Executive Cases: Interviews with Senior Executives of Early-Stage Companies:
Wildfire Interactive – USA
Prepared by Jason Luther and George Foster
Wildfire Interactive Inc. (Wildfire) provides brands with a social media management platform that offers a comprehensive solution to engaging and monetizing customers through social media. Using this platform, customers are able to develop social promotion and advertising campaigns, manage mobile and desktop pages, and analyse real-time analytics across social networks – Facebook, YouTube, Google+, Twitter and Pinterest. These tools are provided on an intuitive and easy-to-use interface that even the least tech-savvy user can understand.
Launched in 2008 by Victoria Ransom and Alain Chuard, Wildfire was born through its founders’ need to develop their own social-marketing campaign. At the time, Ransom and Chuard were owners of a New Zealand-based adventure travel company called Access Travel and were attempting to expand the firm’s market presence and client base through free trip giveaways. In doing so, Ransom and Chuard developed Promotion Builder, an application that enabled marketers to develop social media marketing campaigns comprised of sweepstakes, user-generated contests, quizzes, coupons and other one-time promotions. They caught the attention of Facebook and were winners of the fbFund, a source of early operating capital. As Wildfire grew, the company transformed its business model from a campaign-based platform to a subscription-based one. It also transitioned from a largely SME client base to working primarily with mid- to large-sized companies.
The social marketing technology category saw several high profile acquisitions in mid-2012. Oracle acquired Vitrue in May 2012 and Salesforce.com acquired Buddy Media in June 2012. In July 2012 Wildfire was acquired by Google. Today, Wildfire’s client portfolio consists of 32 of the world’s 50 most valuable brands and contains over 21,000 paying customers worldwide.
Victoria Ransom is the Chief Executive Officer of Wildfire, and Wildfire’s Director of Product at Google. Prior to Wildfire, Ransom was a co-founder of Access Travel Ltd and a financial analyst at Morgan Stanley. Ransom earned a Bachelor of Arts degree from Macalester College in 1999, where she graduated summa cum laude, and an MBA from Harvard Business School in 2008.
Q1: What was the source of the initial idea, and how did that idea evolve into a viable growing company? How did it change over time?
Chuard: “Wildfire really came out of our own need. Victoria and I ran an adventure travel company before Wildfire and we did a lot of online marketing. At the time, one of my Stanford classmates was working for Facebook and he told me the company was launching fan pages and suggested we take advantage of Facebook for our travel company’s viral marketing campaigns.
We created a Facebook page for the company and quickly realized that to do anything more you needed to build an application. So we built a promotional application to run coupon promotions, sweepstakes and contests. Our intention was to leverage these marketing vehicles on the web and try to create some buzz on Facebook. The application we built and used for our own travel company was fairly successful in creating visibility and generating leads.
When we started, this was more of a side project. Since the product was still young, we still had to call companies and ask, ‘Do you want to have the application?’ Over time, other companies began to see our product and started to appreciate the impact it was having. We initially gave the platform away free of charge and then once larger clients such as Zappos and Kayak.com knocked on our door and said, ‘Hey can we use the application too?’, we realized the opportunity we had and changed our model.
The ‘freemium’ model was quite popular at the time and everyone told us ‘Go freemium! Go freemium!’ However, we thought the best validation that your product provides value is to actually charge. If people are willing to pay you, then you are creating some value for them.
We were huge believers in keeping a simple fee model, so we created the product in a way where you were able to create an account free of charge so the user could start playing around with the tools. If you wanted to publish a campaign on your Facebook page, website, or Twitter account, at that point we would charge a fee. I think our cheapest plan contained a US$ 5.00 setup fee, plus US$ 0.99 per day. So, for example, if you had a 30-day campaign, you paid US$ 35.00. If you wanted to have more sophisticated features in your campaign then the pricing increased.
This was our initial pricing strategy. Around two years ago, we started expanding our product to a wider platform for social media marketing tools. As a result, we executed a switch from a campaign-based pricing model to a subscription-based one. When we switched to the subscription model, we built products that enabled brands to use the product every day. The result was a social stream management product, which enabled users to manage their Google+, YouTube and Facebook pages, Twitter stream, etc.”
Q2: What were the major growth accelerators for your company in the early years of high growth?
Chuard: “Externally, the biggest accelerator was the paradigm shift in marketing from digital to social media. In the beginning, we reached out to a myriad of companies. In late 2008, early 2009, we began to feel the market turn to where everyone wanted to be on, and market themselves to, social media. I often compare it to surfing. You can have the best surfboard in production but if you do not catch a big wave, you will not get very far. If you can catch a big wave, however, you can really go places. I felt this was very much the case with Wildfire. We were in the market at the right time, with the right product and with the right team. We were very much focused on speed and execution and that helped us to be one of the early companies in that space.
Internally, we dedicated substantial effort to building a strong sales team. I think a lot of companies in Silicon Valley assume that if they build a product, customers will automatically buy it. We knew we needed to build the internal structures to sell our product and we set out to do this from the onset. To start, we hired someone from the financial industry who was able to implement the tools necessary to scale the sales force and drive revenues.
Culture was also big for us. We did not utilize outside recruiting firms to find our people. We built our own internal recruiting team that knew our values and was able to find the right person for the right position. We also worked through our existing employee base for referrals. Focusing on strong hiring from the start allowed us to build that first kernel of people that really shared the same values and vision as we did. Honestly, we never sat down in the early days and said, ‘These are our values. This is our mission statement, etc.’ (though we did so later). Our culture was so ingrained in us from the start that the values we innately exuded caused it to grow organically.”
Ransom: “Culture was a huge part of our success. Over 50% of our employees came through referrals and we developed some really innovative initiatives to highlight that as something that we really celebrated. This helped us get hires both through monetary compensation and people within the company. As our company has grown, it has become popular for people to compete with each other to be our best referrer.
Another accelerator was the initial funding we received through the Facebook Fund. We bootstrapped the business from inception until the end of 2008. At that time, we were awarded a US$ 250,000 grant from Facebook, which was enough for us to hire a couple more developers, launch the product out of beta, and get to profitability without raising money. As a profitable company, there were all kinds of funding available to us and we raised series A funding through Summit Partners, a top-tier private equity firm in the area. We felt great about the team they had and it seemed like a good fit. When we changed the business model, we raised insider series B funding.
The change in business model came from changing the product. We started as a platform for helping create social media marketing campaigns and then we started to face pressure in the market to produce a broader set of solutions. Customers did not want to just run social marketing campaigns, they also wanted to track and respond to what people were saying about them. So we had to decide between going broad and staying deep in one area we were already familiar with. Eventually, we made the decision to have a more comprehensive platform, because it made sense for all of those products to live together. This really helped accelerate our growth.
The most recent accelerator was our selling Wildfire to Google. Wildfire was at the stage where we were coming to a real turning point. We felt that eventually we were either going to be acquired or have to raise a lot of money. We recognized that the status quo was probably not an option for much longer. A lot of our thinking involved analyzing our space and if it could support dozens of independent public companies or if it would eventually consolidate. Wildfire was one of the two biggest players in the market, yet it was at a size where it was about to have a completely new set of competitors in the market and, with large enterprises such as Oracle and Salesforce making acquisitions in our space, would need stronger backing.
There is this belief in the market that there is no one solution for marketing teams, and yet there is for sales, finance and purchasing teams. So I think we felt that consolidation was meant to happen and that it would be hard to be an independent point solution. It also felt as if we were hitting a point where, if you do not choose to get acquired, you may need to go public. We understood that, no matter how nice the situation had been in the past, with three people on the Board and our having complete control, things were going to change.”
Q3: What role did key aspects of the entrepreneurial ecosystem surrounding your company play in the growth of your company?
Chuard: “We had good timing and were able to benefit from the Facebook and social media wave. Initially, our sales were predominantly from the United States and, when Facebook took off internationally, our sales followed. We were also able to leverage the strong relationships we had at Facebook. When their sales team would sell ads, their clients would often ask, ‘What can we do beyond ads?’, and Facebook would respond with, ‘use Wildfire’.
In terms of marketing, there were other companies in our space that put a lot more brand awareness marketing into their budgets than we did. For example, Buddy Media raised close to US$ 100 million and put a large part of the money into brand marketing like airport billboards and magazine covers. It’s ironic given that they are a social media marketing company. I think ultimately we benefited from Buddy Media’s market spends because their brand awareness efforts carved a space for social media marketing. When Buddy Media was acquired, their valuation impacted the acquisition value of our company, as well.”
Q4: What key aspects of the entrepreneurial ecosystem surrounding your company that were absent (or existed only in a weak form) created the greatest challenges for growing your company? Please describe and discuss how you met/were impacted by these gaps in the ecosystem and their resultant challenges?
Chuard: “Getting access to our target market from where we were was difficult at first. At the time, we thought that Silicon Valley was a great place to find talented engineers and build a good product because everything here is so tech-focused. Given that we were in the advertising industry, I think we thought it would also be nice to have an office in New York, where all of the big advertisers were. So choosing Silicon Valley was a bit of a trade-off for us, since it did not have a deep ecosystem in our industry. I do, however, think there are plenty of people that can help you get connected in New York or in Los Angeles when needed.”
Ransom: “In Silicon Valley, we were definitely less plugged into the advertising agency world. It is typical to hear people say that ‘Silicon Valley companies are all tech-focused and they have no idea how to go to market’ and ‘all East Coast companies have great sales teams but poor technology’. Whereas it is somewhat of a generalization, I do believe there is a dynamic where you get a lot of support out here as it relates to technology. Relative to several other companies, our big advantage was that we were next to the Googles, Facebooks, Twitters and Pinterests of the world.
The other thing I hear, and it may not be so much of an ecosystem issue, is that people feel Silicon Valley is the best place to locate your company because of talent. In our experience, we had to hire most of our talent from elsewhere because the fight for talent here is so extreme. Many companies fail to realize that, out here, you are competing against Pinterest, Dropbox and any of a number of well-respected, well-funded companies.
I would guess that more than 50% of our hires were from outside of the area. We encouraged people to come in from the Midwest and all over. Our secret weapon for attracting these types of talent was not our offering a fancy office or paying the highest salaries, it was our culture. We built a tremendously strong reputation as a great place to work. There was something about the environment that we created that made it so that if we got someone in the door for an interview, they almost always wanted the job.”
Q5: At what stage did you invest significant resources seeking to grow your company internationally/beyond your domestic country or region? What factors were pivotal in deciding when to seek growth internationally and where to seek that growth?
Chuard: “In 2008-2009, we started to see Wildfire take off in the United States. In 2009-2010, we experienced the same acceleration in Europe and overseas. We ended up building an office in London that served the rest of Europe to accommodate this growth.
We definitely benefited from the Facebook and social media wave. When Facebook and other social media started to take off in Europe, we were taken along for the ride, causing most of our expansion to be in line with where other social media firms were doing well.”
Ransom: “Fairly early on we put people in London, which is currently our biggest international presence. After that, we put people in France, Germany, Singapore and Australia. Of these expansions, the France and Singapore offices no longer exist.”
Q6: What were the biggest challenges in building growth internationally? How did you meet or adapt to those challenges?
Chuard: “On the engineering production side, we were very fragmented to begin with. We started by developing the software with two engineers in Estonia, one guy in Finland and two guys in New Zealand. This went well until the engineering team grew and it became hard to coordinate. At that point, we made a conscious effort to hire the engineering team here in Silicon Valley. It was not until later that we built a team in London.”
Ransom: “We no longer have a presence in France or Singapore. In both cases, the issues were with hiring the wrong people. After stepping back, we also asked ourselves, ‘Do we actually need an office here now?’ Overall, though, I think the challenges were finding the right people.
The two places where we hired people that had not been a part of Wildfire before – France and Singapore – were the ones that did not work out. On the other hand, the offices that were successful had people who were trained at our headquarters. Seeing this, we adjusted our hiring processes. Right up until Google acquired us, all of our international hires would spend four weeks at Wildfire HQ in an extensive training programme. After this period, the hires would be sent to their respective locations.
Aside from hiring the right people, a big challenge for us was navigating legal systems. Creating entities, managing taxes and understanding other beyond-market factors made it that much more difficult to operate in different countries. Moreover, the difficulties with communication and isolation due to geographic distance highlighted just how important it was to travel frequently if you intend to open international offices. It all took a lot of work.”
Q7: What major role, if any, did key aspects of the ecosystem in the country (or countries) you first sought international growth either promote or impede your ability to grow in those international markets?
Chuard: “In Europe, the local competitors often had an advantage. Some of the European clients looked at us and said, ‘This is an American company. We are more trusting of the local companies and competitors.’ So I think it was a bit more challenging to penetrate the European markets.”
Ransom: “Internationally, there were several different challenges. In Germany, companies tended to be more conservative; if they decided to use your product, then they were much more likely to stay with you later on. Unfortunately, the lead time and the sales cycle associated with getting these firms to sign up were cumbersome. We also received a decent amount of pushback for things such as, ‘You don’t have an office here in Germany’ and ‘You don’t have a customer support team based here.’
In Singapore, we were competing against cheap custom development. Developers there could say, ‘I can just build this for you for cheaper’. Often times the products they built did not work, but it still hurt us. In general, Asia was difficult to sell to since we did not have a customer support team that was in a client’s time zone.
There were also language challenges. There were instances when we would sell a product and we thought the client understood what they were purchasing and it turned out they did not. These language issues were prevalent in most places we expanded to. French companies, in particular, wanted everything to be in French.”
Q8: Seeking international growth often has both high moments and dark (low) moments. Briefly describe one high moment and one dark (low) moment in seeking international growth.
Chuard: “We had some difficulty pushing away large companies. When it comes to product engineering, these companies pay you a lot of money and expect you to cater your product to their specific needs. We have always had the philosophy that we are building a platform of products where all customers can benefit from the same set of features. It was tough having to tell large companies, ‘we cannot do that’, or ‘we will not do this’.
We have had to push away a good amount of business because of this philosophy. This proved especially challenging when we developed an enterprise sales force. Enterprise salespeople tend to want to sell the deal, and if product engineering says that they cannot, or will not, do something then it sometimes can create tension.”
Ransom: “In general, 2010 was a really fun year for us. Every month we exceeded our sales expectations and it seemed as if we were in a period of endless growth.
When we changed to a subscription business model, we had a tougher time because of cash flow timing. We missed a couple of sales targets and it was the first time we started to burn cash. We started thinking to ourselves, ‘Gosh, if we don’t hit this sales target, what happens?’ This was one of those turning points where you realize, ‘This isn’t all so easy’.
I think our being leanly financed made it scarier. We had to be careful about how we spent our money and we were taking a big risk that we would keep hitting our numbers. We knew we no longer had the predictability we had before because we were new to the subscription world. We had to learn new things and we were unaware that, with certain incentives, we could get a majority of our clients to pay us up front for the whole year. Luckily, it worked out and looking back we know we made the right decision.
There were also difficult decisions to make regarding whether or not to work with large companies. Even when we were really small, we said no to several large companies who approached us to provide them with specially tailored products. Because of this philosophy, we won some deals and lost some deals. Ultimately, we were fortunate to have enough deals in the pipeline that turning down certain companies was not too devastating to our financials. Our discipline also made us less reliant on a small group of large clients. We had a very large customer base with no one customer representing a huge percent of our revenue. This provided us with a tremendous amount of freedom and flexibility to build the product the way we felt best.”