Two of the top venture capital firms have written a big check for Qualtrics, a 10-year-old company offering online data collection and analysis.
The $70 million round is Qualtrics’ first institutional investment — the company says it has been profitable since it was founded in 2002. The money comes from Accel Partners and Sequoia Capital, which both have growth funds targeting investments like Qualtrics — mature companies that have already achieved some success but have bootstrapped thus far. Apparently it’s the largest investment the two firms have ever made together. (Past joint investments include AdMob, the mobile ad network acquired by Google for $750 million.)
Co-founder and CEO Ryan Smith says Qualtrics is offering a new approach to market research. In the past, companies that wanted to conduct this research had to hire outside firms, which is a pricey proposition. There are a few startups are offering cheaper alternatives, but they’re usually simple tools like surveys, which aren’t going to replace serious research. Qualtrics, on the other hand, has developed technology that allows companies to conduct sophisticated research on their own, without hiring an outside firm or even asking their IT team to handle a complicated installation.
“Our mantra is: ‘Sophisticated enough for a PhD, easy enough for an intern,’” Smith says.
Qualtrics claims to have more than 4,000 enterprise customers, including Barnes & Noble, CVS/Caremark, GEICO, Microsoft, Neiman Marcus, Royal Caribbean, Southwest Airlines, Thomson Reuters, Toyota, Vodaphone, Zappos, and 600 universities. Smith says a lot of that growth came in 2008 and 2009, after the financial crash, when companies realized they needed to become more data-driven: “We can’t just throw mud at the wall and see what sticks.”
The company recently expanded its product lineup from the core Research Suite to include Qualtrics 360 (an employee assessment tool) and Qualtrics Site Intercept (which serves custom content to targeted website visitors). Smith says he decided to take on the new funding to invest heavily in growth — in the next year, he plans to add 250 new employees to the 200-person workforce. And he plans to do that in the company’s headquarters in Provo, Utah.
Accel’s Ryan Sweeney and Sequoia’s Bryan Schreier are both joining the board. Sweeney says he heard about Qualtrics after seeing several other companies “we know and admire” using it to collect data. He soon realized that Qualtrics was “powering all these different things and [we were] frankly begging them to take meetings with us.”
Schreier (who, in the press release, calls Qualtrics “the biggest software company you haven’t heard of yet”) tells me he’s known one of the Qualtrics co-founders since 2003, when they worked together at Google, but the company had sounded like a “humble corner store business.” Then, a few months ago, he saw Qualtrics’ numbers, and they were “mind-blowing.” He also says he was impressed by Qualtrics’ commitment to customer service — in fact, Smith tells me that there is an honest-to-goodness siren in the office that goes off every time the customer service phone line rings three times without being answered.