The CEO of a social media firm valued at $1.8 billion has a plan to survive the mar-tech consolidation thanks to big-name clients like McDonald's and Microsoft
- 10-year old Sprinklr wants to be one of a handful of marketers' platform of choice for handling social media and messaging.
- While investors' interest in social media management firms has waned, CEO Ragy Thomas views its software as a service (SaaS) model as well-positioned.
- Sprinklr is on track to hit between $250 to $300 million in revenue this year and is preparing to go public.
Sprinklr has turned the firehose of social media content into big business.
Valued at $1.8 billion, the firm has 1,300 employees and 1,500 clients like McDonald's and Microsoft that use Sprinklr to gather data, run ads and handle customer service.
A few years ago, venture capital money flowed into social media, but funding has started to dry up because it's no longer a shiny, new object for marketers. Still, Sprinklr CEO Ragy Thomas said there's still a growing market for social media management, particularly among brands who link social media with non-advertising teams like customer service, research and commerce.
According to Thomas, companies are still working to understand digital channels and handle them the way they've handled more traditional channels like call centers in the past.
"If you think about the forty channels that have sprouted up - Facebook, WhatsApp, YouTube, RenRen, LinkedIn - how do I do all the things that I've traditionally done in modern channels?" Thomas said.
Business Insider spoke with Thomas about the company's plans to IPO and why he thinks advertising and marketing technology will continue to consolidate.
Read more: The hottest ad-tech and mar-tech companies of 2018
Lauren Johnson: What do buyers get with Sprinklr that is different from working directly with the platforms?
Ragy Thomas: I can go to YouTube, Facebook and Twitter and buy, but most companies want to run a campaign on all three, and they'll have three agencies in different markets. It becomes very hard when everyone's jumping in with [different] passwords, buying ads and spending money. [Instead,] you would invite everyone to be on Sprinklr to do budget allocations and put briefs into the platform. Then, the reporting comes back so I can see how the content and campaign did.
There's a lot of sophistication that someone who is spending $100 million on Facebook needs, especially when they're spending it over 70 countries. I can have a thousand assets and the system is looking at how each one is performing and benchmarking those using AI to move money around. We have a client that ran eight million variants of an ad. We're seeing on the low end, 3% to 5% and up to 20% improvement in media ROI.
Johnson: There's been some blurring between ad-tech and marketing-tech industries. How do you differentiate the two?
Thomas: We see marketing and advertising working together off of the same base of content and campaign strategies. We think it's going to go further because customer care is going to come into the fold. If I'm United Airlines and I talk about great customer service that isn't backed up by a real example in my content or messaging strategy, it's not going to be credible.
Johnson: What do you make of marketing-tech companies like Adobe and Salesforce inching into this space?
Thomas: Microsoft, IBM and SAP are partners. And with Salesforce, we are connected through APIs.
Salesforce is a great email platform. They acquired ExactTarget and some social media tools as well, but the social media market moved way too fast. Adobe shut down their social media products. What Adobe brings is content creation, website management and web tools. They may compete with each other, but we complement all of them.
Johnson: There's been a lot of acquisitions of ad-tech and mar-tech companies. What does that mean to you?
Thomas: Sprinklr has acquired 11 companies, and in each acquisition we shut down that product. We take the engineers, customer success folks and bring that expertise into Sprinklr.
In the beginning, there was a tool to publish, a tool to listen, a tool to buy advertising and tools to measure efficiency and share content. The market has more than 6,000 companies. What brand can keep up? 80% to 99% percent of them will go out of business.
It's not [ultimately] going to be one company: Marketers will chose between Salesforce and Oracle, between Microsoft and Salesforce CRM data, and then you need an Adobe and a Sprinklr.
Johnson: Are you looking for other acquisitions?
Thomas: We've taken a breather to digest all of it. We acquire primarily for talent and expertise.
Johnson: You're rumored to be IPOing this year, and the markets are notoriously rocky for ad and marketing companies. Why not stay private?
Thomas: We are sufficiently big and the path we're on is to go public [but] we haven't announced a date.
We are between $250 and $300 million in yearly revenue, so we beat our target for 2018. We have about $240 million of invested capital in the company and at some point, we want to make sure that there's liquidity available for our investors. In 2019, the plan is to capital break-even, so it's a good place to be and not need money.
The market is red-hot for companies like ours - Zendesk, Salesforce, Adobe - that are subscription-based, enterprise-focused.
Johnson: A few years ago, brands were doing lots of real-time social media campaigns and now some have pulled back. How much further do you think the social space can stretch?
Thomas: When social media got started, there was this illusion of free media. The only thing that's changed is that this market has matured - now I have to pay to reach my audience. The most efficient way to reach the modern customer is by a long shot social and messaging. Messaging is going to hit us in 2019.
Johnson: What are you seeing with messaging apps?
Thomas: Many of them are beginning to open APIs to us now. We just integrated with WhatsApp for Business. With WhatsApp, Messenger and Apple and Google coming on board, businesses for the first time can use a phone number [for marketing].
The business models are not clearly established yet. If you go to China, people live off of WeChat - you find a restaurant, look at the menu, order and pay [through the app]. They're monetizing in so many different ways, and it's not straight-up advertising.