6 ms·

Intercom raises a Series B round of $23M

121 points by patrickod 13y ago

dictum 13y ago
> Your vision is the ceiling for your company’s potential. You’ll never be a billion dollar business if you’re not deliberately working to get there. And in venture capital, it doesn’t make sense to invest in anyone who isn’t at least trying to build a business that size. If I read between the lines correctly: Intercom the CRM focused on medium to small web apps as we know it will be gone soon. Intercom the Big Serious Business CRM but with a friendly interface is the new direction. Congratulations to the team — Salesforce is definitely needing better competition. Congratulations to whatever is second-place to the current iteration of Intercom. You don't get to a billion dollars without snubbing the initial customers.
- janlukacs 13y ago
  I'm 'affraid' that's what will happen, hopefully pricing won't change very soon
seivan 13y ago
“My hiring philosophy is aim high. Get people you think you can’t get. Shock people that you were able to get a certain person.” And then go ahead and hiring executives and managers who're not outsiders. Sorta like what Marissa did with that French dude.
jackgavigan 13y ago
Great post. I met Eoghan a while back, not long after they'd graduated from 500 Startups and I remember thinking "Smart guy, simple idea, huge market." Great to see that they're knocking it out of the park.
blackdogie 13y ago
There's some real gold in some of those blog posts on there. Well worth reading.
- dclara 13y ago
  I think they are really a winner from the following perspective: 1. Have a large enough vision and market 2. Maintain high quality of user engagement 3. Hire a talent team 4. Found the right investors These are pretty much what every successful startup company needs. But I'm curious about 1. How did they obtain a user base (especially enterprise level accounts in the US) and keep them from the competitors, especially when they didn't have any marketing hiring yet? 2. How are they able to attract the talented team members even they were small? The same for investors. Looks like they have extremely good luck. Can you refer some of them which may cover the above questions?
duggan 13y ago
Intercom's story has been a wonderful one to watch. They're a particular inspiration for those of us in Ireland; they've consistently aimed high, have set high standards for themselves, and generally raised the bar for Irish companies. Their blogging has been interesting since before Intercom was even incorporated (at their consultancy company, Contrast's[1], blog). They're also a bunch of smart, down to earth people. Exceptional folks. Congratulations. [1] http://contrast.ie/blog/ http://contrast.ie/blog/
- lynchdt 13y ago
  I echo this entirely - nice work guys.
- zeroDivisible 13y ago
  Not only the story is wonderful to watch, but I really like their attachment to the community here, in Ireland. Being present on most (all?) of the major events, lending their offices (& time) to host Dublin Code Kata meetings - I was taking part in few of those last year and they had been a blast, promoting TTD and hacking while solving interesting problems. Only time and amount of things to finish in my projects had stopped me from going on those meetings - but I will continue with the nearest opportunity. I didn't had a chance to use their products, but hearing the opinions about it - and knowing their attitude - I'd vote with my both hands if having the opportunity to do so. Great job, Guys!
ncremins 13y ago
Really great news for the guys & gals at Intercom, Delighted that they're from Ireland too. Nice to have some good news around here for a change. I've had the pleasure of meeting a few of them and what can I say, they're extremely passionate about what they do! Congratulations.
tzury 13y ago
You should read Intercom's founder article about product management http://insideintercom.io/product-strategy-means-saying-no/ http://insideintercom.io/product-strategy-means-saying-no/
guynamedloren 13y ago
> FOCUS ON ENGAGEMENT QUALITY BEFORE ENGAGEMENT QUANTITY I'm glad they touched on this. I've heard from several sources that many VCs don't care about engagement at all, as long as growth is massive - which seems crazy to me. For my own SaaS, I'm focusing entirely on engagement and getting the service right before scaling up. I'm constantly talking to early users, gathering feedback and iterating. It's a slow and painful process, but it's reassuring that Intercom also did this.
- alasdair_ 13y ago
  Sometimes it's worth focusing on quantity over quality fairly early to allow you to get enough data to improve quality. It's not really possible to A/B test effectively with 3 users and sometimes the data gathered on engagement can be skewed if we are dealing with very small sample sizes.
- simonw 13y ago
  It's a tricky balance to get right. If you focus on quality for too long, you may mis-time your growth efforts and find yourself with a fantastic product and not enough users to keep it viable / raise more money. A great company needs both growth and engagement.
adaml_623 13y ago
" You’ll never be a billion dollar business if you’re not deliberately working to get there. And in venture capital, it doesn’t make sense to invest in anyone who isn’t at least trying to build a business that size." It doesn't make sense to invest in anyone who might just grow to a 50 million dollar company? I think VCs must be missing out on a lot of opportunities.
- _delirium 13y ago
  Depends on the scale of the investment. It doesn't make sense to invest $30m in a company that might grow to $50m, because the potential growth isn't enough to make up for the risk of losing the $30m entirely. It could certainly make sense for a different kind of investor to invest $1m in such a company, though.
- patio11 13y ago
  It's very difficult to make the math work out for Series A/B/C if you exit at $50 million. If a VC firm invests $5 million and gets a 3rd of the company, then you sell for $50 million, they get ~$15 million on that deal. Yay. Unfortunately, to get there, they had to spend $30 million on 10 similarly situated company, in excess of half of which have a liquidation value of zero. Absence of yay. I think the parlance for tripled-our-money is "base hit." You don't play baseball to hit base hits. (Well, unless you're the Oakland As -- and talk to Dave McClure et al if you want to hear this metaphor in a lot more detail.) There exist angels and other seed-stage investors who would not be unhappy with a $50 million exit, to put it mildly. (To say nothing of the founders and the employees.)
  - birken 13y ago
    Minor baseball analogy nit: This year the Oakland A's were 3rd in the MLB in home runs (out of 30 teams), last year they were 7th. In the famous moneyball season (2002) they were 4th. They very much build their teams around hitting home runs, just like most VCs :) I realize you are mentioning the analogy second hand, but I just want to make sure people don't get confused about the A's! There certainly are some smallball [1] teams in the MLB, but the Oakland A's are not one of them. [1]: http://en.wikipedia.org/wiki/Small_ball http://en.wikipedia.org/wiki/Small_ball
rohamg 13y ago
Intercom is an exceptional example of tackling a large and hairy problem with dauntless focus. As a user, evangelist, fan, and investor - I'm proud of all of you and excited to see what comes next. My favorite part of the blog post? "fundraising is a pseudo-achievement" - smart, smart smart!
manishsharan 13y ago
I have always wondered what is the common definition for a billion dollar company . Is it the annual gross or net revenues or is it the valuation ? If it is valuation, what P/E multiple ?
- codeonfire 13y ago
  Is it not market cap > $1 billion? For pre ipo companies with no free cash flow it is amount someone invested divided by perecent equity they got > $1 billion.
- pbreit 13y ago
  Valuation. And no P/E since high growth companies have negative earnings (almost by definition).
fairydust 13y ago
Interesting timing giving the Docker funding news.
philsnow 13y ago
Read that as "Infocom raises a Series B round of $23M" and my heart went pitter-pat.
roryhughes 13y ago
Yays to the intercomrades!
sunir 13y ago
Just to play the armchair investor game... With 2000 customers, what might be their annual revenue (they say in the millions)? $2-4 million? Their evaluation must be a huge multiple of revenue. I therefore imagine their belief is they have conversion down so now it is time to buy marketshare?

121 points by patrickod 13y ago

> Your vision is the ceiling for your company’s potential. You’ll never be a billion dollar business if you’re not deliberately working to get there. And in venture capital, it doesn’t make sense to invest in anyone who isn’t at least trying to build a business that size. If I read between the lines correctly: Intercom the CRM focused on medium to small web apps as we know it will be gone soon. Intercom the Big Serious Business CRM but with a friendly interface is the new direction. Congratulations to the team — Salesforce is definitely needing better competition. Congratulations to whatever is second-place to the current iteration of Intercom. You don't get to a billion dollars without snubbing the initial customers.

janlukacs 13y ago
I'm 'affraid' that's what will happen, hopefully pricing won't change very soon

seivan 13y ago

“My hiring philosophy is aim high. Get people you think you can’t get. Shock people that you were able to get a certain person.” And then go ahead and hiring executives and managers who're not outsiders. Sorta like what Marissa did with that French dude.

jackgavigan 13y ago

Great post. I met Eoghan a while back, not long after they'd graduated from 500 Startups and I remember thinking "Smart guy, simple idea, huge market." Great to see that they're knocking it out of the park.

blackdogie 13y ago

There's some real gold in some of those blog posts on there. Well worth reading.

dclara 13y ago
I think they are really a winner from the following perspective: 1. Have a large enough vision and market 2. Maintain high quality of user engagement 3. Hire a talent team 4. Found the right investors These are pretty much what every successful startup company needs. But I'm curious about 1. How did they obtain a user base (especially enterprise level accounts in the US) and keep them from the competitors, especially when they didn't have any marketing hiring yet? 2. How are they able to attract the talented team members even they were small? The same for investors. Looks like they have extremely good luck. Can you refer some of them which may cover the above questions?

duggan 13y ago

Intercom's story has been a wonderful one to watch. They're a particular inspiration for those of us in Ireland; they've consistently aimed high, have set high standards for themselves, and generally raised the bar for Irish companies. Their blogging has been interesting since before Intercom was even incorporated (at their consultancy company, Contrast's[1], blog). They're also a bunch of smart, down to earth people. Exceptional folks. Congratulations. [1] http://contrast.ie/blog/ http://contrast.ie/blog/

lynchdt 13y ago
I echo this entirely - nice work guys.
zeroDivisible 13y ago
Not only the story is wonderful to watch, but I really like their attachment to the community here, in Ireland. Being present on most (all?) of the major events, lending their offices (& time) to host Dublin Code Kata meetings - I was taking part in few of those last year and they had been a blast, promoting TTD and hacking while solving interesting problems. Only time and amount of things to finish in my projects had stopped me from going on those meetings - but I will continue with the nearest opportunity. I didn't had a chance to use their products, but hearing the opinions about it - and knowing their attitude - I'd vote with my both hands if having the opportunity to do so. Great job, Guys!

ncremins 13y ago

Really great news for the guys & gals at Intercom, Delighted that they're from Ireland too. Nice to have some good news around here for a change. I've had the pleasure of meeting a few of them and what can I say, they're extremely passionate about what they do! Congratulations.

tzury 13y ago

You should read Intercom's founder article about product management http://insideintercom.io/product-strategy-means-saying-no/ http://insideintercom.io/product-strategy-means-saying-no/

guynamedloren 13y ago

> FOCUS ON ENGAGEMENT QUALITY BEFORE ENGAGEMENT QUANTITY I'm glad they touched on this. I've heard from several sources that many VCs don't care about engagement at all, as long as growth is massive - which seems crazy to me. For my own SaaS, I'm focusing entirely on engagement and getting the service right before scaling up. I'm constantly talking to early users, gathering feedback and iterating. It's a slow and painful process, but it's reassuring that Intercom also did this.

alasdair_ 13y ago
Sometimes it's worth focusing on quantity over quality fairly early to allow you to get enough data to improve quality. It's not really possible to A/B test effectively with 3 users and sometimes the data gathered on engagement can be skewed if we are dealing with very small sample sizes.
simonw 13y ago
It's a tricky balance to get right. If you focus on quality for too long, you may mis-time your growth efforts and find yourself with a fantastic product and not enough users to keep it viable / raise more money. A great company needs both growth and engagement.

adaml_623 13y ago

" You’ll never be a billion dollar business if you’re not deliberately working to get there. And in venture capital, it doesn’t make sense to invest in anyone who isn’t at least trying to build a business that size." It doesn't make sense to invest in anyone who might just grow to a 50 million dollar company? I think VCs must be missing out on a lot of opportunities.

_delirium 13y ago
Depends on the scale of the investment. It doesn't make sense to invest $30m in a company that might grow to $50m, because the potential growth isn't enough to make up for the risk of losing the $30m entirely. It could certainly make sense for a different kind of investor to invest $1m in such a company, though.
patio11 13y ago
It's very difficult to make the math work out for Series A/B/C if you exit at $50 million. If a VC firm invests $5 million and gets a 3rd of the company, then you sell for $50 million, they get ~$15 million on that deal. Yay. Unfortunately, to get there, they had to spend $30 million on 10 similarly situated company, in excess of half of which have a liquidation value of zero. Absence of yay. I think the parlance for tripled-our-money is "base hit." You don't play baseball to hit base hits. (Well, unless you're the Oakland As -- and talk to Dave McClure et al if you want to hear this metaphor in a lot more detail.) There exist angels and other seed-stage investors who would not be unhappy with a $50 million exit, to put it mildly. (To say nothing of the founders and the employees.)
- birken 13y ago
  Minor baseball analogy nit: This year the Oakland A's were 3rd in the MLB in home runs (out of 30 teams), last year they were 7th. In the famous moneyball season (2002) they were 4th. They very much build their teams around hitting home runs, just like most VCs :) I realize you are mentioning the analogy second hand, but I just want to make sure people don't get confused about the A's! There certainly are some smallball [1] teams in the MLB, but the Oakland A's are not one of them. [1]: http://en.wikipedia.org/wiki/Small_ball http://en.wikipedia.org/wiki/Small_ball

rohamg 13y ago

Intercom is an exceptional example of tackling a large and hairy problem with dauntless focus. As a user, evangelist, fan, and investor - I'm proud of all of you and excited to see what comes next. My favorite part of the blog post? "fundraising is a pseudo-achievement" - smart, smart smart!

manishsharan 13y ago

I have always wondered what is the common definition for a billion dollar company . Is it the annual gross or net revenues or is it the valuation ? If it is valuation, what P/E multiple ?

codeonfire 13y ago
Is it not market cap > $1 billion? For pre ipo companies with no free cash flow it is amount someone invested divided by perecent equity they got > $1 billion.
pbreit 13y ago
Valuation. And no P/E since high growth companies have negative earnings (almost by definition).

fairydust 13y ago

Interesting timing giving the Docker funding news.

philsnow 13y ago

Read that as "Infocom raises a Series B round of $23M" and my heart went pitter-pat.

roryhughes 13y ago

Yays to the intercomrades!

sunir 13y ago

Just to play the armchair investor game... With 2000 customers, what might be their annual revenue (they say in the millions)? $2-4 million? Their evaluation must be a huge multiple of revenue. I therefore imagine their belief is they have conversion down so now it is time to buy marketshare?