America’s favorite weatherman looked down and shook his head. His fellow Today Show hosts were discussing their network’s new political polling partnership with SurveyMonkey, but Al Roker couldn’t get past the name: “SurveyMonkey? Why not ‘Opinion Orangutan?’” He proceeded to wonder aloud whether NBC paid them in bananas.
Roker’s dad jokes on January 5, 2016, made for a rare PR hiccup for the then-17-year-old online survey company. SurveyMonkey’s multi-year NBC partnership, just announced that morning, was an important piece of a marketing strategy that the company believed would elevate its brand, leading to larger deals with its enterprise customers. That, in turn, would better position SurveyMonkey for its much-delayed public offering. At least some of those plans would come to fruition in the years that followed. First, Roker had to offer up an equally high-profile mea culpa on the popular morning news show. And he did. But afterward, an unmufflered Roker let loose one last dig: “I just think it’s a funny name.”
Founder Finley’s strategy: Catchy name, easy to use, free-mium
The startup founder hero’s journey has a consistent beginning and end: College kid develops a tech startup in their dorm room that grows into a public company worth billions of dollars. That is technically true for SurveyMonkey. But it took almost two decades for SurveyMonkey to get there because the company’s executives never considered an IPO to be a particularly important milestone. Here’s how they thought about it: Going public was, at worst, like going to the dentist. At best? “Just another financing round.”
SurveyMonkey has always been different. It was one of the first to contribute to the “consumerize the enterprise” trend. The company was also among the first to use either a SaaS (software as a service) or a freemium model. Of course, it wasn’t until years later that anyone used those phrases to describe companies like SurveyMonkey.
Ryan Finley created SurveyMonkey in late 1999,For perspective: Google, which would eventually become both a competitor and investor, was just over a year old at the time and not yet a household name. at the peak of the dotcom era, while still a student at the University of Wisconsin-Madison. Finley made a number of good decisions early on as he built what a later CEO of the company would call “the ultimate lean startup”. Chief among those good decisions was the name, SurveyMonkey.
Over the years the company’s executives have repeatedly admitted that it is, of course, a funny name, but that was intentional. People remember funny names. Finley wanted a name that would stick with people because he had no marketing budget. The survey itself was marketing. Taking a survey online that was sent to you by someone else (someone you already had some kind of relationship with) exposed you to the SurveyMonkey service and brand. At the end of the survey, the survey taker would receive an invitation to use SurveyMonkey to create a survey themselves, for free. The hope was that later when you would need a survey tool, you’d remember the brand and return to use it.
SurveyMonkey, then, relied on what LinkedIn founder Reid Hoffman called a secondary viral cycle since it was spread indirectly by survey creators to survey takers. Primary viral cycles are ones that drive social media companies like LinkedIn, which have users directly inviting others to join the service via email.
Dave Goldberg, who would take over as CEO from Finley ten years after the company’s founding, said later that there isn’t a great way to market or sell the SurveyMonkey product. Far-reaching brand awareness and the resulting viral funnel has always been SurveyMonkey’s moat. Goldberg boiled Finley’s strategy down to three simple things: a name people could remember, a product easy enough for anybody to use, and a very inexpensive price point.
During the ten years that Finley ran SurveyMonkey, the pricing model barely changed. Its free tier allowed survey creators to ask up to 10 questions in their surveys and receive up to 100 responses. The professional subscription package was priced at $19.95 per month and included up to 1,000 responses per month — additional responses cost 10 cents apiece in the early years and five cents toward the end of Finley’s time as CEO. It wasn’t until 2005 that SurveyMonkey added an annual pricepoint ($200) that saved its subscribers about $40 per year by paying upfront. The limits and feature sets for these packages varied a bit during the first decade of the company’s existence, but the pricing strategy was remarkably unchanged during the first 12 years.
Finley’s strategy from the very beginning was to increase the feature set to drive ever-increasing value to paying users. What he hadn’t expected was that many of those changes, new value-added features, would dramatically increase the time he and his brother needed to devote to customer service questions about how to use them. This feature complexity vs. customer service push-and-pull reached its breaking point a few years in when Finley and his brother decided to delete all of their emails, an event they referred to as the “Email Bankruptcy”. That’s when they began to hire customer service reps. This feedback loop also convinced Finley that adding complexity to the offering would limit the company’s scalability. As a result, SurveyMonkey was careful to focus on keeping new features simple and easy-to-use, lest they face an insurmountable surge in customer service complaints again. For a few years SurveyMonkey’s website even linked out to a dozen or more competitorsFinley wisely stopped doing this in the mid-oughties as the SEO benefit to the competition grew. and dared potential customers to try those first before paying for SurveyMonkey.
Finley maintained his company’s keep-it-simple approach and, by 2008, built SurveyMonkey into a $25 million-a-year businessThere are actually conflicting reports as to whether revenues topped $25 million or $27 million in 2008, but company leaders have used the $25 million figure more often in interviews. . At the time SurveyMonkey offered paying customers a monthly or annual plan and charged them an extra nickel for every respondent above the number allotted. Given the two pricing options and ignoring the overage fees for the sake of simplicity, a rough estimate for paying users in 2008 comes to about 113,000 at $220 ARPU. Finley ran the company with a skeleton crew that included his older brother and a handful of customer service reps. Of the $25 million in sales for 2008, about $22 million was operating profit, which mostly went home with the Finley brothers.
That year Ryan Finley decided he and his team of a dozen customer service reps couldn’t grow the business anymore. He ended up selling a majority stake to a couple of private equity firms for an undisclosed figure north of $100 million. While Finley officially stayed with the company in a user experience role, he also spent the next few years building his family a “fairytale glass box of a house” overlooking the same Oregon beach made famous in the ‘80s classic, The Goonies.
Dave Goldberg’s three-phase strategy: Hire a team. Rebuild the architecture. Become a platform.
In the fall of 2008, Finley sold SurveyMonkey to PE firm Spectrum Equity and other investors that included Bain Capital Ventures. Former Yahoo Music lead Dave Goldberg also invested in the deal and joined SurveyMonkey as its new CEO. Both Finley and his brother kept minority stakes. Importantly, all of the money from the transaction flowed to the founders, it wasn’t an investment in the company. So Goldberg was left with about $200,000 in working capital his first day on the job.
Goldberg formulated his initial strategy around three phases. First, he needed to build a team. Goldberg kept the original SurveyMonkey team in Portland, Oregon, but moved its headquarters to Silicon Valley where he was based. His formidable network allowed him to recruit an all-star team right from the beginning; Two of his many important hires included one of the co-founders of Evite, Selina Tobaccowala, as head of engineering as well as Google’s director of online sales and operations, Tim Maly, who joined as both CFO and COO. Goldberg would continue to spend much of his time recruiting, but it was almost all he did in his first year when he added about 25 people.
2010-2014: The Monkey’s many M&A moves
Another funnel for talent came from acquisitions. Here’s a quick rundown of the M&A SurveyMonkey did under Goldberg’s leadership along with some color for each. Another important early employee, Brent Chudoba, who joined SurveyMonkey from Spectrum in 2009, led and managed many of the deals below:
- Goldberg oversaw SurveyMonkey’s most acquisitive period starting with the Precision Polling acqui-hire in the summer of 2010. The small stock and cash deal for Precision Polling, dubbed “A SurveyMonkey for the Phone” by TechCrunch, brought in founders Guarav Oberoi and Chuck Groom who proved to be critical employeesAmong other things, they built SurveyMonkey’s Audience offering, which launched in 2012. That marked the first new product from SurveyMonkey since its founding a decade earlier. .
- Less than a year later SurveyMonkey acquired online form maker Infinity Box, better known by its product’s name Wufoo, for about $35 million. The boot-strapped, 10-person company was founded in 2006, went through Y Combinator and had only raised about $118,000. The Wufoo acquisition was more about the product, which SurveyMonkey added to their platform. It also tried to cross-sell Wufoo’s customers on SurveyMonkey and vice-versa.
- At the end of 2011, SurveyMonkey announced that it would acquire its biggest direct competitor, Zoomerang. The complex deal involved private equity heavyweight TPG Capital buying Zoomerang’s parent company, MarketToolsAt the time of the acquisition, MarketTools, with some 550 employees, had about five times as many employees as SurveyMonkey. , and, subsequently, trade Zoomerang, TrueSample, and ZoomPanel for a minority stake in SurveyMonkey. TPG sold the other pieces to other buyers. The acquisition marked SurveyMonkey’s largest acquisition — before or since. The deal added 1.7 million registered users to SurveyMonkey’s 9 million users. Goldberg said that given how similar Zoomerang’s offering was to his own company’s, the acquisition was all about buying and winning over the customer base since Zoomerang’s customers had clearly chosen them over SurveyMonkey and were now unlikely to switch.
- It took almost three years before another deal: In mid-2014 the company acquired Fluidware, an Ottawa-based company that helped people build better surveys and gave them tools to make sense of the results. The $20 million acquisition added about 70 new employees, gave SurveyMonkey a footprint in Canada, and brought new features like offline survey taking.
Goldberg made one other M&A move back in 2011 when SurveyMonkey acquired a 49.9 percent stake in Clicktools, a company that offered surveys via Salesforce’s AppExchange. The investment included a strategic partnership for SurveyMonkey that saw the two companies cross-promote their products. Clicktools ended up getting acquired in full within a few years, which led to SurveyMonkey forging its own direct relationship with Salesforce.That paid dividends later when Salesforce Ventures bolstered SurveyMonkey’s IPO by announcing it would buy $40 million worth of stock.
Rebuilding The Monkey, going global, and tragedy
SurveyMonkey’s huge profit margin impressed Goldberg when he first started in 2009, and it encouraged him to institute an initial policy of: “If it’s not broken, don’t fix it”. The tiny startup with big revenues, however, had plenty of fires that Goldberg couldn’t afford to let burn. When Goldberg joined the company, its database had no backup, meaning if it had lost a server, all of their clients’ data on that server would be lost forever. The company’s code was also built on .NET and hardcoded in places, which presented scalability issues. SurveyMonkey’s architecture even made it difficult to change pricing. It could accept US dollars but no foreign currencies. The list of limitations was long.
As noted above, one of Goldberg’s most important hires was Selina Tobaccowala, the co-founder of Evite, to head up the engineering team. Tobaccowala was an executive at Ticketmaster, which acquired Evite in 2001, where she led a team of 200 in one of the company’s European offices. Goldberg recruited her while she was pregnant, a detail that often figures into her retelling of the story:
I went on the interview. I loved the team, and the CEO was a great leader. Everybody I met was really impressive and I absolutely loved the product. I also got the sense that the company culture supported a strong work/life balance, something that would be important now that my family was growing. I left the SurveyMonkey office certain I wanted the position, but uncertain of how I would handle my contingencies.
I emailed the CEO and told him I was interested in the job and was in the very early stages of a pregnancy. Within minutes, I received an email back with his congratulations and assurance that SurveyMonkey was a great place to work, and the perfect place to raise (and start) a family.
Goldberg quickly built SurveyMonkey’s culture into one that was welcoming not just to 20-somethings right out of school but also to older adults and people with kids. The company was an early entrant in the Startups For Grownups trend. SurveyMonkey’s culture received a lot of kudos years later when Goldberg made the interview circuit with his wife, Sheryl Sandberg, after she wrote a book called Lean In.
Once aboard, Tobaccowala started with an engineering team of three, but she quickly started to recruit new talent. Her first hire was a usability expert who she knew could optimize the customer experience to drive some early revenue. She used that quick fix to buy time for the much more expansive project of rebuilding The Monkey’s architecture from the ground up. Her team was working on what Goldberg called phase two of his strategy: rebuilding the SurveyMonkey tool and website into a platform that scaled. Along the way Tobaccowala and her growing teamThis interview Tobaccowala did with LinkedIn Founder Reid Hoffman in 2015 is worthwhile for any researchers digging into SurveyMonkey’s past. absorbed engineers and code from the acquisitions listed above, worked to deprecate most of the code base of Zoomerang following the acquisition, and launched SurveyMonkey in markets outside of the US.
The international opportunity was a key thesis that drove Spectrum Equity’s decision to acquire SurveyMonkey, and Goldberg’s team decided to partner with a startup called Smartling to go global quickly. Within six weeks of signing with Smartling, SurveyMonkey’s site was translated and up and running in its first foreign market. During the first six months, Smartling helped translate SurveyMonkey into 10 different languages. SurveyMonkey soon opened a European home base in Portugal, which eventually moved to Ireland. In addition to opening international offices in the UK, Australia and other cities around the world, the company’s localization efforts became more sophisticated and targeted over the years.By the end of 2013, Goldberg said international sales were growing twice as fast as US sales, and half of the company’s web traffic was from outside the US.
By mid-2011 SurveyMonkey’s architecture had been rebuilt well enough to handle the company’s first major change up in its pricing and product packages. At that time SurveyMonkey offered four plans: basic, select, gold or platinum. The most expensive package also included the option to use a research DOT net site and the customer’s own branding, instead of sending survey takers to a poll hosted on a SurveyMonkey DOT com domain. This strategy helped mitigate the hesitance some bigger SurveyMonkey clients had about sending their customers to a site with a cartoonish name.
All told, the Rebuild The Monkey phase lasted almost five years: In late 2014 Goldberg said his team, which at that time was well over 300 people, was just about finished with phase two and ready to move into phase three: executing on its platform strategy. Eighteen months earlier an interviewer asked Goldberg how SurveyMonkey would be different in three years time. Goldberg’s answer focused exclusively on SurveyMonkey as a platform:
I think we will continue doing what we have been doing but we will be more of a platform. You will see us adding other data sources, like the Audience business is a data source to help people make better decisions. So not just data they collect from a survey but other data sources that we can help provide them. We didn’t have the ability to do APIs on our old platform, and a lot of people wanted to partner with us. We just couldn’t do it because the platform wouldn’t support it. Now that we have the new platform, we are doing a lot of API deals. You will see us integrate with a lot of other peoples’ apps because people want to collect data and/or match the survey data with other data they have.
Goldberg was right, of course. SurveyMonkey would eventually integrate with more than 100 apps and other data sources. But, tragically, he didn’t live to see his vision come to fruition.
On May 1, 2015, Dave Goldberg died suddenly while on vacation in Mexico with his wife and a few friends. This paragraph will do no justice to Goldberg’s accomplishments and legacy, but many publications wrote about Goldberg in the weeks and months that followed. Here’s one worthwhile example. Even President Barack Obama took the time to write a short remembrance about Goldberg. SurveyMonkey lost its leader and the person most responsible for its continued success. Understandably, without Goldberg, the company slowed down, went on defense, and took time to grieve.
Eyeing the enterprise, a board-level disagreement, a CEO resignation
After a two-month search led by SurveyMonkey’s board chair and GoPro exec Zander Lurie, Goldberg’s longtime friend Bill Veghte took over as CEO in August. Veghte joined the survey company following a storied career as a top exec at HP and Microsoft. His last position at HP was as the head of its enterprise division. In addition to helping the grieving SurveyMonkey employee base after the loss of his friend, Veghte focused on the company’s enterprise strategy and its global ambitions. Veghte talked up SurveyMonkey’s speed, quality, and accessibility, which he dubbed its three pillars. Given his enterprise accolades, Veghte also helped SurveyMonkey reconceptualize its sales strategy from a primarily viral funnel and self-serve one to a hybrid self-serve and sales-assisted model.
Days into Veghte’s tenure, SurveyMonkey announced the acquisition of TechValidate, a startup that automated the process of collecting customer experience data and turning it into case studies, customer testimonials, and other types of content marketing. The acquisition would later prove to be critical to the company’s enterprise strategy.
After just five months on the job, however, Veghte had a disagreement with the SurveyMonkey board over an unspecified strategic tack. He resigned in mid-January. While the specifics of that disagreement never officially emerged, it is easy to guess given the next CEO’s first big move. While Veghte’s time at the helm of SurveyMonkey was short, he successfully shepherded his old friend’s company through its worst days.
Lurie steps up, lays off 100, launches then shuts down a failed product
Following Veghte’s resignation, SurveyMonkey’s chairman and GoPro executive Zander Lurie left the wearable company to join SurveyMonkey full-time as its new CEO. Within six weeks Lurie laid off about 100 employeesThe layoffs amounted to about 13 percent of the company’s workforce of about 750 employees. in the company’s sales-assisted business group. It’s pure speculation, but given the timing, the layoffs were likely the strategic decision Veghte, an executive steeped in enterprise technology sales, refused to make. Lurie put the two founders of TechValidate in charge of SurveyMonkey’s enterprise business, which they rebuilt over the next few years.
A few months after Lurie took over, SurveyMonkey announced the launch of a new product that took the company far away from its core competency: a mobile app competitive intelligence platform called SurveyMonkey Intelligence. As part of the launch, SurveyMonkey revealed that it had quietly acquired an app-focused competitive intelligence company called Renzu a year earlier. The surprise acquisition and new product line proved to be one of SurveyMonkey’s few strategic missteps: SurveyMonkey Intelligence shut down eight months after launching.
The All New SurveyMonkey: new products, higher prices
During SurveyMonkey Intelligence’s failure to launch, however, Lurie managed to get the rest of the company back on track. SurveyMonkey’s tumultuous period appeared to be behind it, at least based on its topline revenue. While revenue figures for 2015 have never been shared, the chart above shows that SurveyMonkey’s 2016 revenues were on the same growth track as indicated by the years leading up to the dark period between 2013 and 2015 when no revenue data found its way into the press.
How did Lurie continue to grow this nearly 20-year-old dotcom? Lurie invested more in the company’s international business, raised prices at both the high end and low end of its product range, and relaunched the company’s product lineup as part of its first big rebranding.
In the summer of 2017, the company announced the “All New SurveyMonkey” with its revamped survey offering, now called a “People Powered Data” platform, and a number of new and freshened up data products and services: SurveyMonkey Apply, SurveyMonkey CX, SurveyMonkey Genius, and SurveyMonkey Engage. Genius coaches survey creators to build better surveys and avoid known mistakes. Apply is the reskinned FluidReview product, which helps organizations conduct grant and scholarship programs. The team rebuilt Audience directly into the main SurveyMonkey platform and gave it wider availability globally. Engage is SurveyMonkey’s employee feedback offering, and CX is SurveyMonkey’s latest reincarnation of its Net Promoter Score product.
SurveyMonkey vs. traditional market research
The new suite of products put SurveyMonkey more squarely in competition with many existing, traditional market research companies. For many years SurveyMonkey claimed it did not compete with traditional market research companies, and, if anything, their product helped encourage companies doing it themselves to seek out more market research from established firms to build on their SurveyMonkey insights. That’s how Dave Goldberg characterized his company’s competitive positioning against traditional market research in an interview back in 2014:
We are not necessarily replacing market researchers. Most people who come to us weren’t using a market research firm before. They weren’t doing anything before or maybe they were using email or pen and pencil surveys… [We] actually probably create more demand for more sophisticated market research down the line… A lot of market researchers do look down on us, but it might be that they feel like they are losing control.
Lurie explained the situation differently two years later as his team was working on the new suite of products. Here’s what he told Bloomberg Asia (3:10 mark) in early 2016:
We feel like we have a solution that is different from the old, traditional world of market research, where customers had to spend six figures and it would take months and months to get answers. We enable them to do that much more cost efficiently and much quicker, which is critical for all decision-makers.
After 19 years, SurveyMonkey IPOs
To outsiders and insiders alike, for many years it seemed SurveyMonkey would remain the rarest of unicorns: a multibillion-dollar dotcom that would never choose to IPO. Goldberg was asked about going public in just about every interview and while he typically deflected the question he often noted that he would never go public because an investor needed liquidity. When that happened from time to time, SurveyMonkey assumed debt or worked with private equity firms. It raised well over $1 billion from most of the big lenders between 2010 and 2014 to finance M&A, pay back investors, and reward patient, equity-holding employees. Goldberg also often acknowledged the costs of going public and did not relish the thought of Wall Street demanding consistent quarter-over-quarter growth for a business like SurveyMonkey. Still, he also never ruled it out entirely and the reasons Goldberg laid out against an IPO in 2014 might not have applied to the “All New SurveyMonkey” of 2018.
Lurie took SurveyMonkey public in September 2018 on Nasdaq under the symbol, SVMK. The up-sized IPO raised $180 million and even included a surprise, last-minute $40 million investment booster from Salesforce’s venture arm.
In its IPO filing SurveyMonkey made clear it now had three types of competitors: other online survey providers like Google, licensed enterprise feedback software companies like Qualtrics and Medallia, as well as full-service market research firms. That settles the debate above.
The IPO filing also revealed financial data dating back to just 2016. The rest of the metrics and data shared above comes from countless news stories, interviews with executives posted on YouTube, old podcast interviews, and more. In addition to annual revenues, on two occasions, both years before the IPO filing, executives revealed earnings figures. In 2008, the last year that SurveyMonkey Founder Ryan Finley ran the company, it posted more than $22 million in EBITDA. Four years later it was revealed in an S&P report and later disclosed to the press by then-CEO Dave Goldberg that the company made more than $61 million in EBITDA for 2012 on revenues of about $113 million. The IPO filing shows that annual revenues would nearly double over the next few years, headcount would more than triple, the company would take on massive amounts of debt, but its earning figures would still hover around that same $61 million figure. In terms of EBITDA, SurveyMonkey posted $64.7 million for 2016, $61.9 million for 2017, and as of the end of September 2018, it was on track to post about the same for 2018.
What’s next for The Monkey?
While going public was never a major milestone or end goal for many longtime members of the SurveyMonkey Troop, IPOs often bring marked changes to companies. Apart from the obvious and typical ones, like newly wealthy employees leaving to seek out their next adventure, ahead of its IPO SurveyMonkey made significant changes to its strategy. It raised its prices, and it refocused on sales-assisted, enterprise accounts. In the long term, will those moves weaken SurveyMonkey’s competitive advantage: its core, self-serve freemium model? Since the IPO one of SurveyMonkey’s biggest competitors in the enterprise space, Qualtrics, was acquired by SAP for $8 billion. What does an SAP-owned Qualtrics mean for SurveyMonkey’s Engage business? Employee feedback isn’t the only vertical producing focused competitors to SurveyMonkey’s historically general use platform. The company will need to thoughtfully launch additional vertical products to defend its flank and not allow any additional up-and-coming vertical players become Qualtrics-sized competitors.
At the same time, SurveyMonkey needs to protect its funnel. Earlier in 2018, just months before SurveyMonkey officially announced its plans to IPO, Microsoft announced the general availability of Microsoft Forms, an Office app that makes it easy to conduct surveys, quizzes, and polls. Anyone with an Outlook account can use Microsoft Forms for free and it’s included with the majority of education and commercial licenses of Office 365. Microsoft Forms may prove to be a more formidable competitor to SurveyMonkey than Google Forms, which launched in 2012. While Google Forms’ existence must have slowed SurveyMonkey signups, between 2012 and 2018 The Monkey’s overall user count grew from 14 million to an impressive 60 million.
As it approaches its 20-year anniversary, SurveyMonkey, the company with the funny name, has proven it can evolve.
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