Qualtrics, In The Billion-Dollar Club, But Still An Outsider

Qualtrics, whose online survey research platforms help more than 8,000 enterprise customers better understand both their employees and their customers, is a little unusual for a lot of reasons.

For starters, it’s based in Provo, Utah, a state that has attracted more than $1 billion in venture funding over the last 18 months yet remains far from Silicon Valley’s bustling tech scene. Qualtrics has raised $220 million from Accel Partners, Sequoia Capital, and Insight Venture Partners over two rounds of funding, but the 13-year-old company was bootstrapped for its first decade, taking institutional money for the first time in 2012.  The 800-person company — valued at more than $1 billion roughly a year ago – is also profitable. That’s a claim that most companies in the billion-dollar club can’t make.

What makes Qualtrics most unusual, though, may be its focus on transparency. We talked with cofounder and CEO Ryan Smith about it earlier today. Our chat has been edited for length.

TC: Qualtrics has been likened to a “SurveyMonkey for the enterprise,” but SurveyMonkey now has its own enterprise business. Are the two companies competing pretty directly at this point?

RS: The common [thread] is that we both [run] survey platforms, but we own enterprise. With 8,000 customers, we’re the de facto solution.

A lot of our [focus is on] customer experience, which is a huge game for us. Historically, that’s been a heavy services business, with companies outsourcing a lot of it to different firms. But we figured out a way to automate it in a professional way that allows companies to get in touch with their customers and to solve problems quickly, with a feedback loop on the HR side.

TC: Give readers an example of how customer service and HR tie together.

RS: Say an airline is always having a problem at Gate 15 in San Jose. Qualtrics is helping customers [like the airline] better understand and retain its customers [including by alerting it if there’s a problem with an employee].

TC: Give us a sense of how fast you’ve grown in recent years. What’s your current headcount?

RS: We have 850 employees, up from 400 last year, and we had a little less than 200 employees in 2012 [when we took outside funding]. We kind of doubled, and doubled again, and that’s been the pattern. We’ve also opened up offices in Dublin, Sydney, Seattle, and Dallas in the last 18 months, so we’ve seen pretty phenomenal growth — and we’re still profitable.

TC: You’ve talked in the past about transparency, saying you release notes about meetings to employees, even about board meetings. Are you still doing that with 850 employees?

RS: At scale, you really can’t control how people think and what they do. The only thing you can control is the information flow. We’re in a world where we’re hiring people and handing them a computer and saying, “Go execute,” so we’re giving them the information they need to do that.

TC: By that, you mean . . .

RS: Companies fail all the time because they get distracted externally and internally. By internally, I mean, for example, that people can get distracted by someone taking a lot of time off. Because of that, we make everyone’s public time off available to everyone else. People might think too much money is being spent on dinners, so we made all expense reports public. We also ask everyone [in a transparent way] each week: What were you going to get done last week, and what are you going to get done this week?

Our best engineers spend a lot of time on our internal systems. But we think if people can learn to model the most competent employees, versus the most popular ones, then our organization can go from 400 to 850 employees, and one to five offices, in stride.

TC: Are you fairly transparent with employees about your funding rounds and their equity? Employees out here are asking more questions about how all these frothy valuations impact them, especially as they pertain to so-called unicorns.

RS: Options are a great retention package, but I think you’re getting into a place in Silicon Valley where people are signing up for things and [immediately asking], “Where’s the liquidity event?” And that’s a bad situation.

TC: This may be a dumb question, but was it complicated, giving your employees a stake in the company, given that it was bootstrapped until 2012?

RS: Our stock program is very similar to everything out there. What’s different is that a lot of companies are burning a lot of money and we were extremely profitable so we waited longer than everyone else [to bring in outside investors].

You were profitable before that outside funding. You remain profitable. Why aren’t you a public company?

I’m not announcing a timeline, [but an IPO is] definitely in our plans, I think we have a compelling business and that we can be a great public company. We don’t have any pressure to get out by a certain time, though. When we decide to go, we’ll just go.