How An Owl Swooped Up A $50 Million Dollar Round

Posted on March 15, 2018

Hootsuite has been quietly building an empire. From 2014 to 2018 they have grown their user base from 10 million to 16 million, while also grabbing up 80% market share in the Inc 1000. (source: https://techcrunch.com/2018/03/15/hootsuite-raises-50m-more-for-its-social-media-management-platform-passes-16m-customers/ )

Hootsuite’s growth is a fantastic example of network effects. As a stand-alone product, it is priced from $129/mo for professionals to $499/mo for enterprise businesses. At those numbers, it would be difficult to grow by arbitraging paid media. So Hootsuite went a different route. Once they reached a critical mass, they were able to make the product more valuable to the user base by driving more integrations and more features.

Take those effects, and pour a little gasoline (paid media) on top and you’ve got a hyper-growth company.