Sequoia Capital and Accel have invested a hefty $70 million into Qualtrics, a do-it-yourself market research firm and the largest enterprise software company that you’ve probably never heard of. That’s the biggest joint investment the firms have done together and a whopper of a Series A.
Qualtrics is 10 years old and has more than four thousand customers in 75 countries. There are three reasons why you’ve never heard of it: It’s in Utah, it sells mostly to academics, and it’s been entirely bootstrapped until now. “We’ve kinda done everything our own way, starting in a basement and hanging out until we could convince people to do their own market research online,” says Ryan Smith Qualtrics founder and CEO.
The idea was that the Web had disrupted most industries, but even Web companies still paid outside firms an arm and a leg to do surveys, gather and analyze data on their customers and businesses. To Smith, it seemed obvious that you could build tools powerful enough that companies could do this themselves and save money — and most importantly own all that juicy data.
He co-founded the company with his dad, who was an academic and provided a built in case study for the product. Not sure how to crack the Fortune 500 (back then) the two mostly peddled the product for academia. Universities went nuts for it, because it was robust enough to provide PhD level results but easy enough that students could conduct and analyze the research. And it was priced based on how many surveys you do, not how many users you have, so a whole class could use it together cost-effectively.
In 2008, companies discovered Qualtrics, and its business exploded. Its revenues have grown in triple digits since 2008, more than half of the Fortune 100 companies use it, including Barnes & Noble, Neiman Marcus, Microsoft, Southwest Airlines, and Toyota.
Companies started grabbing Qualtrics licenses not because the company hired a swashbuckling sales force, but because companies suddenly needed better intelligence in the wake of the financial collapse. “Companies started really asking questions, and suddenly peoples jobs were on the line,” Smith says. “They saw how easy it was to use and it just took off.” 95 percent of the customers have all come in through word of mouth, with little marketing spend, Smith says.
“People want to know why people were abandoning shopping carts, or where they should send their next cruise ships, and those answers aren’t in your CRM tools,” Smith says. “They’re outside the company.”
One of the cool things about Qualtrics is how it marries that data it gets from outside with the data inside the organization, and sews it all up in a powerful analytics dashboard. Ten years after its founding, it is suddenly in the middle of two hot trends: Next generation enterprise software and big data. Huge data in fact: The company is doing millions of surveys at any given time.
Smith will use the huge injection of cash to aggressively expand. It has only recently introduced its second and third product. Qualtrics 360 is a platform for doing 360 degree evaluations, and Site Intercept is a cool tool that works with the core product to grab a specific customer and ask them why they are abandoning a shopping cart or trying to lure them back.
Most important to Smith, they’ll almost double the size of the company. He’s going to create 250 new jobs in the next year — many of them in his home of Provo, Utah. (Also the home state of our beloved Pando trees…) “We have always wanted to be a big company but we wanted to do it here,” Smith says. “This has been a great vote of confidence that we can indeed build a multi-billion dollar company in Utah. I don’t just want to do something great, I want to do something great in Utah.”
[Disclosure: Accel Partners is also an investor in PandoDaily.]