Qualtrics Founder Ryan Smith: ‘Nobody Else Has Ever Done Anything Like This!’

Lost in the glitz and glare of Qualtrics’ high-flying IPO and its creation of an unprecedented new equity relationship with former parent SAP is a rather stunning real-world fact: in the past 2 years, Qualtrics has onboarded 3,800 new customers.

In a Zoom call I had yesterday with founder and chairman Ryan Smith and CEO Zig Serafin, Smith was lavish in his praise of SAP for allowing Qualtrics to pursue a wildly creative approach that could enable the experience-management pioneer to grow even more rapidly as a partner to SAP rather than a subsidiary of it.

“SAP deserves a huge amount of credit for their flexibility and their creativity in allowing us to do this” IPO, Smith said of this week’s high-profile event that leaves SAP owning 80% of Qualtrics.

Set a new precedent?

“Because, really, nobody else has ever done anything like this!” said Smith in his uniquely effusive style that’s probably unrivaled by any chairman of any publicly traded company. 

“I think there’s a good chance that this could set a huge precedent where other big companies are going to look at their assets and their holdings and ask, ‘Do we have a high-flyer? And should we be placing our bets disproportionately to unlock massive value?’ ”

With an IPO price of $30, Qualtrics stock opened at $41.85 on Thursday and had  reached $45.50 early that evening, giving it a market cap in the range of $22 billion.

What’s fueling the fire?

So what’s behind this rabid desire to own a piece of Qualtrics?

What’s this elusive thing that Qualtrics is uniquely capable of doing that drove 3,800 customers to sign on in that last 24 months—that’s about 160 per month and more than 5 each day?

Smith defined it as Qualtrics being able to help CEOs and their companies design and deliver fabulous experiences that consumers and business customers are demanding in today’s fast-paced digital world.

“Two years ago, when SAP acquired us [for $8 billion], we put our heads together and looked at the whole market and thought, ‘Wow, this is a $40-billion opportunity!’ ” Smith said.

‘And then COVID hit’

“Then as we really got into it throughout 2019, we said, ‘No, actually the play is bigger—much bigger!’ And then COVID hit.

“And suddenly, experience was out in front of everything—companies had to figure out how to deliver beautiful experiences in a very different world, and CEOs began to realize that they need to be able to design that whole experience,” Smith said.

“Well, Qualtrics is the perfect platform to help them do that.”

CEO Serafin, who joined Qualtrics from Microsoft in 2016, explained that as with so many business challenges today, the core issue is data.

“We’re able to help companies look at their entire experiential data set—from products, from HR, from sales, and from marketing,” Serafin said.

That data exists, Serafin said, but is fragmented, disparate, disconnected, and therefore of very little help to companies desperately in need of insight and direction in a wildly gyrating world.

Spinning up systems of action

“We can help them pull all that together in single system, like a repository, and let them turn it into a system of action, let them create workflows, and let them use this unified experiential data as the connective tissue of the company.”

The result is that companies can use that data to be able to identify and focus on vital issues that radiate across the company, and “to drive the right actions at the right times,” Serafin said.

Smith described this capability with a phrase that I’ve advocated for years and that, unfortunately, many companies are still not able to master: seeing the world and running the business from the outside in: through the eyes and perspectives of the customer.

“In almost every company, no one owns the experience—customer experience, employee experience, product experience, or brand experience—end to end,” Smith said. 

“We can help them fix that and put the pieces in place, even using some elements of organizational design, to maintain and deliver consistent experiences.

“That’s why CEOs have to lead the charge to take control over designing experiences before and as they happen,” Smith said.

Return of cruises?

“Then they can test new ideas to see the reaction, they can make sure an idea works before it’s fully launched, and a cruiseship company can figure out, ‘How do people feel about returning to cruises? What would make them feel most comfortable? How can I ensure the crew feels safe? What’s the right time to launch the cruise? What’s the right way to market it?’

“That’s exactly what one big cruiseship company did with us—they upgraded their license with us even when their ships were docked and they weren’t doing any cruises because they wanted to get out ahead of things and shape the experience and design the experience with brand experience and experience management,” Smith said.

And, with Qualtrics being an independent company rather than a wholly owned unit of SAP, it can more easily do business with customers who are using non-SAP applications.

Fragmented islands of data

“For too many companies, the data they need to design great experiences is scattered around the company or it’s locked up in various places where people who need it can’t get at,” Serafin said.

“But with the powerful engines we’ve built to let customers focus on very specific actions, we can become the systems of action that sit alongside our customers’ systems of record.

“And our customers are realizing it’s to their advantage to have these systems of action, and to have them running right alongside other mission-critical systems that are often from multiple vendors, not just SAP.”

Yet, while Qualtrics is eager and able to work with all the big software vendors in that way, there’s no doubt that SAP occupies something of a special spot.

“Hey, no question, we are partners in every sense of the word,” Smith said.

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