Rewarding relationships

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HootSuite is hot stuff. The Vancouver-based ‘social relationship platform’ company closed a $165m funding round in August, billed by the Canadian Broadcasting Corporation as the biggest venture capital deal a Canadian software firm has ever seen.

Its backers include Accel Partners, the first institutional investor in Facebook, and Insight Venture Partners, a New York firm that previously funded the blogging platform Tumblr and also holds a sizeable stake in Twitter.

Although only four years old, HootSuite already has seven million users of its platform, which allows individuals and businesses to manage multiple social media accounts, including Twitter profiles, Facebook pages, LinkedIn groups and Google+ accounts. Users can see what’s being said about them, and what’s being said to them. They can respond in real time, or schedule updates for specific times of the day. An inbuilt analytics package tracks performance.

HootSuite is clearly a firm to watch. Though it has designs on dominating the social media marketing space more broadly, it undoubtedly sees data and insight as an integral part of its package. That was confirmed today with the company’s acquisition of social media analytics firm uberVU.

Meanwhile, HootSuite’s support for third-party apps brings ever-more functionality to the platform. SurveyMonkey has built a plug-in that allows users to create, distribute and monitor survey results via the HootSuite dashboard, as have fellow Vancouverites, Vision Critical.

HootSuite’s ‘freemium’ model has proved to be a hit with small and medium-sized businesses – the kind that might not be able to afford a marketing or PR agency. But bigger firms are users too, including PepsiCo, Virgin, Orange and Sony Music. “What’s become apparent is that social channels are becoming the manner in which small businesses, through the Fortune 500, are opting to communicate with their customers and target markets,” says Ryan Sweeney, managing partner of Accel Partners.

However, HootSuite’s main challenge – and its biggest opportunity – is turning free users of its platform into premium subscribers. According to a TechCrunch interview with Holmes, 96.5% of HootSuite’s users don’t pay a penny. “But that 96.5% is a great asset,” says Holmes. “We see a natural upgrade into our Pro product. More than 50% of [Pro users] were free users who wanted extended features and functionality.”

• This is an updated version of an article that was originally published in Issue 3 of Impact Magazine