A little-known — but quickly growing — tech company in Palo Alto has announced a monster funding round that propels it to unicorn status.
Medallia, a Palo Alto firm that makes software for businesses to get better customer feedback, announced on Tuesday it has raised $150 million from investors in a round led by VC firm Sequoia Capital, a previous investor. The round puts the company s valuation north of $1 billion — the threshold to become a so-called unicorn, the term reserved for the once-rare company to reach that valuation (although unicorns have become a dime a dozen in this frothy investing market).
Founded in 2001, Medallia remained a stealthy company for years, rising to greater prominence in the last two years, when it grew more than 50 percent annually. The company, now with 700 employees, is considered the trailblazer in a particular type of software service — software that provides feedback to companies about how to improve their services to make customers happy, and tweak or innovate their products to give customers exactly what they want. It does this by capturing customer reaction and feedback wherever it is expressed — on social media, surveys or the phone with customer service.
Only in the last four or five years have companies realized that customer feedback can make or break their business — Facebook comments and Yelp scores and do serious harm, or good, to a business.
All customers have megaphones right now through social media, and all companies are selling through social media, said Douglas Leone, a partner with Sequoia Capital and Medallia board member for more than three years. If you want to buy something it s no longer good enough to have a commercial on TV.
Medallia started out as a service for primarily hotels, Leone said, and is now used by the auto industry, retailers, financial firms and even oil companies. Leone said while there are lots of survey companies out there that businesses can use to get customer feedback, no other company is doing quite what Medallia is — getting customer reaction from a variety of places, analyzing it and showing companies what they need to do better.
It s tough for us to name a competitor, Leone said. Competition is not something that gets brought up at board meetings very often.
Medallia first raised venture funding in late 2011, and has now raised a total of $255 million, the company said. It s focused on expanding in Latin America, Australia and parts of Asia.
Photo: Medallia Co-founder and CEO Borge Hald and Co-founder and President Amy Pressman. Courtesy Medallia.
