Carey Lai's Corner

A former lemonade stand entrepreneur turned Venture Capitalist

How The Latest Unicorn is Changing The Social Landscape

Best yet to come

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Back in 2006, Facebook had not opened up its platform beyond colleges and really had not focused on monetization yet. However, it was abundantly clear that targeted advertising was the likely path of monetization, given all of the valuable information its users freely volunteered.

As Facebook grew, marketers followed. Remember when large brands spent lots of money acquiring Facebook fans? Soon, enterprise software platforms emerged on Facebook such as Buddy Media, Vitrue, Wildfire, Shoutlet and Hootsuite to help brands engage with their audiences. I liken many of these companies to the early days of the web, where the likes of Scient and Viant helped large companies build websites back in the late 90’s. Well, most of these emerging startups helped large brands build tabs on Facebook.

In 2012, Facebook shifted its platform away from tabs to Timeline. Within a three-month time period from May to July, Oracle acquired Vitrue for $300M; Salesforce acquired Buddy Media for $745M; and Google acquired Wildfire for $400M. While many people thought social software platforms were done and dead, I thought we had only just begun.

Typically, when emerging tech companies get acquired by large companies, an innovation gap occurs as those startups are digested internally. Especially in the fast-moving world of social media, where a year can be counted in dog years, you can easily find yourself behind. And, if you’ve ever been part of a large company that acquires a small startup, it’s never as clean or pretty as it should be. Over the next 18 months after those big purchases, none of the acquirers were innovating, yet Facebook, Twitter and others continued to evolve their platforms. Even though most of the gen-1 products were purposebuilt for Facebook, gen-2 players grew up in a world with multiple platforms including Twitter, LinkedIn, Pinterest, YouTube and many others.

In 2011, I evaluated the emerging companies in the space with an investment thesis that a startup would ultimately win versus one of the major legacy software vendors. I have to admit that every startup in the market sounded the same, but it was only after you dug in deeper that you could really understand the value proposition. After meeting with the leaders in the social media management category, I came away most impressed with the vision and management team of Sprinklr.

Having spent lots of time with marketers, it was abundantly clear that they weren’t getting what they needed from the large software vendors. The major players were only interested in bundling and pushing their non-integrated software platforms. I’m thrilled that many people thought social software was done, because it gave me an opportunity to invest in the next generation platform.

In my 10+ years of venture capital investing, Sprinklr has the best-in-class SaaS metrics I’ve ever witnessed. When you evaluate it from a total capital raised, bookings growth, revenue growth, customer acquisition and lifetime value perspective, it crushes anything I’ve ever seen. All the credit goes to the management team, who has both the vision and execution chops to manage this type of growth.

When I look at the social software landscape today, the field has thinned. Google shut down Wildfire in early 2014. Most of the team left Vitrue. Salesforce’s marketing cloud continues on as a Frankenstein-like platform with pieces bolted on. In light of the competitive landscape, I believe Sprinklr has emerged as the true leader with escape velocity.

Where is social enterprise software headed? I believe we’ve only just scratched the surface with marketers. Most social software initially focused on the CMO suite, typically from a marketing or customer service perspective – starting fires or putting out fires. Today, the customer chooses how to engage with a brand. Gone are the days when a brand leverages a one-to-many model through news, print and radio to reach their customers. We live in a fragmented world where a consumer jumps from Twitter to Facebook, from Snapchat to Pinterest, from Netflix to YouTube. Everyone is shouting and no one is listening.

When customers engage with a brand, they want to be part of the conversation on a one-to-one basis. The conversation extends much deeper beyond marketing, but will touch every part of the customer’s experience. From the person behind the counter, to how quickly a website loads, to how fast a brand responds to a direct message. In the future, every time you tweet, post or pin, an organization will align itself from a product development or marketing perspective. No matter the problem, social has the potential to transform organizations not only in how they respond, but how they’re organized. That’s the power of social.

I wish I could share all the fundamentals of Sprinklr, because it’s truly a unicorn. Not in the sense that its current round of funding values the company at well over $1 Billion, but, more so because of its tremendous fundamental growth. It’s not every day that you get a front row seat at one of the fastest growing companies around. I can only say what a fantastic ride it has been so far. And, as the chairman said, the best is yet to come.

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This entry was posted on April 1, 2015 by in Business, SaaS, Social and tagged , , , .
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