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How one family built Qualtrics to an $8B exit

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Re: How one family built Qualtrics to an $8B exit

#41

Post by thkim »

option_greek wrote: post #9

As per Wikipedia: >Qualtrics reported revenue of $190.6 million in 2016 and $289.9 million in 2017 representing year over year growth of 52%. In 2016, Qualtrics reported an overall net loss of $12 million with free cash flow of $3.4 million. In 2017, Qualtrics reported a $2.6 million net profit with free cash flow of $21.3 million Is it normal for companies to be bought at 30x their revenue or am I missing something…

Given $8bn valuation, I think Qualtrics is spending heavily on marketing which keeps their net profit low. I think their operating margin is near 50% (being a software company it is possible), which means about $200mm in operating income. If their growth rate is expected to remain at the same level (40%) for the next two years, $8bn valuation can be justified. It's hard to know whether this is the case, but seems likely.

Re: How one family built Qualtrics to an $8B exit

#42

Post by andygcook »

alecco wrote: post #6

I like the story. But on the other hand it makes me feel like I'm looking at the equivalent of a popular Instagram model. It's hard to not compare myself and feel disappointed. HN doesn't inspire me to do something with my life like it did 10 years ago. Perhaps it's my fault.

If you haven’t, you should checkout IndieHackers.com. It’s a community for makers who are building revenue-based businesses without taking massive funding rounds. Most are just getting going with some initial success. Their stories will probably feel more relatable and inspiring.

Re: How one family built Qualtrics to an $8B exit

#43

Post by so_tired »

Patient capital is grrreaaatt

But how much of this is down to patient employees and (relative) lack of alternative employers?

Could this be done in SV/Shenzhen/London where a good employee has multiple offers. This worked out great for the employees here. But in many other cases the founders get early rewards for building up a company, and are in no rush to IPO or sell because they are cashflow -balanced.

Re: How one family built Qualtrics to an $8B exit

#44

Post by throwaway5752 »

mattzito wrote: post #19
option_greek wrote: post #9

As per Wikipedia: >Qualtrics reported revenue of $190.6 million in 2016 and $289.9 million in 2017 representing year over year growth of 52%. In 2016, Qualtrics reported an overall net loss of $12 million with free cash flow of $3.4 million. In 2017, Qualtrics reported a $2.6 million net profit with free cash flow of $21.3 million Is it normal for companies to be bought at 30x their revenue or am I missing something…

So bear in mind: 1) those are 2017 numbers, so if we assume they grew by the same amount, they’re over 400m this year, which makes it only 20x 2) the article mentions that SAP is paying a 75% premium over the IPO valuation, because the road show was going well, they felt like they had to do it. 3) a 10-12x revenue valuation is not unreasonable for publicly traded companies So, they’re growing like crazy, IPO plans go…

a 10-12x revenue valuation is not unreasonable for publicly traded companies

I know a lot of publicly traded "cloud" companies are in fact valued like this. I suspect very strong that this is because analysts thing that they have cracked a business model that is very easy to predict and expand rapidly: very low capex, very low-churn (earnings calls talking about "retention rates", NPSs), and easy to predict even high growth (ARR retention/expansion).

I think several early players like SFDC and Splunk have created this impression.

P/S > 3-4 had been pretty unusual up until recently. All companies are worth the discounted sum of their future cashflow, whatever that may be. To see P/Ss 10+ you are projecting both serious growth and very high margins. I wonder if one looked at the whole space if the 5 year projected earnings of all the companies together would make sense, or if we're collectively under-discounting risk (ie, sum total of all cloud SaaS companes far exceeding the reasonable TAM)

All that being said I think you entirely nailed the chain of events leading up to the acquisition.

Re: How one family built Qualtrics to an $8B exit

#45

Post by CalRobert »

lazyjones wrote: post #32
CalRobert wrote: post #24

Earlier quoted context omitted.

There's a few things involved, and they're not all BS! You want to build a couple new features. You have 60 person-hours at your disposal. Which one do your users want? Build two quick prototypes and see which one people actually use more. You need to convince people to give you money (aka "get customers"). You're not sure what the best way to convince them is. Try 3 different approaches (Landing page with tech detai…

So which parts of your example does Qualtrics provide/solve? Probably not the prototypes. Once I have these, logging/counting usage is simple. The decision is made with a one-page Excel sheet with the raw numbers. Where does Qualtrics come in? Perhaps it has similar data from competitors, so my decision making process does not require as much field-testing but then I'd have to worry about my findings being used to im…

Oh, I was addressing the more general question about the field of stats, dashboards, etc..

"Once I have these, logging/counting usage is simple. The decision is made with a one-page Excel sheet with the raw numbers."

I think a lot of people would get the data in to excel and not know what to do next. Also, implementing tracking of views, clicks, etc. is non-trivial for a lot of people. Or just a hassle.

Re: How one family built Qualtrics to an $8B exit

#46

Post by Dwolb »

artemonster wrote: post #7

Can someone please genuinely explain the need of such software products to me? I work in VLSI engineering and such things sound like a total superflous bullshit-bingo to me (stats, dashboards, metrics, "value proposition", "targeting", "customer segmentation") I suppose I think so because I am a total layman in these fields. I'd greatly appreciate if someone could explain - is this a thing that acutally helps with so…

How does your organization decide what the chip you’re designing does?

Often for chips it’s a B2B transaction so you can probably mobilize some of your go-to salespeople or sales engineers and ask them what customers are saying about next gen.

Now what if your customer base were 100x-1000x larger? You might need automated tools to ask your customers what they’re worried about, what issues they have, whether or not they like certain features, what what the relative make-up is of the customer base.

We all know customers don’t always tell reality so this becomes one data point in many in determining product direction.

Re: How one family built Qualtrics to an $8B exit

#47

Post by claydiffrient »

so_tired wrote: post #43

Patient capital is grrreaaatt But how much of this is down to patient employees and (relative) lack of alternative employers? Could this be done in SV/Shenzhen/London where a good employee has multiple offers. This worked out great for the employees here. But in many other cases the founders get early rewards for building up a company, and are in no rush to IPO or sell because they are cashflow -balanced.

As a software engineer in the "Silicon Slopes," I can say that we get multiple offers almost constantly for companies throughout the area. There is enough tech here to keep people employed where they want to be making the money they want to make.

Re: How one family built Qualtrics to an $8B exit

#48

Post by k__ »

SmellyGeekBoy wrote: post #39
k__ wrote: post #15

Earlier quoted context omitted.

True. But the bootstrapping community is filles with its own kind of people. Not much overlap.

There are plenty of successful bootstrappers on HN, myself included. Dozens of us!

Cool!

Where do you talk?

I only tried IndieHackers and there were too much "hustlers" for my taste.

Re: How one family built Qualtrics to an $8B exit

#49

Post by froindt »

ams6110 wrote: post #33
jbchoo wrote: post #27

Earlier quoted context omitted.

May I know what was your needs that required you to code your own survey?

Guessing: privacy

I doubt this is the reason. Any academic studies which are going to be published need Institutional Review Board (IRB) approval to ensure they won't violate ethics guidelines. Qualtrics has done a lot of work to be the go-to academic survey software and meets the privacy criteria required by most if not all IRB's. Using Qualtrics for surveys a breeze to get through my institution's IRB - all they cared about was the content of the questions.

It would have been a nightmare trying to do surveys on some home-brew web server survey system. I saw something similar happen once (study needed real-time tracking of user inputs to a degree which wasn't possible with other systems), and it involved a physical security audit of the server as well as university IT being involved. Project was delayed by a few months getting it through IRB.

For what it's worth, I found Qualtrics to be a a flexible, extendable platform for my unique survey needs. The study I was working on involved people comparing 3d models. Even though an STL viewer wasn't provided by Qualtrics, I was able to use an iframe to display the models in the survey.

Re: How one family built Qualtrics to an $8B exit

#50

Post by philjr »

mettamage wrote: post #5

I used this service as a psychology student, to my dismay if I may add. To the dismay of other students, I'd always code up my own surveys :D I wonder though, how is there space for: Qualtrics, Survey Monkey, Wufoo (back in the day) and a lot of others that I presumably don't know about. I feel most of these survey engines provide the same thing.

The simple answer is that they (mostly) serve different markets
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