Perfecting the Business of Brainstorming
As applications for the 2012 Inc. 500|5000 arrive, we thought it would be worthwhile to shine a spotlight on some of the companies that are vying to appear on our ranking of the fastest-growing private companies in the U.S. (For more information and to apply, click here). One that caught our eye was Pleasanton, California-based Spigit.
Paul Pluschkell has a passion for data. With a background in the financial market, including time as a CTO of a hedge fund and CTO of Reuters America, he understood the enormous amount of data out there, and knew that whoever could capture it the quickest and make decisions could usually beat the market.
Keeping that in mind, Pluschkell worked to brainstorm the next wave of communication. It was around this time that social networking was really gathering steam. "I know it seems old, but MySpace was really big, Facebook was coming on, and Twitter was starting early, there was all types of social information," he says. "Everybody was saying that the problem was going to be how to filter this information."
So in 2007, Pluschkell founded Spigit, a social software company focused on businesses, with an exemplifying name. "If you think of a spigot you can turn the tap to get all the flow or you can turn it to only get the important flow for what your needs are," Pluschkell explains.
Simply put, Spigit is a social software business that connects the people who have the answers with the people who make decisions. The company uses a subscription-based business model to license their software, SpigitEngage, to businesses big and small. Businesses then utilize the cloud-based software by giving it to their employees. They post products, projects, and initiatives then their colleagues offer feedback. If someone gave great advice in the past then their opinion ranks higher and you see their feedback first. This makes it easy for executives to consider feedback when making decisions.
This unique way of filtering data, ranking feedback based on reputation, is one of the ways Spigit stands out in its market. So instead of an executive or someone else high up the chain of command spending countless hours looking at thousands of opinions in a jumble Spigit can provide them with the top 50 valuable ideas. This feedback can also be ranked by subject, category, level, and title, among other ways to suit the needs of the customer.
But, despite its promising business application, starting Spigit wasn’t easy. Pluschkell raised the money, had the idea, and put a small team together, including a market data expert, a technologist and java programmer, a trader, and a social sciences PhD from Berkley. But despite the expertise of his team, in the early stages of his start-up, people thought it was "a complete joke," says Pluschkell.
"I went to 30 VCs and they said 'there's no business for this, there are social networking companies, blogs, wikis, and emails that will do this,'" Pluschkell says.
Despite a lack of initial business support, the entrepreneur stuck with his idea. "If everybody thinks it's a good idea, then it's probably already being done," Pluschkell says. "So I think when you get the first obstacle and people say there's no market for this it's fantastic."
Now peoples’ opinions on Spigit have changed. The company's first four clients were AT&T, Wal-Mart, Lloyds Bank, and Pfizer. "It just turned out to be a real success," Pluschkell says. "It's not a typical start-up with four clients of that nature being your first clients. But that's when we knew we had something real that people had to pay for." According to Pluschkell, Wal-mart was able to make $78 million in profits in one quarter based on a single idea that originated using Spigit.
Today Spigit has 225 active customers and has sold 6.5 million licenses. And, with a three-year growth rate of 288%, the company plans to keep growing, especially with the launch of Spigit Icon, a freemium application that will provide users with quick answers from a business crowd, which will go live this month.
For 2011, the 121-employee company brought in about $10 million. Spigit’s projected 2012 revenue is $30 million. According to Pluschkell, the company has found success in every market they’ve entered. "We have an over 99% renewal rating on our software," he says, "because once you get this information, you don’t want to be without it."