DROPTHOUGHT investment thesis

Customer and employee feedback are critical for companies and employers respectively to understand what their stakeholders are saying and help improve their business outcomes. The traditional method of collecting customer data is through surveys, however, a wealth of information exists on the web through existing websites and portals. However, this data is unstructured, making it difficult to analyze data in its totality to ascertain trends and patterns. This is where Dropthought, HQ in Santa Clara, comes in.

Dropthought is a machine-learning platform that generates insights from sentiment and unstructured data. It then categorizes this data by parsing information in various categories and delivering insights to clients. The company utilizes existing publicly available data and also helps collect new data from its clients via the web and partnerships with point-of-sale terminal providers such as First Data. It is more valuable to understand insights from text-based reviews rather than from survey’s that are either multiple choice or individual checkboxes. User reviews provide context, nuance and sentiment that is not provided in a traditional survey.

The company was founded by a Stanford Marketing Professor and one of his students. They found a gap in the market for employee and customer feedback and were early to identify this trend. The market-research and feedback segment is a competitive one with Survey Monkey and Medallia being the traditional leading players. Elevate invested based on the quality of the team, product and market opportunity. There was also strong initial traction from clients such as Cisco, Sony and JDS Uniphase. 

Post-Mortem: Survey Monkey identified the value that Dropthought could provide and was both a client and had intentions to invest in the company. This is also what drew the interest from Elevate. Unfortunately the Survey Monkey CEO, David Goldberg, unexpectedly passed away. He was the leading proponent of his firm’s interest in Dropthought.

Like many startups, Dropthought had a great product and was focused on the engineering side of the business, reliant on partnerships with companies like Survey Monkey and First Data to be the leading source of driving sales. Because of the circumstances at both companies, Dropthought was eventually acquired by Bawan Cybertek with most of the team going over into the new company.