Five years ago, Qualtrics CEO Ryan Smith stared at a $US500 million acquisition offer for his bootstrapped company doing $US50 million in revenue — half a billion dollars! — and he said, “No.”
Instead he gambled on himself and his family, taking an investment from a VC who convinced Smith to keep the company and to build it bigger themselves.
On Wednesday, Smith announced some sweet satisfaction. The company raised $US180 million in its third round of financing that valued Qualtrics at $US2.5 billion, 250% more than that offer.
Better still, Qualtrics is now on track to earn $US250 million in revenue this year, Smith tells us.
And the value of his company has increased 150% since 2014, when it last raised money ($US150 million) and was valued at a $US1 billion. Qualtrics has now raised $US400 million in total funding, through just three rounds.
The latest round was led by Insight Venture Partners and Accel, with participation from Sequoia Capital.
The Utah-based startup is one of our favourite tech startup growth stories. Back in 2012, when turning down a half a billion dollars, Smith was 33 years old. He had founded the company with his dad, Dr. Scott Smith, a respected professor of marketing at BYU’s school of business, in Dr. Smith’s basement after Dr. Smith was diagnosed with cancer. (He survived.)
Qualtrics offers online market research survey software based on the work of Dr. Smith and it had a particularly smart business model. The Smiths sold it first to universities to be used by students to learn marketing skills. Those students took it with them to companies after they graduated and landed jobs.
Qualtrics still does online surveys, specializing in customer and employee feedback, but has since expanded into big data analysis and counts over 8,500 companies as customers, including much of the Fortune 100 and many business schools.
Jazz for cancer
While the company is still in the red thanks to heavy investment, Qualtrics is throwing off plenty of cash via gross profits, Smith says. So much so, that it can afford a single ad campaign that costs “multi-millions,” that doesn’t even raise awareness for the company itself but for its “5
for the Fight” cancer charity, Smith tells us.
That’s how much Qualtrics committed to pay to buy a sponsorship patch for the Utah Jazz NBA team. Instead of the Qualtrics logo, the Jazz team sports the 5 for the Fight cancer research foundation logo on their jerseys
While he wouldn’t say exactly how many millions Qualtrics committed to this campaign, GE is said to have paid over $US7 million a year to buy a similar patch for the Boston Celtics.
“We probably did the craziest thing I can think of to do for cancer fundraising,” says Smith of the high-cost sponsorship, but says that the players and the NBA “love it” and are happy to be using their jerseys to fight cancer. Qualtrics is trying to raise $US50 million for cancer research over the next three years, and this foundation asks people to give $US5 in honour of each person they know who has suffered from cancer.
You get a car and you get a hot date
The company has also garnered a reputation for giving over-the-top gifts to random customers who attend its annual customer conference. A couple of years ago, after a survey asked customers what they wanted the company to do for them, one customer joked he wanted Qualtrics to help him buy a wedding ring for his fiance. So the company bought the ring.
Last year, when one customer said he wanted a Tesla X, the company loaned one to him. It was the only Tesla X in the state of Utah and happened to be the one just delivered to Qualtrics cofounder, Stuart Orgill.
And this year, a customer said she wanted a date with Smith’s very eligible brother Jared Smith, a former Google exec who’s been with Qualtrics since its early years.
“I didn’t tell him. I said on stage, he’s available, never been more available,” Smith laughs. Jared Smith graciously asked her out to a front row viewing at the company’s private Elton John concert, including a back-stage meet and greet.
In between all the fun the Smiths are clearly having as they grow a multi-billion company, they are on track for an IPO in a couple of years. The company’s board just added Murray Demo, the CFO who guided Atlassian to its 2015 $US4.4 billion IPO.