As customer experience becomes even more front and center for companies in the post-pandemic era, yet another marketing technology startup has gone public—and in the process brought its founder to near billionaire status.
Today, New York-based Sprinklr debuted on the New York Stock Exchange under the ticker symbol “CXM,” with initial shares priced at $16 per share instead of the original range of $18 to $20. The company’s downsized IPO raised $266 million instead of the original target of $380 million. However, by the end of trading, the stock price rose to $17.60 per share.
The idea for Sprinklr came while founder and CEO Ragy Thomas was running the email marketing division of an online DVD sales company in 1999—back when email was a new way to communicate at the dawn of the new millennium. That division then spun off into its own company that as chief technology officer he later helped sell for $120 million to Epsilon in 2005. A few years later, as social media and social media marketing became more prominent, he realized there should be a way to help companies manage their presence on various platforms and founded Sprinklr in 2009.
“This was the ‘Aha’ for us at the inception,” Thomas tells Forbes. “People talk about pivoting, right? We talk about the history of companies and they go ‘Oh this is when we pivoted. This is a company that hasn’t pivoted from Day One. With this vision, we have that clarity from Day One. It didn’t matter what labels and what categories anyone wanted to put us in the past 12 years. We knew we were building the world’s first unified customer experience.”
That original idea has come to fruition: Based on the company’s stock share price after markets closed today, Thomas’s stake in the company is worth an estimated $950 million.
While Sprinklr itself isn’t a household name, its roster of clients include many household brands that use it to track what their customers, critics and would-be customers say about them.
From Thomas’s perspective, the power shift from brands to consumers illustrates the shift between traditional and modern marketing channels and the need to monitor—and react to—the conversation. As a result, he thinks customer care and marketing need work together.
“You can’t out-market someone who has complained,” he says.
While some companies have looked to broaden their appeal through new products and services, Sprinklr was built from the beginning with a “unified platform” that allows the company to manage customer experience at scale across more than 30 channels. Thomas says that’s required the company to throw away the source code of the dozen companies it has acquired along the way in order to make sure the “purity of architecture is sacrosanct.”
Also at the core of Sprinklr’s current pitch is the ability to work with unstructured data with the help of AI, which now deals with 50 million businesses and consumers per day across 60 verticals in 50 languages while making 10 billion predictions.
Since the company’s founding, Sprinklr has raised a total of $429 million, according to Crunchbase. In 2015, it raised $46 million while also passing the milestone of $100 million in annualized revenue—an increase of 150% over 2014. It then reached unicorn status in 2016 after raising $105 million. Then last September, Sprinklr hit a valuation of $2.7 billion after the private equity firm Hellman & Friedman invested $200 million in a Series G fundraising round. At the time time, the Hellman & Friedman also bought $300 million in secondary shares while Sprinklr raised another $150 million from the investment firm Sixth Street Partners in the form of convertible-at-IPO debt.
Sprinklr investors say part of the company’s advantage has been the consistency of its software architecture even while scaling.
“What I love is that he started in 2009 with that vision where most companies start in one part of the customer experience landscape and then over time say they have a bigger vision,” says Hellman & Friedman Partner Tamir Wasim. “Ragy is the only founder I’ve met who started there and said, ‘Here are all the building blocks of how to do customer experience across channels.’”
Public filings with the U.S. Securities and Exchange Commission reveal that Sprinklr’s revenue jumped from $324.3 million in fiscal year 2020 to $386.9 million by fiscal year 2021. However, the company reported net losses of $39.1 million in 2020 compared to $41.2 million in 2021. (Thomas says the company was cashflow positive for two years, but expenses have been part of building out the company for the long-term.)
Former Cisco CEO John Chambers—who invested in Sprinklr in 2017 when he joined the company’s board—says that if he’d still been in his old role when he first heard of Sprinklr, he might have bought the startup rather than invest in it. Recalling his first meeting with Thomas, the billionaire says “didn’t have me at hello, but had me at the end of the meeting,” and he says it was hearing about Sprinklr’s early customers like Nike and Microsoft that won him over.
“Every acquisition I did at Cisco—and I did 180 of them—almost every major one of them was tied to one to three customers directly or indirectly saying ‘You need to make this move,’” he says. “I’ve always been driven by customers, so I never get confused between a great vision strategy and with one of the customers says. And when they articulated to me how this was a new product, not a category, but a platform play that goes across the gamut of what they want to do on all customer interfaces and they love the company, I go: I get it. That normally would have been when I would have bought a company.”
The way Chambers sees it, incumbent competitors are “focused on a very structured world, not a multiple channel world.” He also points out that Sprinklr was able to quickly scale past the usual breaking points of some startups when they hit a certain number of employees.
“If I’m right on what Ragy and the team have done, this has the potential to be an instant replay as it goes across marketing, advertising, research, care, sales and clearly engagement,” Chambers says. “So when I look at the competitors, I love that the first time I saw a chart, it’s everybody, but all of them are pinpoint or they’re the old players from 20 years ago. I’ve seen that movie before and I should know the outcome if we play our cards right.”
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From Social Media Roots To Customer Experience Management, Sprinklr’s IPO Ambitions Come To Fruition - Forbes
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