places outside of silicon valley. YES big success possible outside of Silicon Valley.
2. Now with this big SAP investment, UTAH will get considerable 'tech employment' boost longer term instead of same old crowded Silicon valley & New York (sky rocking housing prices)
3. The way the company grew organically for long time instead of hitting VC money from day one (another big company that did was Atlassian)
4. a very rare father-son founder company and a family company (brother and many of family members in big roles)
> both his parents held doctorates and his father lectured about market research at the University of Oregon. The Smiths moved to Utah around the time Ryan’s father opted to work at Brigham Young University, and in 2002, the pair started Qualtrics, originally targeting academics that needed to conduct field research.
SAS is an interesting company, both for their revenue growth and their work culture.
>During the 1980s, SAS was one of Inc. Magazine's fastest growing companies in America from 1979 and 1985. It grew more than ten percent per year from $10 million in revenues in 1980 to $1.1 billion by 2000. In 2007, SAS revenue was $2.15 billion, and in 2013 its revenue was $3.02 billion. By the late 1990s, SAS was the largest privately held software company.
>SAS is well known for its workplace culture. The company was used as a model for workplace perks at Google and is taught as a case study in management seminars at Stanford.
The page about the SAS CEO, James Goodnight, is also interesting:
I engineered in both offices. VP of engineering and product are both in Seattle and there are MORE engineers in seattle if talking absolutes.
I've heard some good things about the tech scene there, apart from Domo.
Qualtrics has come a LONG way in terms of underlying product quality, but they themselves got by for a long time selling the shit out of a product that could barely deliver. The company is 50% salespeople.
Less than a year ago their APIs were going down every day because of the crappy pile of legacy PHP monolith they were built on. They have brought in some very smart engineering leaders to transition to a more modular and scalable core product, but there's a ways to go.
Another thing that really sucked about the organization was that half the engineers are professional services engineers building custom, overpromised, one-off solutions for large customers. The vast majority are almost completely unmaintainable and they do a very poor job of leveraging previous work or having cookiecutters/shared libraries to accelerate custom development.
With all that said, I think their market opportunity is fucking gigantic and they are serious about curing the underlying inefficiencies of the organization. They are the leader of the field in a time when pretty much every C-suite is realizing they need customer & employee experience data to stay competitive.
They expanded into Customer Experience and Employee Experience products with the big enterprise deals and fat margins that come with them but were much worse at those things than specialized competitors. They then came up with the concept of "Experience Management" to tie the data together. This is actually pretty cool stuff - Ford was able to find which crappy conditions at their dealerships were driving lower sales, etc etc. The strategy was basically if we can offer a total package where we're pretty good at everything, we'll beat competitors that are excellent at one thing.
Kudos to them for avoiding VC money for so long.
So anything marginally better could certainly be worth much, much more (as in this powerful Qualtrics products suite).
We've used it both personally and in business environment, and it was always very difficult to get sound and/or image, connecting properly was always a crap shoot and included 5-10 connect disconnect before finally getting audio and video on both sides.
Very painful to use.
Glad some of you had better experiences.
...which unfortunately destroyed the full P2P nature.
• An insistent awareness that there are alternatives to the conventional solutions.
• Going directly toward the biggest challenges, early on.
• An understanding that engineering strength is more valuable than money.
• Willingness to weasel into industries with hard-to-open doors.
It's illegal. That's why not all English teachers in Korea are doing it.
Now that I stop and think about it, it's likely illegal in the US, too. Interfering with mail services might well be a federal crime. (or maybe not, I really don't know).
...that Draconian approach was the brainchild of Korea’s military leader, Chun Doo Hwan, who took power in 1980 and almost immediately banned private teaching (known as kwawoe). Chun’s goals were to equalize educational opportunities for the poor and to relieve parents of the burden of paying for education. The ban lived on until last month, when the Constitutional Court, Korea’s highest court, ruled that it is unconstitutional because it “infringes upon the basic rights of the people to educate their children.”
I wonder though, how is there space for: Qualtrics, Survey Monkey, Wufoo (back in the day) and a lot of others that I presumably don't know about.
I feel most of these survey engines provide the same thing.
It would have been a nightmare trying to do surveys on some home-brew web server survey system. I saw something similar happen once (study needed real-time tracking of user inputs to a degree which wasn't possible with other systems), and it involved a physical security audit of the server as well as university IT being involved. Project was delayed by a few months getting it through IRB.
For what it's worth, I found Qualtrics to be a a flexible, extendable platform for my unique survey needs. The study I was working on involved people comparing 3d models. Even though an STL viewer wasn't provided by Qualtrics, I was able to use an iframe to display the models in the survey.
>Qualtrics reported revenue of $190.6 million in 2016 and $289.9 million in 2017 representing year over year growth of 52%. In 2016, Qualtrics reported an overall net loss of $12 million with free cash flow of $3.4 million. In 2017, Qualtrics reported a $2.6 million net profit with free cash flow of $21.3 million
Is it normal for companies to be bought at 30x their revenue or am I missing something obvious (may be the wikipedia stats are off) ?
Edit: 2018 revenue according to this article is $400mil. That would mean a 20x.
1) those are 2017 numbers, so if we assume they grew by the same amount, they’re over 400m this year, which makes it only 20x
2) the article mentions that SAP is paying a 75% premium over the IPO valuation, because the road show was going well, they felt like they had to do it.
3) a 10-12x revenue valuation is not unreasonable for publicly traded companies
So, they’re growing like crazy, IPO plans going great, Sap comes calling and qualtrics basically says “why should we sell? We did all the annoying IPO work, what are you going to offer us to make this worth our while?”
It’s basically the perfect negotiating position.
I know a lot of publicly traded "cloud" companies are in fact valued like this. I suspect very strong that this is because analysts thing that they have cracked a business model that is very easy to predict and expand rapidly: very low capex, very low-churn (earnings calls talking about "retention rates", NPSs), and easy to predict even high growth (ARR retention/expansion).
I think several early players like SFDC and Splunk have created this impression.
P/S > 3-4 had been pretty unusual up until recently. All companies are worth the discounted sum of their future cashflow, whatever that may be. To see P/Ss 10+ you are projecting both serious growth and very high margins. I wonder if one looked at the whole space if the 5 year projected earnings of all the companies together would make sense, or if we're collectively under-discounting risk (ie, sum total of all cloud SaaS companes far exceeding the reasonable TAM)
All that being said I think you entirely nailed the chain of events leading up to the acquisition.
I won’t argue if this is warranted, but companies like this have:
- Very high gross margins once you take out fixed costs. (80+%) This implies massive profitability once you exceed fixed costs.
- Negative net churn. (Their existing accounts grow more than they lose) This implies if they got rid of their sales force, they could still grow.
- Their payback on sales investments is quick, usually less than a year. This allows them to heavily invest in topline growth.
When you do all this, the math works at 10X in a low interest rate environment, or if you project a very long growth period. Perhaps 20X is Fear Of Missing Out?
The stock market’s reaction to SAP (Knocking off 5 non in value) suggests that 8-10X is more reasonable.
However, if the revenue is $190m followed by $290m followed by $400m, then that shows that the expected future revenue (which matters for the valuation) likely is much larger than $400m, so it takes a much smaller, more reasonable multiplier to reach $8B.
It's not normal, but you have to define what normal is. A few things worth noting (which are all speculative btw):
- SAP doesn't have a solid CX platform, but has tried to push this to the market for years because the demand is there
- SAP has arguable the strongest foothold in the top 2000 businesses in the world.
- SAP once organically grew their ERP products but decided somewhere around the late 2000's that it couldn't innovate any longer but know cloud/SaaS is the future, so their growth has been largely due to acquisition of cloud/SaaS providers. They want to continue to tell the street they're growing subscriptions and this is one way to do it.
- SAP sales is top tier (whether you like it or not). If their revenue is $400m they'll easily be able to sell 2x that in short order to their existing client base. This is what M&A guys often call "synergies". If you assume 30% eventual gross margins, then a potential ROI is foreseeable.
That all being said, if the market for this type of service isn't there at enterprise scale ($1B/yr revenue), then it's probably overpriced.
>Qualtrics had filed for an initial public offering in the U.S. and was planning to raise about $500 million. SAP CEO Bill McDermott preempted the IPO with an all-cash offer that was more than 75 percent higher than the company’s projected valuation. McDermott said in a conference call that SAP had to pay up because Qualtrics roadshow was going well
> SAP CEO Bill McDermott preempted the IPO with an all-cash offer that was more than 75 percent higher than the company’s projected valuation. McDermott said in a conference call that SAP had to pay up because Qualtrics roadshow was going well.
Ford, for example, has revenue of $37.67B last quarter but net income of only $991M. With a market cap of $37.31B, that means a price to earnings ratio of 9.5.
Microsoft had less revenue, at $30.08B last quarter, but net income of $8.87B. It has a market cap many times that of Ford, at $841.08B both because it has so much higher earnings and because it has a PE ratio of 23.9, which implies that the market things those earnings will grow at a good clip.
Not sure if you couldn't build it your own for that kind of money.
Even so, Qualtrics got a really good exit here.
Huh, interesting. This is exactly the opposite of my experience. I would have said those articles always bloviate about Silicon Slopes.
But on the other hand it makes me feel like I'm looking at the equivalent of a popular Instagram model. It's hard to not compare myself and feel disappointed.
HN doesn't inspire me to do something with my life like it did 10 years ago. Perhaps it's my fault.
My guess is that businesses like mine are more common than VC funded ones but we only get to see VC funded ones because that's what the news covers.
But the bootstrapping community is filles with its own kind of people.
Not much overlap.
Dozens of us!
Where do you talk?
I only tried IndieHackers and there were too much "hustlers" for my taste.
What would it take to create a bootstrapper community that doesn't attract hustlers.
Many of the Chinese 'fraud-cap' companies were taken public in this way: https://www.nytimes.com/2011/07/24/business/global/reverse-m...
(I was a growth engineer and an admin for the Stripe instance, Their stripe account had lots of money flowing through and that was just for sub-5k deals.)
humble CEOs build wholesome companies!!!
CEO in a company here is drawing total compensation $2.2mil ($400+K + stock awards) Company is loosing $15mil/year for 10+ years already. Pathetic and greedy IMO.
But how much of this is down to patient employees and (relative) lack of alternative employers?
Could this be done in SV/Shenzhen/London where a good employee has multiple offers. This worked out great for the employees here. But in many other cases the founders get early rewards for building up a company, and are in no rush to IPO or sell because they are cashflow -balanced.