Every fire needs fuel, and Provo-based Qualtrics just stockpiled enough fu...Read More
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The Speed of Business
Qualtrics Hits it Big with Fast Data
By Dan Sorensen, Photography by Eric Delphenich
October 7, 2014
Every fire needs fuel, and Provo-based Qualtrics just stockpiled enough fuel to super-charge its already incredible growth. In late September, the company announced it had landed a $150 million Series B round of funding, led by Insight Venture Partners with significant participation from its original investors, Accel Partners and Sequoia Capital.
In announcing the deal, the investors pointed to Qualtrics’ continued growth and—more impressive—consistent profitability.
“The ability to stay profitable while in hyper-growth is very difficult to do, and Qualtrics is one of those rare success stories,” said Ryan Sweeney Accel Partners in a prepared statement. “Naturally, we’ll invest in profitable, fast-growing companies with strong financials and great management teams all day long.”
“Hyper-growth” is also how CEO Ryan Smith describes his company’s trajectory. “We hired 200 employees last year; we hired 100 employees last quarter,” he says. “We’re expanding internationally with multiple products, and now we have over 6,000 customers.”
The latest investment round will fuel continued expansion into new markets, as well as new product innovation. Indeed, Smith says there is no limit to the company’s potential growth. Qualtrics’ “insight platform” enables companies to gather real-time information from customers and employees.
“We target absolutely every organization and every business in the world. We’ve got Qualtrics users from soccer moms asking about soccer practice to the world’s biggest airlines and the world’s biggest tech companies, and government agencies trying to find out what’s going on with their websites or programs they’ve put in place. Ultimately, we’re just helping organizations be right—and as many organizations that need to be right, that’s how big our market is,” says Smith.
Qualtrics grew out of a partnership between Smith and his father, Scott M. Smith, who was a professor at the Marriott School of Management at BYU. Scott Smith was developing a survey tool to use in his classes and for his own market research. Together, father and son realized they could forge a business around the concept.
The company’s first clients were universities, which used the survey platform to conduct market research. At the time, online market research was still very foreign to most companies, but universities were beginning to take the plunge. Now, a decade later, Qualtrics offers a variety of products to meet the needs of almost any business or industry.
Over the years, says Smith, Qualtrics has operated by a set of three principles: no outside funding, eat what you kill (always remain profitable), and nail it before you scale it (ensure the product is solid before expanding). The latter rule led to the company rebuilding its product four times to ensure scalability.
These guidelines have allowed Qualtrics to grow at a steady pace over the last decade. Qualtrics has been profitable since inception, with more than 50 consecutive quarters of profitability. The company even prospered throughout the recession, as more companies grew eager to better understand their customers and work smarter, not harder.
“We started to think, ‘How do we do it faster?’” says Smith. “We had nailed it. We had a proven model. We had grown to $50 million in revenue with no marketing, no executive management and a limited amount of employees. We hadn’t put any infrastructure in place, and we had a bunch of money in the bank—so what would happen if we fueled the fire?”
This question is what finally led Qualtrics to take outside funding, after years of turning away interested VC firms. In its first round of funding, Accel Partners and Sequoia Capital invested $70 million—the largest the two VC firms have ever jointly completed. And with that fuel, the company now boasts more than 6,000 customers and over 500 employees, with both numbers continuing to grow rapidly.
In 2013, Qualtrics customers sent more than 1 billion surveys, a number that has nearly been doubled in 2014. Each day, the Qualtrics platform hosts over 2.1 million active surveys. And on top of that, the company has achieved a compounded annual revenue growth rate of over 90 percent during the last five years.
“Big data” is a term that gets bandied about all the time. But what, exactly, is it? And what is it used for?
Big data is the analysis of information so large and complex it can be difficult for traditional systems to process. The challenge is magnified when data needs to be processed in real-time, as it is created, to identify trends as they form and provide companies with the ability to take immediate action.