The Power of Creating a New Category: SAP’s Qualtrics Acquisition

A Record-Breaking Deal

Last year, when SAP spent $8 billion to acquire the online research firm Qualtrics, a price that was roughly 14 times the company’s projected 2019 sales, SAP’s CEO defended the deal by citing a statistic. Companies that create a new category typically capture 76% of the total category market capitalization, he said. Since Qualtrics created the category in which it played, the CEO said, this deal would payoff despite the steep premium.

A New Category, a New Opportunity

The concept of creating a new category is not a new one. It has been a recurring theme in the business world, where companies that pioneer a new market or create a new product or service often reap significant benefits. The category creators, as they are often called, tend to dominate the market, and their success often leads to increased profitability and growth.

A Statistical Advantage

The 76% statistic mentioned by SAP’s CEO is a significant one. It suggests that companies that create a new category have a natural advantage in the market. This is because they have a head start in terms of brand recognition, customer loyalty, and market share. As a result, they are better positioned to capture a larger share of the market, leading to increased profitability.

Qualtrics: A Pioneering Company

Qualtrics was founded in 1994 and has since become a leading provider of online survey and feedback software. The company’s platform allows businesses to gather and analyze customer feedback, helping them make data-driven decisions. With its innovative approach to customer experience management, Qualtrics created a new category in the market, one that has disrupted traditional market research methodologies.

Conclusion

The success of Qualtrics and its acquisition by SAP highlights the importance of creating a new category. By doing so, companies can gain a significant competitive advantage, capturing a larger share of the market and reaping the benefits of their innovation. As the statistics suggest, creating a new category can lead to increased profitability and growth, making it an attractive strategy for companies looking to stay ahead of the competition.

FAQs

* What is the 76% statistic mentioned in the article?
+ The statistic refers to the percentage of the total category market capitalization that companies that create a new category typically capture.
* What is Qualtrics?
+ Qualtrics is an online research firm that provides survey and feedback software to businesses.
* Why did SAP acquire Qualtrics?
+ SAP acquired Qualtrics to gain access to its innovative customer experience management platform and to expand its presence in the market.