From $0 to $2.5 billion with Qualtrics CEO, Ryan Smith12 min read
The first time Ryan Smith, co-founder and CEO of Qualtrics, and I were meant to speak over Zoom, I only got a glimpse of his Provo, Utah office through the camera. He never came in, stuck at a prolonged customer meeting. The CEO and co-founder of unicorn Qualtrics still actively speaks with customers.
When we do speak at our next call, he tells me that Qualtrics is neither a product company nor a marketing company, but a customer company. I believe him.
In the first ten years of Qualtrics, Ryan hadn’t even looked for a media moment of glory. He got his first with an article in Forbes in 2012 after closing a $70 million funding round with Accel and Sequoia. And while he has become a much more outspoken voice for Qualtrics, it’s clear the C in TACOS, the abbreviation that stands for Qualtrics’ core values is for customer obsession, not communication. The other are Transparency, All in, One team and Scrappy.
At the interview, Ryan, gulping from a large soda cup, starts off by telling me about the newest item in his office – a business degree diploma he has just earned. After 15 years of building Qualtrics, he has finally fulfilled the key hiring requirement of his own company. As the tale goes, Ryan left business school, shy of a few credits, to help start Qualtrics. And for the next 15 years, he got away without completing it because he was irreplaceable. “Now that I am, I needed to get one,” he jokingly says. The business degree is one of many things he will do to stick around for the long run. As he says it, Qualtrics is his last job.
Qualtrics is already a unicorn company, valued at $2.5 billion after its last funding round in April 2017. One of the key things that has gotten it to where it is its scrappy DNA and creative culture, both of which have been there since day one and remain firmly in place through the growth of the company.
Ryan has achieved that through keeping his own disposition no matter what, giving full autonomy to each employee to figure out the big challenges Qualtrics is facing, and accepting the reality that innovation in SaaS will mean letting go of what made them successful in the first place and doing it all over again but bigger. Ryan has already let go twice and is in the third iteration of Qualtrics. All 1,500 employees are the script writers. That’s how you get from $0 to $2.5 billion.
Focus on one market
As the story goes, Qualtrics is a product born in the head of Ryan’s father, a Ph.D. who consulted on the side. Instead of relying on laborious human market research capture, his father had written a program that sought feedback on their preferences about brands. It analyzed the data in real time. When his father was diagnosed with cancer, Ryan came back from university to be with his father. To spend time together, they worked on that tech project in the basement that later became Qualtrics. He instantly got hooked to the product and began developing and selling it.
Selling had been his forte from an early age. At a very young age, instead of using the five dollars his parents gave him to see a football match with his brothers, they used the money to trade tickets. They would come home with a couple of hundred dollars.
At age 14, his parents announced that the boys would have to be buying their own school clothes with their summer job money. That same afternoon, Ryan was already cleaning stables.
And at age 17 when Ryan found himself in Seoul without a promised gig to teach English, he quickly befriended big apartment block security guards who let him post thousands of brochures advertising his teaching skills in people’s mailboxes.
Ryan had a hunch the web-based online survey that would become Qualtrics was a perfect fit to academic institutions to use for research purposes. All he needed was the key decision makers’ contact information, which he could easily find online. The first customer he signed was a professor at the Kellogg School of Management at Northwestern University. If he signed one, surely he would sign more.
All along, Ryan’s goal was to create a company that had enough cash to survive the year even if it didn’t make another sale.
And before 2008 that was tough. Companies didn’t care about the experiences of customers. “I remember talking to an airline which told me they didn’t need software to tell them in advance if customers were unhappy. They would call if they were upset.”
Which is why, for many years, he bet on the academic market alone, a key lesson to remember.
When he first started selling Qualtrics to academics, he made the company appear much bigger than it was as he spoke over the phone. Instead of creating marketing functions he could not pay, he set up a tiny in-house agency. When he needed to go to trade shows, he offered to pay with software, instead of money. He focused on the product, making it an outstanding and user-friendly experience, coupled with excellent support. Providing an amazing customer experience was the way to keep companies and customers coming back.
As an entrepreneur, your role is to figure things out and make them happen.
The focus on just one market paid back in many ways.
For one, it made them profitable without stretching resources too thin. Secondly, his customers, essentially the MBA students at the universities, took their love for the blend of easy-to-use question-generating tools, nifty data visualizations and low-cost solution with them when they went to their new employers after graduation. This is how Qualtrics landed Heineken as a customer.
And it got many more corporate customers during the financial meltdown in 2008 when market research budgets were slashed while the price of getting things wrong with customers and losing them was far too pricey. The corporate world was finally ready for what Qualtrics had to offer.
Remain scrappy at scale
It was time for the second act, and in its opening scene, Ryan finally knew he was onto something big. But to get there, he had to tear down what had gotten him there in the first place. “In SaaS, you have to be willing to throw it all away and start over again because innovation has a very short life.”
It was time to rewrite the Qualtrics product once again and put NPS at the centre of it.
Qualtrics never had a Facebook or a Google kind of moment. We have had to work hard at every checkpoint and listen to the market.
It feels there is an emphasis on we. Because this second act was about everyone’s scrappiness. He had to transfer the willingness to never give up to his people, a team that was starting to grow substantially.
That started with finding people that would be loyal.
“The average tenure at Silicon Valley is 19 months, which covers only the beginning of the movie. No one can achieve anything great before seeing a few scenes.” So he had to make sure the people that joined the company were the kind that would stick around, even when times were tough.
And once they did, they needed to be comfortable to be as audacious as Ryan himself. One way of doing that was by empowering them to see what they are made of and that whatever the next act might be, instilling the belief that they could make it, anything is possible. That belief only comes with doing.
“I remember at an all-hands meeting an employee asked me why the road to the Qualtrics HQ building wasn’t named after the company?” As with any other similar idea, Ryan gave carte blanche to the person to pursue it and figure out how to achieve it. The person went to every single City Council meeting the next year. Qualtrics Drive became a reality that Christmas, the achievement building on the belief that nothing is impossible. It’s a key tenant for resolving the bigger challenges at Qualtrics.
In this sense, Ryan has spread ingenuity and decision-making throughout the company. The team figures out together when and where to open new offices, how many people should be there, etc.
Ryan vividly recalls when he opened their first international office in Dublin in the Autumn of 2013. He and Dermot Costello stood in an office with no furniture. But in front of them were plenty of TV cameras and the Irish Prime Minister at the time, Enda Kenny. Ryan promised he would have 150 people working in that office over a period of 18-to-36 months. But on that day in September, he had no idea how to do it. By mid-2015, the company had revised that number to 250, which it fulfilled by the end of 2016.
“Because there is no recipe, it’s part of everyone’s objectives to figure out how to improve hiring, diversity, growth and turn them on their head. At the core of scrappiness, there is an obligation to be creative, to do something no one else believes is possible.” In this way, they are rewriting the Qualtrics script all the time.
Listen and measure everything
Nowadays Ryan thinks about every experience he has throughout the day and how that advises the choices he makes. “I drive the same way to work because I had a bad experience with the traffic light on another route.”
Measuring all experience through the Qualtrics platform sounded all too logical, including feelings on brand, product, as well as employee satisfaction.
From measuring their own experiences, Ryan has learned that if a Qualtrics employee is new to the workforce and Qualtrics is their first job, they are 20% less engaged than those who have had the experience of working elsewhere. Because they do not have a point of reference compared to working at other companies, they don’t realize how unique Qualtrics is. The point being, experiences are incredibly important in life. They help set expectations and guide us to do, learn and buy certain things.
And these experiences are equally important for businesses.
It’s why in act three, Qualtrics introduced the first Experience Management Platform, to help organizations measure, prioritize and optimize their four core experiences of business across employee, customer, product and brand experiences.
To Qualtrics and Ryan experience management (XM) platforms, are as essential as CRM platforms are. Measuring, optimizing and acting upon the findings of experience data is the last true competitive advantage organizations have, and most are not maximizing their advantages.
Qualtrics doesn’t just preach but also applies those beliefs internally. “At our annual user summits, we constantly measure everything and adjust the event in real-time to better match customer’s expectations.” He remembers how at one event he was super excited about a camera that hovered over the audience, taking really cool shots of the stage. But it blocked the view of those in the audience, and attendees were quick to give the feedback via the Qualtrics platform that the camera was irritating and distracting. After the first coffee break, it was gone, never to be seen again. Like in most businesses, there is no playbook how to do things. But if you listen carefully to what customers have to say, you stand a chance of figuring it out.
How do you get every company to understand they should compete on the experiences they provide and use a platform like Qualtrics?
“By balancing the act of wowing customers, yet not being afraid to mess up through experimentation and innovating. You need to be able to jump in the trenches to help your customers and make it amazing by exceeding their expectations.”
Through all this, Qualtrics has evolved from a data-collection company into one which today provides a platform that “allows organizations to predict the experiences their customers and employees most want.” The key, he says, “Is in the X-data, or experience data, provided by the platform.
The journey is far from over. As he puts it himself, Ryan Smith has attention deficit disorder as much as anyone else, yet something has powered him through everything, including many lows. Somehow he finds a way to remain positive within the rollercoaster ride of emotions of being an entrepreneur.
The potential of measuring people’s experiences and figuring out a way to use the data tangibly is limitless. It can close some of the world’s biggest experience gaps: political misunderstandings, human rights issues, health care disparities, gender inequality and minimize education and income differences. All that starts by asking questions and understanding human emotions, beliefs, sentiments, and values.
Staying sane on the unicorn journey
What helps Ryan do that is sleep. “I don’t sleep much, but when I do, I sleep very deeply. When I wake up in the morning, it is as if whatever happened yesterday was only a dream.
Today is a new day, with a million new opportunities to succeed.
Just like a kid, he tends to forget the day before and lives in the present. So through the years, when issues arose, he would try to sleep it off and tackle things again the next day. Many times he was unsure if the could actually pull through, but he wouldn’t let doubt get the better of him.
The other thing that helps to get through tough times is having a bigger mission than the company. And for Ryan that is what brought he and his father together in the Provo basement in the first place– his father’s fight against cancer. Funding the search for a cure for cancer has become a mission for Qualtrics. They recently announced an audacious goal of raising $50 million to help advance research to find a cure for cancer via their global fundraising campaign, 5 For The Fight. But there are also smaller initiatives, like that in the Dublin office, fundraising for those locally who have been diagnosed with cancer. Again, Qualtrics has turned to its employees, and their scrappy, innovative, creative, one-team values, to help find a cure.
Come hear Ryan Smith at SaaStock for a dose of unicorn magic and loads of inspiration about why you should stay in the entrepreneur game. Get your ticket now.
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