Imagine being 33 years old, looking a half a billion dollars in the face, and saying "no."
That's exactly what Qualtrics CEO Ryan Smith did last spring. After about a decade of hard work, the cloud survey business he, his dad, and brother built was on fire and the venture capitalists were calling.
So were the offers to buy.
At one point the Smiths had an offer to sell their business for $500 million in one hand and seven term sheets from major Silicon Valley venture capital firms in the other, Smith told Business Insider.
"When we first started, we decided we were not going to raise any funding. When you are sitting in a basement you're not really thinking—you're hoping—but not thinking you'll be in an 80,000 square-foot building in eight years, with 5,000 customers," he described.
Sequoia Capital was one of those VCs. Sequoia's Mike Moritz—backer of Google, Yahoo, and PayPal—convinced Smith that a half a billion dollars was nothing compared to the multibillion-dollar company Qualtrics could become.
The family had built a cloud service to fix the "$20 billion outsourced research market" as Smith describes it. Smith's dad was the well-known Dr. Scott Smith, a professor of marketing at BYU's school of business. He was fed up with the software for conducting research so he built this cloud service for doing surveys online. Ryan was still in college, also studying business and marketing, when he joined the company.
Flash forward to 2012. The Smiths did some soul searching and in May opted to keep the company independent and take a $70 million Series A round from Sequoia and Accel Partners. (Sequoia's Bryan Schreier and Accel's Ryan Sweeney joined its board.) This was the largest Series A that the two companies had ever jointly invested in, and among the biggest first-round deals ever.
As you might expect, Qualtrics is so sought after because its marketing has been brilliant. The Smiths first targeted universities. "We signed up every business school we went after." Thousands of marketing students learned to use it at school and then brought Qualtrics into their companies when they get hired.
Business is booming.
- Qualtrics has had triple-digit revenue growth "every year for last 5 years," he says.
- It now has 5,000 customers including 600 universities, 95 of the top 100 business schools.
- Customers include half the Fortune 100 and include companies like Kellogg, Microsoft, Verizon, Toyota, Cabela's.
- They have 220 employees and will hire another 200 next year, and will expand internationally.
Smith still has no plans to sell but says he gets more offers every week.
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