This weekend SuccessFactors announced its acquisition by SAP for $40/share in cash, valuing SuccessFactors at approximately $3.4 billion, and representing over a 50% premium to Friday’s closing stock price. As one of SuccessFactors’ venture capital backers, my partners and I at GGV Capital are extremely proud of our association with Lars Dalgaard, CEO, Bruce Felt, CFO, Aaron Au, CTO, and the rest of the hardworking and talented crew at SuccessFactors. Congratulations on a great outcome!
The announcement of this deal prompted me to recollect the SuccessFactors story. There are a lot of great lessons here – Lars and his team did a tremendous number of things right. Here are a few highlights for me:
- Culture is Key. From day one, Lars built a culture of customer-focus and the “no jerk” rule. Putting the customer first above all else gave all SuccessFactors employees a strong compass. All decisions, large and small, were then executed up and down the employee ladder with this relentlessly in mind. The no jerk rule held employees accountable and ensured that everyone worked together internally rather than undermining one another as happens so frequently.
- Great people can accomplish great things. Over the years, Lars has been relentless in hiring the very best. People work hard at SuccessFactors. Those who execute under Lars find themselves with increasing responsibility. Innovative thinking is prized. But the “no jerk” rule is key. The company also eats its own cooking – using its own software to appraise and manage employees.
- Serve your customers and your roadmap will become apparent. One of the great benefits of SuccessFactors’ customer focus is that the company has happy customers who increasingly seek more from SuccessFactors’ products. A majority of the company’s revenue now comes from applications conceived of and created after we invested in 2006. This is amazing. It’s as if the company built another company, larger than the original, while it was public. That’s the key to long term growth.
- Manage expectations and stay focused on the ultimate goal. From day one as a public company, Lars and his CFO, Bruce Felt, played a consistent and steady hand. Even when the stock price slid to the mid single digits in late ’08 / early ’09 and investors panicked, Lars and Bruce continued to message their goals consistently to Wall Street. No Hail Mary passes. Rather, like Bill Belichick and the Patriots of the early 2000s, they just executed. Fast forward to today, the company reported 4+ years of quarterly results on or ahead of guidance. The net result – a $40/share deal with SAP.
In 2006, the year before SuccessFactors went public, the company did just over $30 million in revenue. Fast forward, SuccessFactors was set to report about $100M in December ‘11 quarterly revenue, or a $400 million run rate. More than 10x growth in 5 years. Yes, Lars – truly remarkable! It’s been a true honor to be a passenger on the journey.