Dave Goldberg is half of one of Silicon Valley’s most powerful couples.
He’s the CEO of uber successful Valley company SurveyMonkey, with an epic career that began in the Internet bubble days. And he’s married to Sheryl Sandberg, the COO of Facebook.
By any measure, Goldberg has a fantastic life. And it’s easy to see why: he’s smart, witty, but laid-back, the kind of that can swap funny stories one minute and argue economics the next with a waterfall of top-of-head facts.
While Goldberg’s rise to success seems almost effortless, it wasn’t always easy.
He spent much of his early career being “out of favour,” as he describes it.
The law-school road not taken
Goldberg grew up in Minneapolis, the son of a law-school professor, making him “a lifelong, pathetic Vikings fan. I made my kids into Viking fans, so they will carry their misery with them, too. A little disappointment in life goes a long way,” he laughs.
He went to Harvard getting an undergrad degree in history and government and planned to go to law school after a two-year hiatus. During that time off school, he worked as a consultant for Bain, travelling the world and living in Boston, Sydney, and San Francisco.
But two weeks before he was set to start law school, “I came to the realisation that I didn’t really want to be a lawyer,” he said. “Sometimes the things you decide not to do are actually the biggest things to do in your career.”
“Sometimes the things you decide not to do are actually the biggest things to do in your career.”
Although he enjoyed working for Bain, he also knew he didn’t want to be a consultant.
He had no idea what to do. He thought about going into the tech business.
“I looked at Microsoft but it was really hard to imagine moving to Seattle and the rain when you were used to living in San Francisco and Sydney. When you are 24, that does make a difference,” he says.
Then a friend called him with a tip about a job at Capitol Records in L.A. Goldberg is a huge music lover who had at the time a 500-CD music collection.
“I have almost no musical talent, but I knew a lot about music and that’s how I got the job,” he says.
The job involved coming up with new ways to sell music.
For instance, he convinced the company to sell its Beatles catalogue on CD and helped the company double sales.
He sold music to be used with video games when the industry switched from cartridges to CD-ROMs.
He, along with the vice president of Starbucks and a store manager named Tim Smith, started selling CDs at Starbucks. (Smith picked the music.) In fact, Starbucks just ended the CD program February. “But for 22 years, they sold a lot of CDs,” he says.
But, he wasn’t 100% happy with his job. “There were a lot of things broken about the way record companies were run,” he explained.
Crazy for selling ads on a computer
“I decided I had to start something. It was more the motivation to try running my own thing than because I had some brilliant idea. I had the motivation first and then the idea came,” he says.
I had the motivation first and then the idea came,” he says.
The Starbucks deal, which helped people find songs they wouldn’t hear on the radio or MTV, gave him his idea.
“There was a lot more music getting created that no one was ever hearing. I saw this when I was at the label. I realised that the computer could be a better way to do it,” he says.
So, “with my best friend from high school, we quit our jobs. We started what became Launch Media with the idea that we were going to help people discover new music.”
One problem: they didn’t have any money.
So they maxed out their credit cards and hit up friends and family.
“Those were the only people crazy enough to give us money. We raised $US100,000 at a $US1 million valuation, post — so not today’s valuations,” he laughed.
And he was sort of crazy. This was 1993. PCs were young. The internet wasn’t yet a thing. Launch Media began as an electronic magazine of sorts, distributed monthly by CD ROM. It contained interviews and live music, but it didn’t actually sell the music. It was supported by ads.
“In some ways, we were too early. What we got most of the attention for was advertising. People had never seen advertising on their computer. We had a lot of investors tell us: ‘No one will ever want to advertise on computer.’ Very well respected, successful venture capitalists,” he laughs.
Watching $US285 million drain away
Soon Launch Media expanded from CD-ROMs to internet streaming. The company wasn’t profitable, but it was bringing in money and he could see profitability on the horizon. So, like lots of internet companies in the heady days of 1999, he took the company public.
“People weren’t’t throwing money at me, we were always out of favour. When people wanted me to be selling music, I was like, ‘No, we’re ad supported,'” he explained.
After the IPO, at the height of the bubble (March, 2000), the company was worth about $US300 million, he told us.
That’s when Yahoo, and a couple of other companies, came sniffing, looking to buy Launch Media.
It took 15 months for the bidding to wrap up and by the summer of 2001 the sale was finalised. But by then, the bubble had burst, big time.
He watched his company’s stock drop like a rock, down 91%. Yahoo’s stock dropped too, down 94%.
So no, it wasn’t a great exit. It was a total of like $US15 million, so it wasn’t a lot of money.”
“It would have been a much better exit had we gotten it done a year earlier,” he laughs about it now.
“At the time Yahoo’s stock was also very low. It ended up being OK at least for my employees who got stock options at Yahoo at the time. So no, it wasn’t a great exit. It was a total of like $US15 million, so it wasn’t a lot of money.”
But he said, “Yahoo was the right place for us. So we were glad they actually wound up winning.”
Rocky times at Yahoo
He went with his company to Yahoo, a job he kept for six years. It was a rough time to join Yahoo.
Its first CEO, Timothy Koogle, had just stepped down. Terry Semel was hired and although buying Launch Media wasn’t his idea, he did sign off on it and support the new music unit.
But it was a rough time.
“Things are bad in 2001 at Yahoo. There’s been layoffs, restructuring, lots of people left. But I got a lot of support from Terry and everybody else there,” he remembers. “So for the first 3 to 4 years they kind of left me alone and let me build a great business at Yahoo.”
He and his team stayed in L.A. and they rocked. “We built the world’s largest music site at that period of time, 60 million unique users. We were doing, in 2006, over 5 billion music videos a year, which doesn’t sound like much by today’s numbers but it was far and away the largest video site, period, let alone music site. And we built a subscription music product that had well over half a million subscribers.”
I was there to win in music, and if we weren’t going to win in music because we couldn’t invest in it, I left.
But Yahoo’s search business was tanking, in part to the burst bubble that tanked the whole tech world, and in part to the rise of a young startup called Google.
“Yahoo made the choice to invest in the search business” to try and rebuild it. That meant not investing in its media properties like the music site.
“I was there to win in music, and if we weren’t going to win in music because we couldn’t invest in it, I left. Most of my team left. A lot of people left Yahoo.”
Commuting from the Valley to L.A.
When he started the job at Yahoo, he also started dating Sheryl Sandberg, whom he met years earlier.
“I met my wife in ’96 in LA. But we didn’t start dating until 2002. We went on a trip and we started dating. I was still in LA and she had moved to the Bay Area,” he says of their courtship. “I lost the coin flip as to where we were going to live. I liked L.A. and my job was in L.A.”
But he moved to the Bay Area anyway, and commuted to work in L.A. which was “challenging,” he says.
It was 2007, about 8 years ago, when he grew frustrated enough at Yahoo to quit.
Between the sale of his company, his job at Yahoo, and Sandberg’s job at Google (where she was a VP of ad sales), he didn’t have financial concerns over quitting, he told us.
I prefer to have the customers pay me, versus having to sell ads
But once again, he didn’t know what he was going to do with his life.
All he knew was that he “definitely” didn’t want to do music again.
“I feel like we changed how people learned and discovered music,” he says. “Everything else beyond that, was just going to be derivative of what we’ve done.”
“I’m excited to see Spotify, Pandora, and my friend Ian Rogers is running Beats Music, he worked for me at Yahoo for years,” he adds. “I’m excited to see all of those things but to me it was just more of what we already did.”
And he also didn’t want to have to sell ads. He wanted a subscription business.
“I did that [sell ads] for a really long time. I prefer to have the customers pay me, versus having to sell ads,” he says.
When we pointed out that his wife makes her living selling lots of ads, he laughed. “It’s a personal preference. There’s nothing wrong with selling ads.”
While in drifting mode, he took a gig as an entrepreneur in residence at VC firm Benchmark.
“I didn’t know what I wanted to do, but I knew I didn’t want to go run someone else’s startup, which is actually the path of least resistance as an EIR,” he says.
“You see all these companies come through and there’s a couple of star engineers. You sit in the in pitch meetings and the VC says, well David, you go run this, they need a CEO. And I’d have to say, but I don’t want to run someone else’s company.”
He decided to go run someone else’s company after all. But he didn’t get there through Benchmark.
He was introduced in the fall of 2008 through another VC through his work at Ancestry.com, where he was a board member.
“I knew what SurveyMonkey was. My team had used it at Yahoo, but I had never really thought about it as a business,” he said.
“It turned out to be this fantastic business with a great brand, incredible customer loyalty, super profitable business model, very viral … and no team. Literally, there were 12 people there, seven were on the customer support team.”
So there was this fear factor of, oh my God, what if I do something up and screw up the business?
It was more than a little nerve-wracking at first.
“It was a little scary in the beginning because no one could explain to me why the business were working so well. The founders were great people. But it was too small a team to figure out how the business had gotten to be so big,” he explains.
“So there was this fear factor of, oh my God, what if I do something up and screw up the business?
We don’t know why it’s so good. So my first rule was to do no harm to something that was working.”
Taking on $US1.2 billion
Flash forward to 2012, and Goldberg has clearly not hurt SurveyMonkey.
As part of a $US350 million debt financing package, the company released annual 2012 revenue: It booked $US113 million in revenue and made $US62 million in profits (EBITA), he told us. SurveyMonkey hasn’t released updated figures but Goldberg says, “Obviously, we’ve grown since then.”
In 2013 and 2014, the company suddenly took on huge chunks of VC investment, too: $US450 million in one round and a few months later, another $US250 million, ending at a valuation of $US2 billion.
Between debt and equity, SurveyMonkey wracked up about $US1.2 billion in investment.
Goldberg said he used the money to cash out equity instead of doing an IPO.
“We made the conscious decision that we’re not going to go public just to get liquidity for people.
“All the money has gone out to investors and employees,” he said. “We made the conscious decision that we’re not going to go public just to get liquidity for people.”
He adds,”I’m not saying we’ll never go public but we’re not going to do it just to get cash for people because there’s plenty of cash available in the private market these days.
“That wasn’t the case when I took my first company public and it wasn’t the case even five or six years ago. But today you can raise over $US1 billion as a private company to get liquidity for people. That’s changed and makes it possible to stay private.”
He did clarify that the company kept about $US70-ish million of the last round “to have cash on hand to do an acquisitions” but insisted, “the founder, Ryan Finley, never raised any money.”
From surveys to big data
SurveyMonkey seems to be thriving on other counts, too. From those early days with 14 employees, the company now has 500 employees, creates 90 million completed surveys a month in 60 languages and has 25 million customers, including those that use it for free.
It has expanded into partnerships with companies like MailChimp, Hootsuite, Zendesk, and Salesforce that integrate surveys into their wares.
“I really like the mission at SurveyMonkey which is, we help people make better decisions. It’s just a great thing,”
And earlier this month, it rolled out a new “big data” service called Benchmarks, which lets customers compare their survey results to others who asked those same questions. So a company can, for instance, compare its customer or employee satisfaction ratings against its industry.
“This has been something that people have had to pay a lot of money for, been hard to get, hard to find. It’s something you can only do with our scale,” he says.
And he’s clearly happy with this job. “I really like the mission at SurveyMonkey which is, we help people make better decisions. It’s just a great thing,” he says.
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