8 ms·

SurveyMonkey to Lay Off 100 and Retool Business Product

108 points by coloneltcb 11y ago

courtf 11y ago
Worked there from 2007-2010, through the sale etc. I had no idea they were up to 750 employees, and can't guess why they've gotten so big. There were 10-15 employees, 2 engineers in 2008 and that company was printing its own money, lots of it. I'm sure revenue is much higher today, but that profit amount isn't a big jump from where the company was headed pre-buyout, on momentum alone. Really have to wonder what they are spending it all on (besides payroll tax).
- azernik 11y ago
  Judging from the article, the cuts were mostly in B2B sales. I could definitely see sales bloating up a SaaS company's headcount very fast. (That's something I'm having to watch out for in my current company.)
  - vyrotek 11y ago
    Perhaps competing with Qualtrics in the B2B space isn't working out.
  - shostack 11y ago
    Correct me if I'm wrong here, but don't B2B sales people pay for themselves (assuming you are smart about LTV modeling, commissions and quotas)? Or is it more that the capital is more profitably invested in other areas of the business?
    - my5thaccount 11y ago
      Sales people are really good about selling themselves, but generally not so great at actually selling the thing you are hiring them to sell.
      - shostack 11y ago
        Right, which is why you let them go if they don't hit quota. What they do is the most measurable part of the acquisition funnel. Laying off a large group of them speaks to financial issues/improper planning vs. just regular weeding out if poor performers.
        my5thaccount 11y ago
        Quotas are fine for an enterprise with a decades old sales process that has data to measure. SurveyMonkey was entering a new market and growing the sales force quickly and before they even knew what a reasonable quota was. You could say that's bad planning, you could also say it's throwing spaghetti at the wall to see which sales person sticks. Data gathering, if you will.
        ucaetano 11y ago
        That doesn't work when you're setting targets for very aggressive growth. A much higher % of salespeople won't hit their quotas, and not because of bad performance, but usually because of bad (aggressive) planning. Letting those many people go would mean spending too much money on replacements, that probably still won't sell their quotas. in the essence, you market analysis (value generated to customer, willingness to pay, potential market size is wrong. As you said, this looks like a business model failure, not a sales failure.
    - toddmorey 11y ago
      If they layoffs are largely sales, I'll bet the cost of acquisition was getting out of control. I've found in practice it certainly can be hard to keep an eye on LTV (the long game), since sales teams live and die for month-over-month results. To support a people-heavy sales process, you need to have decent headroom in your margins, and they might not have had a lot of success getting people from the $25 to the $85 price point.
    - braythwayt 11y ago
      As a former salesperson and manager... It’s not so simple when you sell a product with recurring revenue. When you sell something like a computer, you get a chunk of revenue right away, you make margin on that, and you pay your salesperson out of the margin. You can work out quotas based on the salesperson’s base salary and overheads. That’s a very simple model, and nearly everybody understands it well enough to know when a salesperson is profitable and when they’re not. But when a product has recurring revenue, like seat licenses, you have to model the revenue and mach it up to the compensation. You could tell the salesperson that they get commission when you get revenue, in which case an enterprise sale will pay very little today, put provide an annuity over a long period of time. But salespeople hate that. The thing they control, the sale, happens immediately, but the things they don’t control, like whether you lay them off, whether the customer decides to switch providers, &c. happen over time and are much more likely to cut their income than to boost it. You generally have to be a very mature company with a very well-understood business model to structure salesperson’s income over the long term. Most growth companies are fraught with risks. Thus, salespeople want a chunk of their money when they make the sale. And thus, you have to model the net present value of the sale and structure the salesperson’s compensation accordingly. Now you are taking on some of that risk. And the faster you want to grow, the more salespeople you need to hire, and the more of that risk you need to shoulder. Basically, you’re buying future revenue with cash right now. If the revenue doesn’t materialize, you’re out of pocket,and you need to have fewer salespeople. --- p.s. I’m leaving out the REAL reason why many growth companies lay salespeople off when growth stalls. I explained it above in terms of the value of a sale from a revenue basis. But for most growth companies, the value of a sale is in how it boosts the perception that the company is in hyper-groth mode, which leads to higher valuations, which leads to founders and investors making mad crazy bank. Under such circumstances, the cost of sales can exceed the net present value of the expected revenue from the sale, but companies will merrily dump investment funds into the sales force to keep the company growing at a rate that justifies more investment funds, and maybe get a round where they can take money off the table or go public and make the investors rich. If the company is “buying growth” with its sales force, and growth stalls, you have to get rid of sales very quickly, because even when they’re making sales, they aren’t paying for themselves. And when they aren’t making sales, they’re dragging the company deep into the hole. The interesting thing about this scenario (“buying growth,” as opposed to “buying revenue” described above) is how it affects employees whose equity is locked into the long term. Generally, they shoulder all the risk of this tactic not working, while investors reap all the rewards when it works and they take money out early.
    - azernik 11y ago
      That's a big assumption. LTV modeling and controlling Cost of Acquisition (which includes both salary/commission and sale rate) is hard.
- Justsignedup 11y ago
  I was using SM in 2008 and it was fantastic. Ironically I use SM in the same exact way today as I did in 2008... except apparently 700 more employees on the other end.
- jerrysievert 11y ago
  much love to court, and the work he's done, both there and every other company he's worked for, and truly believe he has a good handle on this.
- finance-geek 11y ago
  How sure how closely it compares to large companies, but with most of the [large] companies i've been at, the metric for promotion was how many people you could hire under you. Not code quality, size of system, not impact, not money saved, not business enabled....just the size of your org chart. Not sure why HR devolves into such a silly metric for non-revenue generating departments, but i've seen it at 5 separate organizations. Is it any wonder employees then behave in the ways they do and build empires?
  - matt_s 11y ago
    If you read Parkinsons Law you will discover the Law Of Multiplication of Subordinates. This is the little known law compared to the one about work filling the time, etc. He shows that between 1914 and 1928 the number of ships in the Royal Navy went down 67% but the number of Admiralty officials (aka management) went up 78%. He was the Scott Adams of that time. (Google the article which originally appeared in The Economist in November 1955)
    - arethuza 11y ago
      The Royal Navy famously now has far more admirals than it does ships. Something like 40 admirals and 260 captains for just 19 ships...
AlexWest 11y ago
"The cuts amount to about 13 percent of SurveyMonkey’s workforce of about 750. The cuts were made primarily among the sales team devoted to SurveyMonkey for Business."
petercooper 11y ago
Founded in 1999, SurveyMonkey is valued at $2 billion Given the stated revenue of $200M and the recent atmosphere around SaaS multiples, is a 10x valuation realistic here? (I'm not throwing shade - genuine semi-naïve question.)
- 55555 11y ago
  It's high for even for a b2b saas company. I think another consideration that should probably bring SurveyMonkey's down is that they have great competitors.
  - andrenotgiant 11y ago
    who are their great competitors? would love to find some alternatives
    - mattwinslow 11y ago
      SurveyGizmo is another. Have used them for several years. My general perception over the years has been that SurveyMonkey had shinier marketing, but SurveyGizmo had a solid feature set.
    - dabeeeenster 11y ago
      typeform
      - diggan 11y ago
        Wow, cool to see Typeform being randomly mentioned on HN! I'm one of the early developers working at Typeform, if you have any questions about it, feel free to ask right here.
    - salmonet 11y ago
      Qualtrics (!)
    - deleted 11y ago
      [deleted]
carleverett 11y ago
I was surprised to see that Google Capital is an investor in SurveyMonkey - Google Consumer Surveys is a direct competitor: March 2012 - Google launches GCS January 2013 - Google invests in SurveyMonkey Is it common for Google to invest in competitors? Why would they do this?
- adevine 11y ago
  Google Ventures (early stage) and Google Capital (late stage) are focused solely on profit, rather than strategic alignment with Google. Google's Corporate Development group is what does investments for alignment and potential acquisition by Google.
- acchow 11y ago
  Yes, this is common. Google Capital claims that they operate wholly independently from the rest of the business to avoid these conflicts of interest.
jzymbaluk 11y ago
I'm honestly kind of surprised SurveyMonkey had over 100 employees to begin with. I always thought of SurveyMonkey as a more fully featured version of something like http://strawpoll.me/ http://strawpoll.me/ with more analytical features and such. I never would have expected them to be a company of nearly 1000 employees.
- kdkooo 11y ago
  Totally agree! It seems like many of the other comments here make similar points.
1123581321 11y ago
Does anyone know if this is something Dave Goldberg opposed and has finally gone through?
throwaway_xx9 11y ago
They've discussed moving from Palo Alto to Menlo Park, so the layoff may be related to that.
- kdkooo 11y ago
  I thought they were moving to San Mateo... http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive-palo-alto-based-surveymonkey-is-moving.html http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive...
zbuf 11y ago
Not calling it "SurveyMonkey" would be a good start for a business product. For me, and when I try to put myself in others' shoes, I find it hard to see how a professional organisation linking to "SurveyMonkey" can do anything but create a negative impression. The product seems good, I'm just surprised the name has lasted this long. Does the name stick because the brand recognition is stronger than the features -- when compared to competitors? What happens when a name like this has "stuck"?
- bobbles 11y ago
  Heh I'm pretty sure we started using a different survey system purely because everyone hated sending out 'surveymonkey' links. They should call their business side 'engage<something>' or whatever...
  - sutro 11y ago
    How about EngageMonkey?
  - wmeredith 11y ago
    I can testify from my agency days, we had more than one client pass on them as a tech solution because of the goofy branding.
  - mech4bg 11y ago
    They also support sending out unbranded links from research.net.
  - my5thaccount 11y ago
    I'd like to see conversion rates between qualtrics and surveymonkey surveys. Who is the monkey, exactly? The person building the survey, the person filling it out, or the company providing the service?
- mech4bg 11y ago
  What about the name is so negative for you? Do you feel the same about other companies like MailChimp? In Australia the name is synonymous with online surveys - it wasn't until I moved to the US that I realized that some people think it's such a strange name.
halite 11y ago
Actually not too surprised. The customer service of SurveyMonkey (and Fluid Survey that they acquired recently) is of D grade now. Getting some rudimentary information about service and internals took years. Now we are looking for other tools as my work publishes few surveys everyday. Their product has not changed in years and seems likes company is confused about the future direction.
DrFunke 11y ago
Oh, god. My sister was literally hired last week...
capitan_picard 11y ago
i've heard there is a lot of "(re)invented here" syndrome in engineering at surveymonkey. if so, that's a shame
meshko 11y ago
How can that company have more than 100 employees i don't understand.
- rtpg 11y ago
  Very likely a lot of it was support/sales. When you're working with business clients who are not technical, a lot of support can come in, even if it's just to help onboarding. In a lot of B2B SAAS, the long term value of each customer means it's totally worth having support staff spend a day helping out. Here it seems like they were trying the B2B SAAS route, and they decided against it, so are firing basically the team on that.
malz 11y ago
Recently signed a deal for 210,000 square feet of office space, 4x the size of their University Ave space just a year after they moved in with a $6.6 mil/year lease. http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive-palo-alto-based-surveymonkey-is-moving.html http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive...
Angostura 11y ago
The thing I find surprising is that they have that many staff and yet the surveys themselves are still so ugly - the visual design has really changed since about 2002 from what I can see
drelihan 11y ago
I am shocked that A SaaS survey would ever need 100 people never mind having 100 it was able to let go.

108 points by coloneltcb 11y ago

Worked there from 2007-2010, through the sale etc. I had no idea they were up to 750 employees, and can't guess why they've gotten so big. There were 10-15 employees, 2 engineers in 2008 and that company was printing its own money, lots of it. I'm sure revenue is much higher today, but that profit amount isn't a big jump from where the company was headed pre-buyout, on momentum alone. Really have to wonder what they are spending it all on (besides payroll tax).

azernik 11y ago
Judging from the article, the cuts were mostly in B2B sales. I could definitely see sales bloating up a SaaS company's headcount very fast. (That's something I'm having to watch out for in my current company.)
- vyrotek 11y ago
  Perhaps competing with Qualtrics in the B2B space isn't working out.
- shostack 11y ago
  Correct me if I'm wrong here, but don't B2B sales people pay for themselves (assuming you are smart about LTV modeling, commissions and quotas)? Or is it more that the capital is more profitably invested in other areas of the business?
  - my5thaccount 11y ago
    Sales people are really good about selling themselves, but generally not so great at actually selling the thing you are hiring them to sell.
    - shostack 11y ago
      Right, which is why you let them go if they don't hit quota. What they do is the most measurable part of the acquisition funnel. Laying off a large group of them speaks to financial issues/improper planning vs. just regular weeding out if poor performers.
      - my5thaccount 11y ago
        Quotas are fine for an enterprise with a decades old sales process that has data to measure. SurveyMonkey was entering a new market and growing the sales force quickly and before they even knew what a reasonable quota was. You could say that's bad planning, you could also say it's throwing spaghetti at the wall to see which sales person sticks. Data gathering, if you will.
      - ucaetano 11y ago
        That doesn't work when you're setting targets for very aggressive growth. A much higher % of salespeople won't hit their quotas, and not because of bad performance, but usually because of bad (aggressive) planning. Letting those many people go would mean spending too much money on replacements, that probably still won't sell their quotas. in the essence, you market analysis (value generated to customer, willingness to pay, potential market size is wrong. As you said, this looks like a business model failure, not a sales failure.
  - toddmorey 11y ago
    If they layoffs are largely sales, I'll bet the cost of acquisition was getting out of control. I've found in practice it certainly can be hard to keep an eye on LTV (the long game), since sales teams live and die for month-over-month results. To support a people-heavy sales process, you need to have decent headroom in your margins, and they might not have had a lot of success getting people from the $25 to the $85 price point.
  - braythwayt 11y ago
    As a former salesperson and manager... It’s not so simple when you sell a product with recurring revenue. When you sell something like a computer, you get a chunk of revenue right away, you make margin on that, and you pay your salesperson out of the margin. You can work out quotas based on the salesperson’s base salary and overheads. That’s a very simple model, and nearly everybody understands it well enough to know when a salesperson is profitable and when they’re not. But when a product has recurring revenue, like seat licenses, you have to model the revenue and mach it up to the compensation. You could tell the salesperson that they get commission when you get revenue, in which case an enterprise sale will pay very little today, put provide an annuity over a long period of time. But salespeople hate that. The thing they control, the sale, happens immediately, but the things they don’t control, like whether you lay them off, whether the customer decides to switch providers, &c. happen over time and are much more likely to cut their income than to boost it. You generally have to be a very mature company with a very well-understood business model to structure salesperson’s income over the long term. Most growth companies are fraught with risks. Thus, salespeople want a chunk of their money when they make the sale. And thus, you have to model the net present value of the sale and structure the salesperson’s compensation accordingly. Now you are taking on some of that risk. And the faster you want to grow, the more salespeople you need to hire, and the more of that risk you need to shoulder. Basically, you’re buying future revenue with cash right now. If the revenue doesn’t materialize, you’re out of pocket,and you need to have fewer salespeople. --- p.s. I’m leaving out the REAL reason why many growth companies lay salespeople off when growth stalls. I explained it above in terms of the value of a sale from a revenue basis. But for most growth companies, the value of a sale is in how it boosts the perception that the company is in hyper-groth mode, which leads to higher valuations, which leads to founders and investors making mad crazy bank. Under such circumstances, the cost of sales can exceed the net present value of the expected revenue from the sale, but companies will merrily dump investment funds into the sales force to keep the company growing at a rate that justifies more investment funds, and maybe get a round where they can take money off the table or go public and make the investors rich. If the company is “buying growth” with its sales force, and growth stalls, you have to get rid of sales very quickly, because even when they’re making sales, they aren’t paying for themselves. And when they aren’t making sales, they’re dragging the company deep into the hole. The interesting thing about this scenario (“buying growth,” as opposed to “buying revenue” described above) is how it affects employees whose equity is locked into the long term. Generally, they shoulder all the risk of this tactic not working, while investors reap all the rewards when it works and they take money out early.
  - azernik 11y ago
    That's a big assumption. LTV modeling and controlling Cost of Acquisition (which includes both salary/commission and sale rate) is hard.
Justsignedup 11y ago
I was using SM in 2008 and it was fantastic. Ironically I use SM in the same exact way today as I did in 2008... except apparently 700 more employees on the other end.
jerrysievert 11y ago
much love to court, and the work he's done, both there and every other company he's worked for, and truly believe he has a good handle on this.
finance-geek 11y ago
How sure how closely it compares to large companies, but with most of the [large] companies i've been at, the metric for promotion was how many people you could hire under you. Not code quality, size of system, not impact, not money saved, not business enabled....just the size of your org chart. Not sure why HR devolves into such a silly metric for non-revenue generating departments, but i've seen it at 5 separate organizations. Is it any wonder employees then behave in the ways they do and build empires?
- matt_s 11y ago
  If you read Parkinsons Law you will discover the Law Of Multiplication of Subordinates. This is the little known law compared to the one about work filling the time, etc. He shows that between 1914 and 1928 the number of ships in the Royal Navy went down 67% but the number of Admiralty officials (aka management) went up 78%. He was the Scott Adams of that time. (Google the article which originally appeared in The Economist in November 1955)
  - arethuza 11y ago
    The Royal Navy famously now has far more admirals than it does ships. Something like 40 admirals and 260 captains for just 19 ships...

AlexWest 11y ago

"The cuts amount to about 13 percent of SurveyMonkey’s workforce of about 750. The cuts were made primarily among the sales team devoted to SurveyMonkey for Business."

petercooper 11y ago

Founded in 1999, SurveyMonkey is valued at $2 billion Given the stated revenue of $200M and the recent atmosphere around SaaS multiples, is a 10x valuation realistic here? (I'm not throwing shade - genuine semi-naïve question.)

55555 11y ago
It's high for even for a b2b saas company. I think another consideration that should probably bring SurveyMonkey's down is that they have great competitors.
- andrenotgiant 11y ago
  who are their great competitors? would love to find some alternatives
  - mattwinslow 11y ago
    SurveyGizmo is another. Have used them for several years. My general perception over the years has been that SurveyMonkey had shinier marketing, but SurveyGizmo had a solid feature set.
  - dabeeeenster 11y ago
    typeform
    - diggan 11y ago
      Wow, cool to see Typeform being randomly mentioned on HN! I'm one of the early developers working at Typeform, if you have any questions about it, feel free to ask right here.
  - salmonet 11y ago
    Qualtrics (!)
  - deleted 11y ago
    [deleted]

carleverett 11y ago

I was surprised to see that Google Capital is an investor in SurveyMonkey - Google Consumer Surveys is a direct competitor: March 2012 - Google launches GCS January 2013 - Google invests in SurveyMonkey Is it common for Google to invest in competitors? Why would they do this?

adevine 11y ago
Google Ventures (early stage) and Google Capital (late stage) are focused solely on profit, rather than strategic alignment with Google. Google's Corporate Development group is what does investments for alignment and potential acquisition by Google.
acchow 11y ago
Yes, this is common. Google Capital claims that they operate wholly independently from the rest of the business to avoid these conflicts of interest.

jzymbaluk 11y ago

I'm honestly kind of surprised SurveyMonkey had over 100 employees to begin with. I always thought of SurveyMonkey as a more fully featured version of something like http://strawpoll.me/ http://strawpoll.me/ with more analytical features and such. I never would have expected them to be a company of nearly 1000 employees.

kdkooo 11y ago
Totally agree! It seems like many of the other comments here make similar points.

1123581321 11y ago

Does anyone know if this is something Dave Goldberg opposed and has finally gone through?

throwaway_xx9 11y ago

They've discussed moving from Palo Alto to Menlo Park, so the layoff may be related to that.

kdkooo 11y ago
I thought they were moving to San Mateo... http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive-palo-alto-based-surveymonkey-is-moving.html http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive...

zbuf 11y ago

Not calling it "SurveyMonkey" would be a good start for a business product. For me, and when I try to put myself in others' shoes, I find it hard to see how a professional organisation linking to "SurveyMonkey" can do anything but create a negative impression. The product seems good, I'm just surprised the name has lasted this long. Does the name stick because the brand recognition is stronger than the features -- when compared to competitors? What happens when a name like this has "stuck"?

bobbles 11y ago
Heh I'm pretty sure we started using a different survey system purely because everyone hated sending out 'surveymonkey' links. They should call their business side 'engage<something>' or whatever...
- sutro 11y ago
  How about EngageMonkey?
- wmeredith 11y ago
  I can testify from my agency days, we had more than one client pass on them as a tech solution because of the goofy branding.
- mech4bg 11y ago
  They also support sending out unbranded links from research.net.
- my5thaccount 11y ago
  I'd like to see conversion rates between qualtrics and surveymonkey surveys. Who is the monkey, exactly? The person building the survey, the person filling it out, or the company providing the service?
mech4bg 11y ago
What about the name is so negative for you? Do you feel the same about other companies like MailChimp? In Australia the name is synonymous with online surveys - it wasn't until I moved to the US that I realized that some people think it's such a strange name.

halite 11y ago

Actually not too surprised. The customer service of SurveyMonkey (and Fluid Survey that they acquired recently) is of D grade now. Getting some rudimentary information about service and internals took years. Now we are looking for other tools as my work publishes few surveys everyday. Their product has not changed in years and seems likes company is confused about the future direction.

DrFunke 11y ago

Oh, god. My sister was literally hired last week...

capitan_picard 11y ago

i've heard there is a lot of "(re)invented here" syndrome in engineering at surveymonkey. if so, that's a shame

meshko 11y ago

How can that company have more than 100 employees i don't understand.

rtpg 11y ago
Very likely a lot of it was support/sales. When you're working with business clients who are not technical, a lot of support can come in, even if it's just to help onboarding. In a lot of B2B SAAS, the long term value of each customer means it's totally worth having support staff spend a day helping out. Here it seems like they were trying the B2B SAAS route, and they decided against it, so are firing basically the team on that.

malz 11y ago

Recently signed a deal for 210,000 square feet of office space, 4x the size of their University Ave space just a year after they moved in with a $6.6 mil/year lease. http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive-palo-alto-based-surveymonkey-is-moving.html http://www.bizjournals.com/sanjose/news/2015/08/17/exclusive...

Angostura 11y ago

The thing I find surprising is that they have that many staff and yet the surveys themselves are still so ugly - the visual design has really changed since about 2002 from what I can see

drelihan 11y ago

I am shocked that A SaaS survey would ever need 100 people never mind having 100 it was able to let go.