How one family built Qualtrics to an $8B exit • Hacker News Board

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

#61

Post by wpietri » Mon, Nov 12, 2018, 3:36 PM UTC

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…

You have the advantage that you are building for a very small number of people who are a) very like yourselves, b) highly trained, and c) strongly motivated to figure out and help you understand what they want. Even so, I'm sure figuring out what your customers want isn't trivial. I imagine you put a lot of work into it. But that work can involve long discussion with customers. What if none of those things were true?

A more typical business is building for a wide variety of people from heterogeneous backgrounds and selling during relatively low-touch encounters. There if you want to know what is going on with customers you need ways to find out and ways to sift the data into useful forms. It's not an easy problem.

I consulted for one company in a consumer-focused service business. They were very energetic users of Net Promoter Score [1] surveys as their default measure. New product? Everybody gets the 1-question survey option after using it. They'd see how that compared to their other products and to competitors. If scores were too low, they'd dig in with other research tools to find out why; new product revisions would be made and measured similarly. It worked very well for them, in that it kept people focused on actual customer experience and not on the HiPPOs [2].

It was such a core part of their culture that they went for related tools internally. When they were changing their software development process, they used NPS scores and other internal surveys to see how it was working for their thousands of developers. To my surprise, I saw the executives taking the numbers very seriously, well aware of the limitations and risks with surveys. I expected to be kinda BS-ish, but I didn't see that at all.

As to your terms:

Value proposition is basically, "What's in this transaction for the customer?"

Customer segmentation is where you notice your customers respond differently to stimuli, so you divide them up into groups. For example, just yesterday we were talking about fancy LED Christmas lights. [3] One customer segment is general-audience consumers who want fancy light displays at the press of a remote. But our customer segment is people who like hacking things, the computer-skilled DIYer. So the value prop for the first segment is something like "make your Christmas tree interesting and different", while the value prop for the second is "this year, hack your Christmas tree!" There are other segments and other key value propositions, which is why there are more kinds of Chrismas lights on the market.

Targeting is just taking particular actions in terms of a particular customer segment. For example, if were making hackable Christmas lights, I wouldn't buy a superbowl ad. I'd use very targeted advertising to reach my computer-skilled DIY market. As well as content marketing, where I'd have somebody write good blog posts about exactly how to hack the lights, so that the posts would end up on HN, Slashdot, Reddit, etc.

Is that helpful?

[1] https://en.wikipedia.org/wiki/Net_Promoter

[2] https://www.bbc.com/news/business-39633499

[3] https://news.ycombinator.com/item?id=18428566

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

#62

Post by mbesto » Mon, Nov 12, 2018, 3:37 PM UTC

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…

M&A guy here and disclaimer, former SAP employee.

It's not normal, but you have to define what normal is. A few things worth noting (which are all speculative btw):

- SAP doesn't have a solid CX platform, but has tried to push this to the market for years because the demand is there

- SAP has arguable the strongest foothold in the top 2000 businesses in the world.

- SAP once organically grew their ERP products but decided somewhere around the late 2000's that it couldn't innovate any longer but know cloud/SaaS is the future, so their growth has been largely due to acquisition of cloud/SaaS providers. They want to continue to tell the street they're growing subscriptions and this is one way to do it.

- SAP sales is top tier (whether you like it or not). If their revenue is $400m they'll easily be able to sell 2x that in short order to their existing client base. This is what M&A guys often call "synergies". If you assume 30% eventual gross margins, then a potential ROI is foreseeable.

That all being said, if the market for this type of service isn't there at enterprise scale ($1B/yr revenue), then it's probably overpriced.

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

#63

Post by usaphp » Mon, Nov 12, 2018, 3:45 PM UTC

mdorazio wrote: post #56

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…

Here's a real-world example from a client who uses Qualtrics heavily. At regular intervals following vehicle purchase, an automotive manufacturer sends surveys to vehicle owners asking about their perception of the quality of the vehicle, issues that may have come up, features that were not explained properly or don't work as expected, etc. We're talking hundreds of thousands of surveys a year, each with 20+ branchin…

> each with 20+ branching questions

I never understood , why would anyone waste their time answering 20+ questions for free?

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

#64

Post by hermanradtke » Mon, Nov 12, 2018, 3:48 PM UTC

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…

The Experience Economy https://stratechery.com/2018/the-experience-economy/ post on stratechery provides just that explanation.

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

#65

Post by dmarlow » Mon, Nov 12, 2018, 3:53 PM UTC

usaphp wrote: post #63

mdorazio wrote: post #56

Earlier quoted context omitted.

Here's a real-world example from a client who uses Qualtrics heavily. At regular intervals following vehicle purchase, an automotive manufacturer sends surveys to vehicle owners asking about their perception of the quality of the vehicle, issues that may have come up, features that were not explained properly or don't work as expected, etc. We're talking hundreds of thousands of surveys a year, each with 20+ branchin…

> each with 20+ branching questions I never understood , why would anyone waste their time answering 20+ questions for free?

People who are dissatisfied with something certainly would. Especially a large purchase.

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

#66

Post by cleancogitate » Mon, Nov 12, 2018, 3:56 PM UTC

how do businesses deal with sampling bias when they use these tools? In most cases you can't compel customers to respond to a survey invitation, so there will always be some potentially enormous bias in your survey results due to the non random sample that has responded.

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

#67

Post by biztos » Mon, Nov 12, 2018, 3:57 PM UTC

usaphp wrote: post #63

mdorazio wrote: post #56

Earlier quoted context omitted.

Here's a real-world example from a client who uses Qualtrics heavily. At regular intervals following vehicle purchase, an automotive manufacturer sends surveys to vehicle owners asking about their perception of the quality of the vehicle, issues that may have come up, features that were not explained properly or don't work as expected, etc. We're talking hundreds of thousands of surveys a year, each with 20+ branchin…

> each with 20+ branching questions I never understood , why would anyone waste their time answering 20+ questions for free?

I just did that today, for a podcast I follow. I usually say "no" to popup surveys on web sites but if it's anybody I have any kind of business or consumer relationship with I'm usually more than happy to spend 10-15 minutes on a survey.

Why?

* Help products/companies I like to improve

* Help products/companies I dislike to get less bad

* Increase the chances that the product/company will skew towards my preferences

* Hope someone might answer my questions some day (reciprocal altruism)

* Basic decency, helpfulness

* In rare cases, curiosity as to what the questions will be

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

#68

Post by kelvin0 » Mon, Nov 12, 2018, 3:59 PM UTC

ekianjo wrote: post #36

ejstronge wrote: post #34

Earlier quoted context omitted.

Skype was far better before the MS acquisition - there doesn’t seem to be a comparable video platform anymore, considering that Skype offered amazing video at a time when (U.S.) internet speeds were even slower than what they are now.

Agree, Skype in MS era is just a shadow of what it was before. They completely destroyed the user experience. I don't even know how you can break something that working so well before, and not realize it.

My experience using Skype on all types of connections (Cable,Fibre) and broad range of devices (High-End PCs) was always very bad (pre and post MS).

We've used it both personally and in business environment, and it was always very difficult to get sound and/or image, connecting properly was always a crap shoot and included 5-10 connect disconnect before finally getting audio and video on both sides.

Very painful to use.

Glad some of you had better experiences.

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

#69

Post by jack6e » Mon, Nov 12, 2018, 3:59 PM UTC

sjg007 wrote: post #57

Easy to setup programmable web forms and surveys for non-experts. Apparently it is big business. One thing I think is interesting is that I'd heard of SurveyMonkey before but never about qualtrics.. even here on hackernews. Maybe because qualtrics was outside of the valley? Yet clearly a unicorn and a very successful exit.

Qualtrics is pretty popular among their initial target audience mentioned in the article: academics. Among academic survey shops this product is the definite go-to.

I imagine, based on my own experience, the average tech worker thinks of surveys as small sets of questions used to easily and quickly collect a few data points. SurveyMonkey is fine for that. But for the types of real surveys that provide the data for serious research, Qualtrics is what you need. I've used it for government surveys, sociological, health/medical, etc., web and in-person, with lots of flow control, randomization, and all the other features needed to produce robust and accurate data.

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

#70

Post by dkarl » Mon, Nov 12, 2018, 4:02 PM UTC

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…

Imagine if the true performance of your chips, instead of being something you can validate through simulation or measure in a lab, could only be measured in the brains of tens or hundreds of thousands of people.

For every chip you make, you have some expectation of how it will perform, which is its "value proposition."

You want to see if your chips are performing as you predict (fulfilling the value proposition) so you need to interact with a large number of the people whose brains are measuring the true performance of your chips. Since you're dealing with thousands of measurements, you summarize them using math. That's where "stats" come into play. A "metric" is any quantity that is supposed to reflect a measurement, but it usually refers to one specifically designed to be useful. For example, for your chips, the 99th percentile power draw experienced by your users might be a metric you use to guide your design process.

Imagine further that your chips perform differently for different groups of people. Figuring out the best way to divide people into groups to understand how your chips perform is "market segmentation." You probably care about some groups more than others, and depending on how well your chips perform for different groups, you may need to strategically change those priorities over time. That's "targeting."

Meanwhile, different versions of your chips are continually becoming available to people, and you want to detect as soon as possible if a new chip has an unexpected performance regression (or an unexpected improvement!) So you make the latest metrics available in a way that's quickly visually digestible, usually at the expense of all subtlety, but hey, your brain's executive function finds it gratifying. That's a "dashboard."