Arena: Market Conditions Before SurveyMonkey
Individuals, teams, schools and nonprofits · 1999 · Worldwide, led by the United States
Barriers to participationOverserved customers
In 1999 an office manager polling staff, a teacher asking parents for views or a nonprofit surveying its members had no cheap, simple way to build a survey and send it online SV21. Survey research was a specialist's job, done with tools and firms built for trained researchers rather than for the person who simply needed answers from a group SV21 SV30. The demand was wide and shallow: many occasional askers, each needing a few questions answered, few able to pay much, and almost none buying on behalf of an organization.
How each step happened
Step 1 of 5 · 1999–2008
A free survey tool for anyone
The widest possible customer
Ryan Finley built SurveyMonkey in 1999 as a side project, and it was one of the first freemium web businesses: anyone could build and send a survey free and pay for more SV22 SV2. Every survey sent put the brand in front of respondents. Selina Tobaccowala, who ran engineering from 2009, says the referral effect showed after a user's fifth, sixth or seventh survey SV22. With no marketing, in 2008 it earned about $30 million of revenue at an 85% EBITDA margin with no outside capital SV22 SV24. By 2009 two million registered users had collected about 200 million responses, and its users included more than 80% of Fortune 100 companies SV3.
The loop made SurveyMonkey the best-known name in surveys at almost no acquisition cost. Dave Goldberg, chief executive from 2009, credited its lead over more than 60 competitors to a memorable brand, ease of use and low price SV5. In 2017, 45% of business users of survey software called it their platform of choice, nearly double any rival SV25. The same loop fixed the customer as one person paying with a card. Those people worked inside large companies, but no one had chosen SurveyMonkey for the organization, and the brand meant little to a company's IT and purchasing staff SV8.
Rivals Qualtrics started in 2002 with the opposite customer: academic researchers who needed sophisticated experiments and had almost no budget Q1 Q2. A UCLA researcher said tools like SurveyMonkey were fine for polling but crude for academic research Q26.
Growth LoopFreemium ModelOwned Media
Step 2 of 5 · 2009–13
Capital for reach and owners, not schools
In April 2009 Spectrum Equity and Bain Capital Ventures bought control with bank debt and made Goldberg, a former Yahoo executive, chief executive SV3 SV4. It could invest in international expansion, quality, enterprise development or the platform, and chose reach and engineering first SV21 SV22. Tobaccowala rebuilt the site in Python one area at a time, with billing in 28 currencies SV22. By 2012 it had launched 14 languages in 18 months, bought Precision Polling and Wufoo, and begun selling survey respondents SV5. In January 2013 it raised $794 million of debt and equity at a $1.35 billion valuation, used mainly to buy back shares and pay down debt SV6.
International growth paid off: 35% of 2017 revenue came from outside the United States SV2. None of it reached the people who would later buy survey software for companies. Schools used SurveyMonkey the way anyone did, one free account at a time SV3 SV22. Elena Verna, who ran growth at SurveyMonkey for about seven and a half years, recalls what followed: as students trained on Qualtrics graduated, SurveyMonkey saw users choosing and promoting Qualtrics where it had faced no such competition before QTX-2.
Rivals Qualtrics set a goal of 250 universities, and every class at a licensed school learned research on its product; it counted 1,300 colleges and universities by 2013 Q2 Q1 Q26. Verna says Qualtrics gave schools its product nearly free through license deals QTX-2.
Resource allocation
Step 3 of 5 · 2013–18
Inside companies, rarely bought centrally
SurveyMonkey released its first enterprise plan in November 2013, with central administration, one invoice and company ownership of survey data SV23. Goldberg said "control issues" had kept enterprises away, called the company a "weird hybrid" of consumer and enterprise, and said the plan had required rebuilding the whole technology architecture SV23. The plan was built for the company buyer. Verna says single sign-on, data ownership and permissions made the product worse for the people using it, so users felt no pull toward a company account, while her growth team kept its focus on self-serve payments QTX-2.
Then the sales effort shrank. After Goldberg's death in May 2015, Zander Lurie became chief executive in January 2016 and within six weeks cut 100 jobs, 13% of staff, mainly in the sales division serving business clients; part of the strategy "isn't living up to expectations", he said SV27 SV28. At the 2018 IPO the prospectus described a salesforce that "has historically been limited"; 2,900 organization-level agreements brought about 12% of revenue SV2. SurveyMonkey had paying users in 98% of the Fortune 500, yet when it approached procurement and IT, Lurie said, "we need to explain that we also have an enterprise-grade solution" SV8. Revenue grew 6% in 2017, mostly from charging existing payers more SV25.
Rivals Qualtrics sold to companies through inside and field sales teams and reached more than 9,000 customers; its 2017 revenue was $289.9 million, up 52%, against SurveyMonkey's $218.8 million, up 6% SV30 SV25.
Self-Serve Only
Step 4 of 5 · 2018–21
Customer-experience tools bought, then a new name
Qualtrics had named the larger category first. In March 2017 it launched its experience management (XM) platform, with customer, employee, product and brand experience products on one shared engine, the Research Core SV31 SV30. When SAP agreed to buy Qualtrics for $8 billion in November 2018, Lurie called it "a multi-multi-billion-dollar global category"; SurveyMonkey's parent, SVMK, was worth about $1.6 billion SV7. SurveyMonkey signed its first $1 million customer in that quarter QTX-5.
It bought its way in. In 2019 it paid about $80 million for Usabilla, a feedback tool for websites and apps used by 450 enterprises, and about $68 million for GetFeedback, a customer-experience tool built into Salesforce SV13 SV12. In June 2021 the parent renamed itself Momentive, "an experience management company" promising insights in hours or days rather than weeks or months; the survey product kept the SurveyMonkey name SV10 SV11. The bought products arrived as separate tools, while Qualtrics' four products shared one engine and one account relationship SV12 SV13 SV30.
Rivals Qualtrics grew accounts on its shared engine: net retention, what existing customers pay a year later, reached 143% among Global 2000 customers in 2018, and 27 customers paid $1 million or more a year by the end of that year SV30 QTX-1. Medallia competed with both for enterprise experience programs SV25.
M&A Strategy
Step 5 of 5 · 2021–23
Accounts kept, not embedded; sold for $1.5 billion
SurveyMonkey's accounts stayed but rarely grew. At the IPO, organization net dollar retention was consistently above 95%, and individual annual subscriptions renewed at above 80% SV25. Bought one user or department at a time, its surveys did not become the system behind a company's customer or employee programs, so accounts did not spread the way Qualtrics' did SV2 SV30.
The company then tried to combine. Zendesk agreed in October 2021 to buy Momentive for about $4 billion; Momentive's holders approved, but Zendesk's stockholders voted the deal down on February 25, 2022 SV15 SV14 SV29. In 2022 sales-assisted revenue grew 27% to $181.3 million while self-serve revenue stayed flat at $299.6 million SV18. In May 2023 a consortium led by STG took the company private at $9.46 a share, about $1.5 billion in cash, and the new chief executive, Eric Johnson, dropped the Momentive name to "unify our products under a single iconic name" SV16 SV19. What remained was the business step 1 built: the best-known brand in survey software, with nearly one million paying users SV17 SV19.
Rivals Qualtrics customers connected it to CRM and ticketing systems, including Zendesk, and customers who joined in 2014 to 2016 were billed 1.7 to 1.8 times their first-year amount by 2019 Q27 QTX-1. SAP had valued Qualtrics at $8 billion in 2018 SV7.
M&A Strategy