1.31.19
5 min. read

Facebook Research is no Nielsen Mobile Panel

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Facebook’s controversial research app is drawing comparisons to Nielsen Mobile Panel, but Nielsen has taken a much more responsible approach to mobile behavior tracking than the social media giant.

This week a high-profile report in TechCrunch revealed that Facebook has been quietly paying teenagers and adults to download a market research app that is capable of tracking nearly everything the user does with their phone. Facebook relied on third-party beta testing sites to promote and market its research app. It didn’t mention it on its official website. Facebook also seemed to fail to mention the existence of Facebook Research to its front line customer service reps.

Two years ago, one confused Facebook user asked the company’s help desk (via its official customer service forum) if a pitch to participate in the Facebook Research program was a scam. He attached an image of the email he received from Facebook’s partner Applause. Here’s how the Facebook customer service rep, Audrey H., wrote back:

It sounds like the email or notification you saw is likely a scam. Spammers and scammers sometimes create phony emails or posts that look like they’re from Facebook. These notices can be very convincing. If an email or post looks strange, don’t click any of the links in it or open any attachments, and please report it to us.

TechCrunch’s scoop has been picked up and built on by countless media outlets over the past two days, and many of them make passing references to Nielsen’s market research practice since Facebook said it also uses apps to track online behavior. When responding to TechCrunch’s report, Facebook also pointed to Nielsen as an example of another company who uses apps for tracking online behavior. It’s true that Nielsen’s Mobile Panel App shares quite a bit in common with what we know about Facebook Research, but there are at least five differences between the two companies’ approaches to mobile behavior tracking.

 

Nielsen Mobile Panel does not allow minors

While many Nielsen research services include data from minors, its mobile panel does not. The membership agreement that Nielsen requires everyone to review before signing up for its Nielsen Mobile Panel makes clear that only adults, 18 years or older, can participate. In its membership agreement, Nielsen makes clear: “If Nielsen reasonably believes that you are under 18 years of age then your participation in the Research may be denied or terminated at any time without notice.”

The Facebook Research app encouraged anyone between the ages of 13 and 35 to participate, but it required those 13 to 17 to have their parents sign a form of consent. Facebook also used ads on Instagram and Snapchat to target teenager participants. Facebook told TechCrunch that only 5 percent of Facebook Research users were under the age of 18 and all of them provided consent forms signed by their parents.

Facebook used third parties to market Facebook Research and used a workaround to distribute it to iPhone users

Nielsen markets mobile panel openly as its own program with terms and conditions as well as privacy policies clearly laid out on its own corporate website. Nielsen also distributes is mobile app through Apple’s AppStore, which means it had to go through Apple’s own review process.

Facebook broke Apple’s rules and distributed Facebook Research to consumers by using a workaround distribution channel that Apple offers companies looking to get internal apps onto their employees’ phones. Facebook used this backdoor to onboard consumers to an app that Apple had never reviewed. What’s more, Facebook Research was marketed exclusively by third-party beta testing sites like Centercode’s BetaBound and Applause’s uTest. The app was typically called either Facebook Research or Project Atlas, but it was not disclosed in marketing materials that it was a program for Facebook itself. An installation guide from Applause states definitively: “The company that is operating this project is Applause.”

Nielsen Mobile Panel is less invasive than Facebook Research

It’s not clear which specific information Facebook tracks with its Research app, but the app required users to give it Root Access to their devices, which means it could feasibly track everything the device does. Here’s how one of Facebook’s third-party distributors explained the scope of the data tracking for the Research app (emphasis Scatterplot’s):

“By installing the software, you’re giving our client permission to collect data from your phone that will help them understand how you browse the internet, and how you use the features in the apps you’ve installed . . . This means you’re letting our client collect information such as which apps are on your phone, how and when you use them, data about your activities and content within those apps, as well as how other people interact with you or your content within those apps. You are also letting our client collect information about your internet browsing activity (including the websites you visit and data that is exchanged between your device and those websites) and your use of other online services. There are some instances when our client will collect this information even where the app uses encryption, or from within secure browser sessions.”

TechCrunch also reported that the level of access the app has allows it to potentially track private messages in social media apps, chats from instant messaging apps, photos or videos sent to others, emails, web searches, browsing activity, and even location data.

The Nielsen Mobile Panel app will also track dozens of different things participants do with their phones, but the company makes clear in its member agreement that there are a number of things that Nielsen will not track or collect.

Please note that the Software will not track, collect or store the content of any personal communications such as the content of phone calls, text messages or emails or the names of any recipients or senders to your mobile device. No personal data identifying individuals or other persons from any directory such as a mobile device phonebook or other directory applications including your email and text directories of addressee will be collected…

In that the Software will also track and collect the URLs of the websites you may visit (although not the specific content of the pages of those websites when you are visiting) the Usage Data may therefore contain data which may indicate your personal preferences or interests or reveal by inference sensitive personal matters such as racial or ethnic origin, political opinions, religious or philosophical beliefs, trade-union membership and health or sex life, and you expressly accept that this may be the case and that such data may be processed by Nielsen.

Again, it is unclear what Facebook Research does and doesn’t track, but its capabilities are certain. Nielsen’s member agreement takes pains to note which personal information it believes to be out-of-bounds. Facebook should make clear where its data-gathering stops too.

Facebook Research requires root access

Facebook Research requires participants to give its app root access to their device, which allows it to decrypt and analyze their mobile activity. That level of access enabled TechCrunch to list what the app was capable of tracking. Nielsen Mobile Panel does not require root access, but it does reserve the right to use a VPN to collect and store data.

Facebook Research offers more money in rewards

Nielsen Mobile Panel participants can earn up to $50 worth of rewards a year. Those rewards are redeemable on Nielsen’s online rewards store, which offers electronics like TVs and digital cameras as well as gift cards to Starbucks, Amazon, and Target.

Facebook Research offered participants varying incentives to sign up and stick with it. Since Facebook relied on third-parties to promote its tracking app, the incentives ranged but started at $5 to sign-up and typically included a $20-a-month incentive to continue on. Participants were also given referral codes and earned more money if they managed to get others to sign up using it.

Apple shut down Facebook Research for iOS but the Android version lives on

Shortly after the TechCrunch report surfaced, Apple pulled the plug on Facebook’s research app. Facebook broke its agreement with Apple by distributing the Facebook Research app to consumers via a channel Apple set up for companies to send internal apps out to employees. As of this writing, the Android version of Facebook Research appears to remain active.

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1.24.19
5 min. read

Gartner’s 50 Acquisitions

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The IT market research goliath Gartner has acquired 50 companies since it went public in 1993. Scatterplot rounded up all 50 M&A deals from the past three decades along with price tags for many of them.

Gartner went public (for the second time) more than 25 years ago. During these past three decades the company claims to have acquired “more than 32 companies”, but it only highlights a few of them on its corporate website.

While others have managed to cobble together lists that get close to the 32 number, Scatterplot has unearthed more than 50 M&A transactions carried out by Gartner since its most recent IPO in 1993. Scatterplot found acquisition prices for many of these deals, including high-profile transactions that had undisclosed terms at the time of their initial announcement.

1993 to 1997: 16 M&A Deals

In 1993 Gartner absorbed competitor New Sciences Associates, which was also based in Stamford, Connecticut. New Sciences was founded in 1985 by former Gartner analysts and focused more on emerging technologies than its eventual acquirer. It grew to a headcount of 38 and $3.8M in annual revenue by 1990, according to Inc. Magazine. In 1993 Gartner also acquired Real Decisions, which offered an IT benchmarking service that complemented Gartner’s existing offerings.

In 1995 Gartner inked one of its bigger M&A deals: It bought Dataquest from Dun & Bradstreet for about $80 million. Up until that point Gartner had mostly sold to IT managers at large companies, while Dataquest mostly sold its services to hardware and software vendors. That same year Gartner made a pair of international acquisitions: MZ Projekte and Nomos Ricerca. MZ Projekte offered research and advisory services focused on the German, Swiss, and Austrian technology market. It also published four newsletters and produced the PC Trends conference. Nomos focused on the Italian IT market and offered custom consulting, market research, and technology assessment services. It had about 10 million Euros in revenue and a headcount of 25 when it was acquired, but no price tag for the deal emerged. Gartner’s fourth and final acquisition in 1995 kicked off its brief foray into corporate training: The company bought a majority interest in Relational Courseware, Inc. (RCI), which was a developer of computer-based training products. RCI continued to operate independently but took advantage of Gartner’s distribution channels and it could tap its analysts to help build material.

Gartner snapped up four more companies in 1996. Two of those built on Gartner’s corporate training interests: Mindware Training Technologies and J3 Learning Corporation. J3’s training software focused on desktop applications, operating systems, relational databases, networking technologies, and developer languages and tools. Gartner bought J3 for $45 million and it combined it with Mindware and Relational Courseware to form Gartner Group Learning. The division grew from $4 million in revenues in 1995 to $35 million before Gartner sold it to Harcourt General in 1998. Gartner also purchased healthcare-focused research and consulting firm C. J. Singer for a rumored price of about $4.3 million. And its fourth acquisition in 1996 was Productivity Management Group, a consulting company that bolstered GartnerMeasurement with project management software. While unconfirmed, the PMG price was rumored to be about $2 million.

By 1997 Gartner was in full acquisition spree mode with six more deals. The company bought a sizeable stake in corporate training company Fox Industries for an undisclosed price. It also bought Australia-based telecommunication research firm East Consulting, research products from SPG that focused on the Australian and APAC markets, French IT publisher Bouhot and Le Gendre, and Swedish consulting firm Informatics MCAB. Finally, Gartner acquired Datapro from McGraw-Hill for about $25 million. Datapro tracked product specifications and pricing and offered product comparisons, technology reports, market overviews, case studies, and user ratings surveys.

1998 to 2000: 18 M&A Deals

Based on deal volume alone, 1998 was Gartner’s most acquisitive year with nine transactions. Gartner bought the Research Board, an IT research firm known for its exclusive event for CIOs, for $12 million. It also acquired UK and Hong Kong-focused IT advisory firm Wentworth Research for $8.3 million, longtime competitor Griggs-Anderson for $18.2 million, total cost of ownership software provider Interpose for $8 million, and conference company Vision Events International for $20.5 million. It also acquired France-based Norbert Miconnet Information Technology Advisors for an undisclosed sum, and Argentina and Chile-focused AICC Consultores and Technology for $2.4 million. Finally, it acquired financial services industry-focused IT advisory Mentis Corporation as well as Irish IT consulting firm National Institute of Management Technology.

In 1999 during the lead up to the dotcom bust, Gartner had yet another banner year of acquisitions with seven deals. It bought telecommunications-focused research firm Rendall and Associates for $12 million, IT procurement advisory firm Computer Financial Consultants for $16 million, and IT consulting for government agencies specialist Warner Group for $18 million. It also snapped up IT research and consulting firm G2R for $15.6 million, consumer technology researcher INTECO for $4.8 million, the System Builder Summits in Europe, and a majority stake in website satisfaction monitoring firm cPulse for $3.5 million.

In early 2000 Gartner inked its ill-fated $78.5 million deal for online tech media firm TechRepublic. After injecting about $50 million into TechRepublic, it ended up selling TechRepublic a year later for about $23 million. Gartner’s last acquisition of the millennium was its $9 million deal for Solista Global, a strategy consulting firm that merged business and technology expertise.

2001 to 2018: 17 M&A Deals

The first decade of the new millennium was a slow one for Gartner’s M&A team. In fact, six out of the ten years saw zero deals for the analyst firm. Gartner acquired the Midsize Enterprise Summit and AIMS Management Consultants in 2001. AIMS, an India-based research firm, fetched just $800,000. In 2002 Gartner acquired the remaining 49 percentIt had acquired a majority stake in the company at a previous time, but the date and price tag of the first half of the deal is difficult to pin down. of People3, a human capital management consulting practice, for $3.9 million. In 2002 Gartner also acquired cybersecurity event Sector 5 Summit for an undisclosed amount.

In 2005 Gartner made a big move and acquired one of its IT research and consulting rivals, META Group, for $160 million. In 2009 it bought two other sizeable competitors: AMR Research and Burton Group for $63 million and $56 million, respectively. AMR differentiated itself with a focus on supply chain management, while Burton stood out for its in-depth, technical expertise.

In 2012 Gartner acquired Ideas International, an enterprise IT research firm that was publicly listed in Australia, for about $18 million. In 2014 Gartner acquired its longtime partner Market-Visio, which was headquartered in Finland but had a presence in Russia, for $6.6 million. That same year it acquired Israel-based SircleIT, maker of cloud-based automation software and better known as Senexx, for $5.7 million. In 2014 Gartner also bought software buyer consulting firm Software Advice for $135 million.

The following year, 2015, brought two more acquisitions, but Gartner made the odd decision to only disclose the aggregate purchase price of the two companies, even though they were separate entities. Gartner purchased crowdsourced software recommendation site Capterra and a similar company called Nubera eBusiness, better known as GetApp, for an aggregate purchase price of $206.2 million. Some websites list the Capterra acquisition price tag at $206.2 million without noting that the number includes the price of the GetApp deal too.

In 2016 Gartner bought machine-to-machine and Internet of Things specialist market research firm Machina Research for $4.5 million. It also acquired London-based subscription-based research and conferences company, SCM World, for $49.2 million.

In 2017 Gartner announced its two most recent acquisitions: L2 and CEB. Gartner bought L2, a subscription-based research firm that benchmarks the digital performance of brands, for $155 million. The New York City-based company had 150 employees. Finally, Gartner’s largest acquisition — by far — is also its most recent one: CEB. On April 5, 2017, Gartner acquired CEB for about $2.6 billion but the company considered the aggregate purchase price to be about $3.5 billion. CEB was a publicly listed company based just outside of Washington D.C. with some 4,900 employees. Its main offering was subscription-based, best practice research and analysis covering human resources, sales, finance, IT, and legal.

Gartner made no additional acquisitions in 2018 while it continued digesting its multi-billion dollar deal.

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1.17.19
5 min. read

Owning Nielsen

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As Nielsen meets with private equity firms for go-private talks, Scatterplot looks back at its history of ownership. Wisconsin fraternity brothers, New York City bootleggers, and Dutch media conglomerates all figure into the company’s almost century-long run.

Nielsen might go private again. After reporting a disappointing Q2 last summer, Nielsen announced that Europe’s GDPR privacy law and other changes to the consumer privacy landscape had an unexpected impact on revenues. The nonagenarian cut its annual outlook by 36 percent, announced its CEO Mitch Barnes would depart, and promised to explore a sale of its Buy business. Its share price fell 25 percent in one day.

That led the largest activist fund in the world, Elliott Management, to take an 8 percent stake in the market research goliath, and attempt to pressure Nielsen’s board to take the company private.

Reportedly, the board rebuffed by asking for time to appoint a new CEO first, which it has since done. David Kenny, the former SVP of IBM’s Watson and Cloud platform, started in early December. Prior to running IBM Watson, Kenny was CEO of The Weather Company (TWC). He joined IBM when it acquired TWC in 2015.

With Kenny at the helm, Nielsen’s board was set to begin talks in January with private equity firms Blackstone, Bain Capital, and Hellman & Friedman. Should a go-private deal get inked, it would be one of the biggest leveraged buyouts in years.

That said, the move wouldn’t be unprecedented for Nielsen. Throughout the course of its 96-year history, Nielsen has changed hands as many as seven times already. Here’s a rundown of important changes in Nielsen’s ownership status over the course of the past century:

1923 Pricetag: $45,000.

In 1923, 26-year-old electrical engineer Arthur C. Nielsen asked his University of Wisconsin-Madison fraternity brothers to pool together $45,000 and invest in his new market research company,One of A.C.’s friends not only invested but also loaned him money so he could buy some of the stock himself. A. C. Nielsen Company which would conduct performance surveys for industrial manufacturers.

The surveys provided clients independent economic and engineering analyses of the performance of their products in the plants of their customers. While the company managed to sell the surveys to hundreds of clients, after five years it remained unprofitable. Two of Nielsen’s customers, General Electric and DuPont, asked Nielsen to conduct carefully planned interviews with their customers and prospective customers. This line of business helped drive sales to a peak of $205,000 in 1930. Shortly thereafter, however, the Great Depression crushed the business. It laid off nearly all of its 45 employees and posted sales lower than those of its first year of operation.

1931 Pricetag: $15,000 and one bootlegged drink.

In 1931 at the midpoint of the Great Depression, Nielsen’s company was about to go bankrupt. A.C.’s last hope was a good friend, a widow who held a fortune in Woolworth and AT&T common stock. He asked an advisor Ralph B. Johnson at Smith, Barney and Company for some advice on how to convince her to invest. Here’s how A.C. recounted the story in 1964:

Ralph Johnson’s advice was to the effect that the less I said about the virtues of Nielsen stock, the better would be my chances — and that I had better stake everything on giving the lady a very pleasant evening and pray that we should reciprocate by purchasing a bit of my stock. Then he asked, ‘How are you fixed for liquor for the evening?’
I replied that the subject of liquor had never entered my head — because its use would be illegal under the Prohibition Law.

Ralph Johnson then explained patiently that, illegal or not, big Wall Street deals like the one I was contemplating (involving as much as $15,000) were invariably aid by a bit of conviviality. And so, with some misgiving, but having complete faith in my friend’s judgment, I bought a hip flask at Woolworth’s, filled it with a potent liquid provided by Johnson’s bootlegger and set off on my stock-selling campaign.

The dinner went satisfactorily although my guest consumed only one drink. Perhaps the quality was a bit low.
But the soundness of our banker’s advice was demonstrated by the fact that the charming lady handed me her check the very next day. I’m happy to say that she was eventually repaid in full.

1958 Pricetag: $5 million.

In 1958 Nielsen also repaid his friend at Smith, Barney and Company by tapping the bank to put The A.C. Nielsen Company stock on the over-the-counter public market. The bank priced the company’s shares at $26 a pop, and the offering ended up valuing the company’s shares at $5 million in total. Less than six years later, during a speech A. C. Nielsen gave on his company’s first 40 years, he noted that his original investors from 1923 had enjoyed a 700-fold increase in the value of their investment. Investors in the 1958 stock offering had already seen a seven-fold appreciation by 1964, he said.

A.C Nielsen Jr in 1964.

1984 Pricetag: $1.1 billion.

In the evening on May 17, 1984, business services goliath Dun & Bradstreet, best known then for its credit information services, announced its intent to merge with Nielsen in an all-stock deal valued at $1.1 billion. A.C. Nielsen Jr, who had taken over his father’s company in the mid-1950s, retired as CEO of the company just weeks before the announcement. At the time he said he and his father had considered D&B as their only viable merger partner in the past 15 years. Nielsen posted revenues of $680 million in 1983, while D&B’s revenues had topped $1.5 billion that year. While D&B denied it, some critics of the deal suggested it was an elaborate way to fend off potential acquirers of D&B, which was sitting on $940 million in cash at the time. D&B denied the speculation, but the Nielsen merger made it a much more expensive target.

1999-2000 Pricetag: $4.8 billion.

D&B held onto Nielsen for nearly 12 years before deciding it should split itself up into three public company spinouts in 1996. That maneuver separated Nielsen Media Research from its consumer packaged goods research business, which D&B dubbed A. C. Nielsen. One of the three spinouts D&B glommed together was called Cognizant, which included Nielsen Media Research, IMS Health, and Gartner. In late 1999, however, Dutch media company VNU acquired Nielsen Media Research from Cognizant for $2.5 billion. A year later it reunited NMR with its roots by acquiring A. C. Nielsen for another $2.3 billion.

2006 Pricetag: $9.8 billion.

After VNU tried and failed to acquire IMS Health for $6.8 billion, six private equity firms successfully acquired VNU for $9.8 billion. At the time VNU’s other high-profile businesses were the magazines The Hollywood Reporter and Billboard. The PE consortium included AlpInvest Partners, the Blackstone Group, the Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts, and Thomas H. Lee Partners. VNU changed its name to The Nielsen Company the next year because of its better brand recognition.

2011 (Partial) Pricetag: $1.8 billion.

The Nielsen Company finally goes public on the New York Stock Exchange with an IPO that raises about $1.8 billion. Valuations of the company at the time ranged but went as high as $14.5 billion for full enterprise value.

2019 Pricetag: Still under negotiation.

Scatterplot will update this article with any news related to Nielsen’s reported go-private talks.

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1.08.19
17 min. read

An Incomplete History of SurveyMonkey

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SurveyMonkey’s path from pioneering, freemium dotcom to enterprise-grade survey platform. Scatterplot’s incomplete history of the market research giant includes historical financial data, growth metrics, strategy shifts, one failed product, a Goonies reference, and more.

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.

Source: Internet Archive/Wayback Machine

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.

What’s missing? Which incomplete history should Scatterplot write next? Send your comments to b@scatterplotnews.com and make sure to sign up for the Scatterplot newsletter so you don’t miss the next one!

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