SaaS Interviews with CEOs, Startups, Founders
931 Qualtrics "Well Past" $250m in ARR, When Will The Go Public?
10 Feb 2018
Chapter 1: What is Qualtrics and what problem does it solve?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
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Chapter 2: How did Ryan Smith handle a $500 million acquisition offer?
Hello, everyone. My guest today is Ryan with Qualtrics, Ryan Smith specifically, co-founded Qualtrics back in 2002 with the goal of making sophisticated research simple. He was named to Fortune's 2016 40 Under 40, a list of the most powerful, influential, and successful young people in business, and was also listed as one of Forbes America's most promising CEOs under 35 in 2013.
He's a graduate of Brigham Young University and is a frequent guest lecturer there, among many other places. Ryan, are you ready to take us to the top?
Let's go.
I'm just going to cut right to the chase here because a lot of people I think are probably familiar with your story. You had a $500 million offer a few years ago and you're 33 years old. What's going through your head and how do you rationally convince yourself to say no to that offer in the moment?
Yeah, I think this is an interesting point where people don't probably understand what drives them on one angle and also how long they're going to work for.
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Chapter 3: What is the experience management platform offered by Qualtrics?
And I was pretty clear that I knew that I'm going to work until I'm 80 years old. And so if you actually think about what you would do if you sold your company, and mind you, it's my dad, my brother, and myself. And it's like grab your coat and go home. It was that kind of an offer. I think you really got to say, hey, what am I going to do next?
And I remember getting in a car with my wife and driving on a four-hour drive. We got about 30 minutes. And she's like, Ryan, I don't need you around the house more. This isn't going to do you any good. And by the way, like the path of least resistance is to go build Qualtrics.
Chapter 4: How has Qualtrics grown since its founding?
And so, you know, obviously we were pretty bullish on it becoming a multi-billion dollar platform. And I think we were right.
Yep. All right. Give us the back. So for people that don't know your product set, what do you do and what's your general business model? How do you make money?
Yeah, we have an experience management platform and we view that everything and where the world's going is around the experience economy. We care about experiences. We behave with experiences in mind, our habits around experiences.
Chapter 5: What role does data play in Qualtrics' business model?
But companies historically are really bad at understanding experiences, not from their employees, from their customers and the market. So a lot of times they'll be surprised when an employee leaves and they don't understand, you know, the experience gap. They thought they were providing something to the employee, but they weren't.
Or when the customers leave, everyone's trying to create a good experience. So we've created a platform where people can actually listen to their customers and their employees in the market in real time and have all that data being managed in one place. one location. And that's the experience management platform.
We believe every organization, and we're seeing it, is going to have an experience management platform the same way they have a CRM. And it's a different kind of data. It's a new data.
Chapter 6: What challenges did Qualtrics face in its early years?
It's data that they're creating on their own, not data that they're just getting sent to them, which is pretty cool.
And are you, in terms of business model-wise, pure SaaS play today or no?
Yeah, pure sass. We have been pretty much since the beginning.
Even back in 2002.
Which is crazy. I mean, we had servers going in the basement. We were really early, probably too early to the cloud. You know, I remember all the nightmares with that.
So give us some of that backstory there.
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Chapter 7: How does Ryan Smith view the future of Qualtrics and potential IPO?
So by the way, coming up, I want to talk more about a new product. You released the XM platform. You've been pretty public about, hey, we just raised capital. We're thinking about going public. We'll talk about that later. But take us back and give us some of the backstory here. 2002, your dad's at Brigham Young. You have obviously family involved. Why did you launch the company?
We had this goal of being able to collect data online and run real-time analytics on it.
Chapter 8: What are the key lessons learned from Ryan's entrepreneurial journey?
And it was interesting. There was a time where no one was interested in doing this. I specifically remember the only people that would listen were our academic market. So we started only targeting academics, which is a horrible business model because they have no money. They're extremely demanding and they can sit in and play with your product all day long with nowhere to go.
And, you know, what was great was we we catered to them and we ended up building an enterprise level platform with thousands and thousands of features and functionality, which cascaded as people graduated college right into the enterprise. And enterprise folks started to say, hey, wait a minute. I can actually understand what our customers want.
I don't need to guess anymore, and I can get it in real time. And we wake up in 2011 after a bunch of hard work with 2012 with 160,000 net promoter studies or NPS studies running on Qualtrics and people being able to metric and and kind of power their business of experience data. We work really hard to get operational data, which is our financial data and other data.
But we're most surprised with our experience data, which is kind of what we don't know. And only the last couple of years has technology been in a spot that we can go gather this data and make heads and tails of it.
Before we dive kind of more into those first 10 years, you mentioned kind of enterprise customer. Put a number on that if you could for me. So what would you say the average customer pays you guys annually?
Yeah, so our range, I mean, we have different groups. You know, we have enterprise businesses just like everyone else where the numbers look great. I think probably some of the most impressive numbers are, you know, we've gone from, you know, just a handful of, you know, what I would call six, seven figure deals to, you know, thousands and thousands of percent growth in that area.
We have about 9,000.
What do you mean by that though, Ryan? Like expansion revenue on those same customers or just more people joining the seven figure?
Just look at our deal size. It actually looks like Salesforce. Right. Where, you know, I think, you know, between 2002 to 2014, like you count the number of six and seven figure deals on one hand. And now we're we're closing more a year than all the prior years combined.
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