Qualtrics, the 8 billion dollar startup?

November 16, 2018 - Posted by: admin - In category:

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SAP to buy startup Qualtrics for $8 billion.  That is global news and something that has almost rattled the Silicon Slopes here in Utah. 

Let’s focus on the headline mentioning that German tech giant SAP is paying $8 billion (yes, that’s billion with a “B”) for a “startup” company.  Doesn’t that seem like something of a contradiction or at least something that doesn’t quite make sense?  Is there really such a thing as an $8 billion startup company? 

When the average person thinks of a “startup company”, they likely picture an operation run out of a basement or a garage, being bootstrapped by its owner(s), with few or no other employees and small revenue.  But perhaps those within the industry have a different understanding of what it means to be a startup business.  From Investopedia.com, we get the following definition:

What is a ‘Startup’
A startup is a company that is in the first stage of its operations. These companies are often initially bankrolled by their entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand. Due to limited revenue or high costs, most of these small-scale operations are not sustainable in the long term without additional funding from venture capitalists.

https://www.investopedia.com/terms/s/startup.asp#ixzz5X3t2xgYV

Still, by any stretch of the imagination or understanding, it is difficult to conceive of a global giant like SAP paying $1 Billion, or even $100,000,000 for a company that is in its “first stage of operations.”  And again, SAP just threw down $8 billion (again, with a “B”).  What gives?  Let’s look a little closer at this picture.  According to Wikipedia and Qualtrics.com:

Qualtrics is a privately held experience management company, with co-headquarters in Provo, Utah and Seattle, Washington, in the United States. The company was founded in 2002 by Scott M. Smith, Ryan Smith, Jared Smith and Stuart Orgill. Wikipedia
Customer service: 1 (800) 340-9194
CEO: Ryan Smith (Dec 2002–)
Founded: 2002
Number of employees: 1,300
Headquarters: Provo, UT, Seattle, WA, Dublin, Republic of Ireland, Sydney, Australia, London, United Kingdom, Munich, Germany, Washington, D.C., Dallas, TX

Wikipedia.com and Qualtrics.com

Founded in 2002, offices that span the globe and more than 1,300 employees worldwide. Yet again, we ask, how is such an awesome enterprise anything that can reasonably and accurately be termed a startup business? Perhaps the most reasonable answer is that Qualtrics really isn’t’ a “startup”.  It just might be the case that the CNBC.com report was in error (if not technically, at least as reasonable people think and use such terms) when describing Qualtrics as a startup.  While Qualtrics may indeed be in an early stage of its development of sorts, at least vis-a-vis where its founders and the SAP management intend to take the company in the coming years, still, an iconic global business that holds annual events at which the likes of Barack Obama and Oprah Winfrey appear is one that is not properly referenced as a startup business.  In fact, I would venture to say that even massive public companies like Ford, GE, Boeing, and Apple would struggle to bring in such high profile talent for a yearly event.  

Any way you look at it, SAP’s acquisition of Qualtrics is a BIG DEAL.  We can all agree on that, even if we differ on whether Qualtrics is a startup company at this point in its notable history.