The cheese stands alone: Hearsay Social's SaaS platform shifts to direct selling after all its competitors sell out
During the great social media SaaS bubble of 2011, Hearsay Social, a tool for publishing social media content built by up-and-coming social media expert Clara Shih, was often grouped in with its peers, Buddy Media, Wildfire, and Vitrue. Made sense -- Shih literally wrote the book on social media marketing, The Facebook Era.
At the time, industry observers wondered if Hearsay, and the few of its peers that didn't get acquired, had missed the boat. Sure, this business model -- helping companies figure out social media -- had been hot and in-demand. But all the potential acquirers had done their shopping.
As it turns out, some of those businesses were more hot than they were impressive. Many were surprised to discover that Buddy Media, which a sale valuation of $745 million, had only made $18 million in 2012 on a loss of $35 million. What's worse, the more it grew, the larger the company's losses became. That's not how enterprise model is supposed to work -- the whole idea is that more people who use a product, the better margins become. Buddy Media was burning $3.5 million a month.
Perhaps as a lesson from that situation, Hearsay has shifted its model to find its a viable niche in the social platform market. The company has always focused on clients with many local branches. Hearsay's tools are meant to streamline the permissions side of things (so that local branch managers can post onto their Facebook pages but a central manager can enforce policies, workflows and approval processes).
Now, the company is more focused on direct selling than in the past. As we move through phase two of this whole social SaaS platform wave, Hearsay has decided the future is "social sales."
Many companies spend money on social media because they think they have to. Meanwhile the entire advertising industry is still struggling to figure out how to measure performance so advertisers can tell their bosses that it works and continue to allocate money there. ROI on social has always been Shih's thing. Hearsay puts out regular Social ROI reports and Shih frequently positions herself as a thought leader on the topic with speeches, white papers and guest posts.
Now, Hearsay is focusing on direct sales, which is very different from the rest of its social media peers. Facebook wants advertisers to think of its ads like TV, which, conveniently, falls under the amorphous category of "branding" and carries no accountability or ROI. Another social SaaS platform Percolate focuses on the content side of things, helping its clients figure out what to share and how.
But Hearsay has positioned itself as a tool for getting sales leads on social media.
"The first few years of Hearsay Social we were heavily focused on the "say" part of social media," Shih says. "However, as retail and institutional customer behavior has fundamentally changed due to social, mobile, digital trends, heads of sales are now recognizing the critical importance of social sales."
The shift allows Hearsay to move beyond compliance and branding to actual prospecting for clients on social media. "With the Hearsay Social platform, sales representatives are now able to 'hear' buying signals in their customers lives, and reach out to them with the right information at just the right time,'" she says.
It has worked: In the last year, the company has doubled its client base, adding banks like Raymond James, Mutual of Omaha, Bank of the West, as well as Nationwide Insurance and Allianz Global Investors. Its active users number 10,000, which Forrester says is the country's largest deployment of an enterprise social relationship platform. The company also expanded to Europe this year and expanded to more than 100 employees.
In turn, Sequoia Capital and NEA today announced a $30 million investment into the company, bringing its total funding to $51 million. Hearsay may have missed the acquisition wave its competitors rode. But that opened the door to a whole new market.