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From the basement up » Qualtrics wasn’t launched 10 years ago in an office building. Instead it sprang from Smith’s Provo home, with up to 22 people and a slew of computers crammed in his basement.
"We were dragging wires and doing everything ourselves — literally from laying sheetrock to wiring and putting on the ends of Internet cables. It was baling wire and chewing gum," Smith said.
Qualtrics, from the inside
What » Provo company that produces Web-based survey software that can collect and analyze data for businesses and colleges.
Employees » About 200, including sales staff, customer support personnel and software engineers. Will be hiring another 250 by the end of the year.
Founded » In 2002 by Scott Smith, son Ryan and Stuart Orgill in Scott Smith’s Provo basement.
Funding » Recently received $70 million in venture capital from Silicon Valley investors Accel Partners and Sequoia Capital.
About that time, Smith’s son, Ryan, now 33, came home from an internship at Hewlett-Packard to help his father, who had been diagnosed with throat cancer (Scott Smith is now 10 years cancer free, he says). Ryan Smith, today the company’s CEO, began helping secure clients. Stuart Orgill, 34, an accounting graduate from BYU and company co-founder, was helping run Qualtrics, while Scott Smith was in charge of the product development.
"It was kind of, ‘We ate what we killed,’ " Orgill said about those early days in the basement. "I made $8,000 the first year and $12,000 the second year. My family thought I was crazy. But it was a lot of fun."
A few years later, the basement was packed. So many employees’ cars were parked up and down Scott Smith’s street, the neighbors were getting annoyed. Qualtrics was making $100,000 a month, but Orgill and Ryan Smith realized the company had to move to a real office.
While his father was serving a Fulbright scholarship in the Eastern European country of Moldova, Ryan Smith and Orgill decided to move into a Provo space that was only 3,500 square feet. Although Qualtrics targeted colleges, namely business schools early on, businesses also had a need for their Web-based survey software, especially when the recession hit in 2008.
"A lot of companies had it easy and were doing a lot of guess work [before the recession], but when budgets were getting tight ... they wanted to know exactly what was going on," said Ryan Smith about why businesses began to turn to Qualtrics’ survey software.
Opportunity calling » Several years ago, venture capitalists started approaching Qualtrics "on a daily basis," Scott Smith said. But since the beginning, he was never really interested in accepting money from investors.
"As a business professor, I’ve been exposed to horror stories one after another, that once you bring in an investor, all of a sudden they’re your boss," he said. "I didn’t want to have to report to anyone. I didn’t want to be financially accountable to anyone."
But his son discovered that "the quality of the investors started to get higher and higher," he said. "I thought, ‘Let’s at least take a lunch or a call.’ "
The Smiths always dreamt of keeping their company. Then one day they were thrown a curve ball — an offer from a company (they won’t say which) to purchase Qualtrics for $500 million. The Smiths were finding it hard to say no.
But one night last February, Ryan Smith was having dinner in Silicon Valley with Mike Moritz of Sequoia Capital, the venture capitalist whose early investments included Google, YouTube and Yahoo.
Smith asked him for his thoughts about the offer. Instead, Moritz gave him the vision that Qualtrics could be its own billion-dollar company with the right growth.
Moritz wasn’t the only one impressed by Qualtrics. "It’s a great product." said Accel general partner Ryan Sweeney. "First and foremost we look for great teams and great products. They’re all top class." Accel talks to about 5,000 companies a year but only invests in four to six of Qualtrics’ size, he said.
After that dinner conversation with Sequoia, Ryan Smith was hooked on the future vision of Qualtrics. He thought of their potential success as "a magic pony ride."
"We’re on a magic pony, which means it’s one of those horses that can be game-changing forever, and that’s what he [Moritz] saw in Qualtrics," Ryan Smith said. "That’s what we wanted, and that’s what helped sway the decision."
In the end, Scott Smith relented. "We view these two companies that have invested in us as partners," he said. "We need partners of their type to help us to grow."
An open culture » Qualtrics no longer is in that cramped 3,500-square-foot building, having moved into the bigger Dynix Drive space, which is about to double with the occupation of a second floor. The company also is building an office in Europe.
Ryan Smith successfully begged his brother, Jared, who used to work at Google, to come back to help run Qualtrics’ product development and engineering team (which works in an area of the office dubbed the Death Star). And Qualtrics is operated with a Google-esque office culture, Scott Smith said. Instead of cubicles, the space features small desks to keep clutter to a minimum. There are Qualtrics bicycles inside for employees to ride, a pingpong table and chess table, and two arcade basketball machines. Ryan Smith paid $800 for an old VW bus that the company moved into the office and turned into a snack station.Next Page >
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