If you missed it, SurveyMonkey announced yesterday that it was acquiring Dutch firm Usabilla, whose software is used by product managers, marketers and researchers to capture user feedback on websites and in apps.
Here are 5 brief thoughts about that deal.
1. SurveyMonkey is having another bite at the enterprise market
SurveyMonkey led the way in democratising access to online survey tools. Along the way, it built a brand that became eponymous with its category (even my 15 year old daughter talks about surveymonkeying in school) and helped to drive the growth of online feedback and research.
But its business performance hasn’t been great. It has been around for nearly 20 years, raising $1bn of funding over that time whilst staying resolutely loss-making. It is now trading just above its IPO price – but has spent most of the last year below that level.
And in the run-up to going public, it re-focused on its core proposition – easy to launch surveys – and stopped chasing complex enterprise deals with long sales cycles and expectations of costly support services.
Since going public, however, it has quietly started pushing back into that space, with its CX and Engage (employee feedback) products. Buying Usabilla signals a bigger attempt to create a more fully featured offer for CX, UX and research teams.
I don’t think this will be the last deal SurveyMonkey does; and I wouldn’t be shocked to see it develop a sub-brand that feels more grown-up and big company-ish for those enterprise buyers.
2. Is 20x the new normal for research-tech acquisitions?
In November last year, SAP bought Qualtrics for what seemed like an outrageous premium. For weeks after that deal, every SaaS founder I met with went swivel-eyed with excitement.
Calm down, I said … this is an outlier.
But is it?
Usabilla is a private firm, so no official statements of annual revenue. But Owler’s best guess is $4m … which would make it another 20x acquisition.
If so, congrats to the Usabilla team.
And research-tech founders: stop drooling.
3. There’s no substitute for sound fundamentals
Usabilla has been around for 10 years and took just 1 angel round of $1m funding in 2011.
Since then, it has been steadily building up a solid product and book of customers – including Vodafone, Philips and Just Eat.
It has taken ten years to become an overnight success; impatient founders should take note. Of all the ingredients of a truly valuable business, time is frequently the most overlooked.
4. Journalists and investors often misunderstand #insightplatforms
Why has most of the coverage of this deal talked about Qualtrics being SurveyMonkey’s big competitor?
It’s nonsense.
They play in adjacent parts of the market with some overlap at the edges. I doubt that either would figure in the other’s top 5 primary competitors.
For these journalists, it’s a case of ‘survey technology (yawn) … I know someone else who does that … they must be competitors.’
So another lesson for founders: research-tech is a really niche space. Potential investors might think they understand what you’re pitching … but often they’ll equate you with something else they know better. And you might end up in the wrong box with the wrong expectations.
5. The commercial rules for technology firms are bonkers
I say this because I find it a bit bewildering. I’m not disparaging either SurveyMonkey or Usabilla. Both great companies.
But the SurveyMonkey CEO’s rationale for the deal (and bear in mind this is a public company, with lots of scrutiny) is that it adds the ability to do popup surveys.
I kid you not.
This, from TechCrunch:
Zander Lurie, CEO at SurveyMonkey, said Usabilla filled in a missing piece in its survey toolkit.
“A key product that we identified that we really wanted to add to the portfolio, which is really adjacent to our VOC (voice of the customer) solution is a website feedback collector helping people on the web or on mobile apps really understand what users are doing on their site.”
Really?
For $80m.
OK, they also get (apparently) a $4m book of business with some great brand names.
Still, really?
SurveyMonkey could build those features in a week and – with its distribution – generate that much revenue from the product within 12-24 months.
At a cost of – let’s be generous – $10m.
$70m – 7x – is the impatience premium that we’re now seeing in #insightplatorms SaaS deals.
Nice money if you can get it.
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