Intercom raises a Series B round of $23M(insideintercom.io)
insideintercom.io
Intercom raises a Series B round of $23M
http://insideintercom.io/silicon-valley-outsider-raised-30m-30-months/
15 comments
Not only the story is wonderful to watch, but I really like their attachment to the community here, in Ireland. Being present on most (all?) of the major events, lending their offices (& time) to host Dublin Code Kata meetings - I was taking part in few of those last year and they had been a blast, promoting TTD and hacking while solving interesting problems. Only time and amount of things to finish in my projects had stopped me from going on those meetings - but I will continue with the nearest opportunity.
I didn't had a chance to use their products, but hearing the opinions about it - and knowing their attitude - I'd vote with my both hands if having the opportunity to do so.
Great job, Guys!
I didn't had a chance to use their products, but hearing the opinions about it - and knowing their attitude - I'd vote with my both hands if having the opportunity to do so.
Great job, Guys!
I echo this entirely - nice work guys.
> FOCUS ON ENGAGEMENT QUALITY BEFORE ENGAGEMENT QUANTITY
I'm glad they touched on this. I've heard from several sources that many VCs don't care about engagement at all, as long as growth is massive - which seems crazy to me.
For my own SaaS, I'm focusing entirely on engagement and getting the service right before scaling up. I'm constantly talking to early users, gathering feedback and iterating. It's a slow and painful process, but it's reassuring that Intercom also did this.
I'm glad they touched on this. I've heard from several sources that many VCs don't care about engagement at all, as long as growth is massive - which seems crazy to me.
For my own SaaS, I'm focusing entirely on engagement and getting the service right before scaling up. I'm constantly talking to early users, gathering feedback and iterating. It's a slow and painful process, but it's reassuring that Intercom also did this.
It's a tricky balance to get right. If you focus on quality for too long, you may mis-time your growth efforts and find yourself with a fantastic product and not enough users to keep it viable / raise more money.
A great company needs both growth and engagement.
A great company needs both growth and engagement.
Sometimes it's worth focusing on quantity over quality fairly early to allow you to get enough data to improve quality. It's not really possible to A/B test effectively with 3 users and sometimes the data gathered on engagement can be skewed if we are dealing with very small sample sizes.
You should read Intercom's founder article about product management http://insideintercom.io/product-strategy-means-saying-no/
> Your vision is the ceiling for your company’s potential. You’ll never be a billion dollar business if you’re not deliberately working to get there. And in venture capital, it doesn’t make sense to invest in anyone who isn’t at least trying to build a business that size.
If I read between the lines correctly:
Intercom the CRM focused on medium to small web apps as we know it will be gone soon. Intercom the Big Serious Business CRM but with a friendly interface is the new direction.
Congratulations to the team — Salesforce is definitely needing better competition. Congratulations to whatever is second-place to the current iteration of Intercom.
You don't get to a billion dollars without snubbing the initial customers.
If I read between the lines correctly:
Intercom the CRM focused on medium to small web apps as we know it will be gone soon. Intercom the Big Serious Business CRM but with a friendly interface is the new direction.
Congratulations to the team — Salesforce is definitely needing better competition. Congratulations to whatever is second-place to the current iteration of Intercom.
You don't get to a billion dollars without snubbing the initial customers.
I'm 'affraid' that's what will happen, hopefully pricing won't change very soon
Really great news for the guys & gals at Intercom, Delighted that they're from Ireland too. Nice to have some good news around here for a change.
I've had the pleasure of meeting a few of them and what can I say, they're extremely passionate about what they do!
Congratulations.
I've had the pleasure of meeting a few of them and what can I say, they're extremely passionate about what they do!
Congratulations.
Great post. I met Eoghan a while back, not long after they'd graduated from 500 Startups and I remember thinking "Smart guy, simple idea, huge market." Great to see that they're knocking it out of the park.
" You’ll never be a billion dollar business if you’re not deliberately working to get there. And in venture capital, it doesn’t make sense to invest in anyone who isn’t at least trying to build a business that size."
It doesn't make sense to invest in anyone who might just grow to a 50 million dollar company? I think VCs must be missing out on a lot of opportunities.
It doesn't make sense to invest in anyone who might just grow to a 50 million dollar company? I think VCs must be missing out on a lot of opportunities.
It's very difficult to make the math work out for Series A/B/C if you exit at $50 million. If a VC firm invests $5 million and gets a 3rd of the company, then you sell for $50 million, they get ~$15 million on that deal. Yay. Unfortunately, to get there, they had to spend $30 million on 10 similarly situated company, in excess of half of which have a liquidation value of zero. Absence of yay.
I think the parlance for tripled-our-money is "base hit." You don't play baseball to hit base hits. (Well, unless you're the Oakland As -- and talk to Dave McClure et al if you want to hear this metaphor in a lot more detail.)
There exist angels and other seed-stage investors who would not be unhappy with a $50 million exit, to put it mildly. (To say nothing of the founders and the employees.)
I think the parlance for tripled-our-money is "base hit." You don't play baseball to hit base hits. (Well, unless you're the Oakland As -- and talk to Dave McClure et al if you want to hear this metaphor in a lot more detail.)
There exist angels and other seed-stage investors who would not be unhappy with a $50 million exit, to put it mildly. (To say nothing of the founders and the employees.)
Minor baseball analogy nit:
This year the Oakland A's were 3rd in the MLB in home runs (out of 30 teams), last year they were 7th. In the famous moneyball season (2002) they were 4th. They very much build their teams around hitting home runs, just like most VCs :)
I realize you are mentioning the analogy second hand, but I just want to make sure people don't get confused about the A's! There certainly are some smallball [1] teams in the MLB, but the Oakland A's are not one of them.
[1]: http://en.wikipedia.org/wiki/Small_ball
This year the Oakland A's were 3rd in the MLB in home runs (out of 30 teams), last year they were 7th. In the famous moneyball season (2002) they were 4th. They very much build their teams around hitting home runs, just like most VCs :)
I realize you are mentioning the analogy second hand, but I just want to make sure people don't get confused about the A's! There certainly are some smallball [1] teams in the MLB, but the Oakland A's are not one of them.
[1]: http://en.wikipedia.org/wiki/Small_ball
Who are the smallball teams today, then? The Pirates? The Giants?
The problem is that no one can predict the future, so VCs end up backing people who promise billion-dollar potential. More realistic people who say, "yeah, this could do $50 million, maybe a little more", get hosed. But the either/or dichotomy ($50M lifestyle business vs. billion-dollar world-changer) is stupid. There's nothing that says that one can't get to the $50M point and then, once out of the gravity well, make a bigger and bolder play.
All these numbers are bullshit when starting out, anyway.
There exist angels and other seed-stage investors who would not be unhappy with a $50 million exit, to put it mildly. (To say nothing of the founders and the employees.)
Actually, $50m exits under current conditions are horrible for employees, just because employee equity is so low. After preferences, it ends up being equivalent to the kind of bonus bankers get when the firm's trying to get rid of them.
Aside from just regular greed, I think one of the reasons VCs push for pathetic option pools is to create a company where a $100 million exit will piss off almost every single employee, which means that even if the founders would prefer it, there are plenty of key players who'll only do their best in a quest for a $10B+ result.
All these numbers are bullshit when starting out, anyway.
There exist angels and other seed-stage investors who would not be unhappy with a $50 million exit, to put it mildly. (To say nothing of the founders and the employees.)
Actually, $50m exits under current conditions are horrible for employees, just because employee equity is so low. After preferences, it ends up being equivalent to the kind of bonus bankers get when the firm's trying to get rid of them.
Aside from just regular greed, I think one of the reasons VCs push for pathetic option pools is to create a company where a $100 million exit will piss off almost every single employee, which means that even if the founders would prefer it, there are plenty of key players who'll only do their best in a quest for a $10B+ result.
This comment isn't responsive either to 'patio11 or to the thread. The question is, "are VC's missing out on lots of successful exits because they're allergic to 50MM outcomes?". The answer seems to be "no", because the returns on 2 50MM exits in a 10 company portfolio don't make up for the goose eggs from the other 8.
The fact that many of us believe that any given "billion dollar" prospect is counterfeit is neither here nor there. Sure, most VCs also fail with the "bet on billion dollar companies" strategy. Most VCs fail. But that doesn't mean that they should select instead a strategy that appears to be mathematically predetermined to fail.
The fact that many of us believe that any given "billion dollar" prospect is counterfeit is neither here nor there. Sure, most VCs also fail with the "bet on billion dollar companies" strategy. Most VCs fail. But that doesn't mean that they should select instead a strategy that appears to be mathematically predetermined to fail.
What makes you think that only 2 of the exits will succeed? Or that the projects slated for $50M won't turn out to be worth $500M when new approaches or uses for the work are discovered?
There are too many hidden variables and no one knows what they are doing. I don't.
There are too many hidden variables and no one knows what they are doing. I don't.
If you have a strategy for investing in 10 companies and having 5 of them exit at 50MM+, you should raise money for a fund.
Suffice it to say that, because the trajectory of a company which goes to $10 million a year in sales and then exits at $50 million is quite different than one which IPOs, including having likely a far smaller number of employees and stock grants set more by "what a founder felt appropriate for his five closest friends" rather than "how to split 20% 200 ways", a $50 million exit can and has been a motivating event for some employees.
For more detail on this, talk to people.
For more detail on this, talk to people.
Its not the math but the execution risk that is the issue.
No, it's the math, because you can't wish the execution risk away.
I'm not sure I follow you. The 'fact' that you can't wish execution risk away says nothing about "the Math". Many things do impact ~probabilities, and at the same time are not "wishes". For example, YC has an application process. They could get rid of it, but why? "You can't wish the execution risk away".
Depends on the scale of the investment. It doesn't make sense to invest $30m in a company that might grow to $50m, because the potential growth isn't enough to make up for the risk of losing the $30m entirely. It could certainly make sense for a different kind of investor to invest $1m in such a company, though.
Intercom is an exceptional example of tackling a large and hairy problem with dauntless focus. As a user, evangelist, fan, and investor - I'm proud of all of you and excited to see what comes next. My favorite part of the blog post? "fundraising is a pseudo-achievement" - smart, smart smart!
Just to play the armchair investor game...
With 2000 customers, what might be their annual revenue (they say in the millions)? $2-4 million?
Their evaluation must be a huge multiple of revenue. I therefore imagine their belief is they have conversion down so now it is time to buy marketshare?
With 2000 customers, what might be their annual revenue (they say in the millions)? $2-4 million?
Their evaluation must be a huge multiple of revenue. I therefore imagine their belief is they have conversion down so now it is time to buy marketshare?
“My hiring philosophy is aim high. Get people you think you can’t get. Shock people that you were able to get a certain person.”
And then go ahead and hiring executives and managers who're not outsiders. Sorta like what Marissa did with that French dude.
And then go ahead and hiring executives and managers who're not outsiders. Sorta like what Marissa did with that French dude.
There's some real gold in some of those blog posts on there. Well worth reading.
I think they are really a winner from the following perspective:
1. Have a large enough vision and market 2. Maintain high quality of user engagement 3. Hire a talent team 4. Found the right investors
These are pretty much what every successful startup company needs. But I'm curious about
1. How did they obtain a user base (especially enterprise level accounts in the US) and keep them from the competitors, especially when they didn't have any marketing hiring yet?
2. How are they able to attract the talented team members even they were small? The same for investors.
Looks like they have extremely good luck.
Can you refer some of them which may cover the above questions?
1. Have a large enough vision and market 2. Maintain high quality of user engagement 3. Hire a talent team 4. Found the right investors
These are pretty much what every successful startup company needs. But I'm curious about
1. How did they obtain a user base (especially enterprise level accounts in the US) and keep them from the competitors, especially when they didn't have any marketing hiring yet?
2. How are they able to attract the talented team members even they were small? The same for investors.
Looks like they have extremely good luck.
Can you refer some of them which may cover the above questions?
I have always wondered what is the common definition for a billion dollar company . Is it the annual gross or net revenues or is it the valuation ? If it is valuation, what P/E multiple ?
Is it not market cap > $1 billion? For pre ipo companies with no free cash flow it is amount someone invested divided by perecent equity they got > $1 billion.
Valuation. And no P/E since high growth companies have negative earnings (almost by definition).
Read that as "Infocom raises a Series B round of $23M" and my heart went pitter-pat.
Yays to the intercomrades!
Interesting timing giving the Docker funding news.
Their blogging has been interesting since before Intercom was even incorporated (at their consultancy company, Contrast's[1], blog).
They're also a bunch of smart, down to earth people.
Exceptional folks. Congratulations.
[1] http://contrast.ie/blog/