Hearsay Social gets a $30 million boostSeptember 11, 2013: 7:00 AM ET
Clara Shih's 3-year-old startup is hoping to prove what so far remains unproven: that companies can use social media to sell.
By Chanelle Bessette
FORTUNE -- Hearsay Social, a three-year-old San Francisco startup that in the past year has doubled its number of clients, announced last Thursday that it has raised $30 million in capital, bringing its total funding to $51 million overall. Among the biggest investors are New Enterprise Associates and Sequoia Capital -- two stalwart fixtures on Sand Hill Road that have backed some of the biggest successes in the social media realm.
Hearsay, which provides businesses with software to help them increase sales and marketing efforts on social media platforms, has already had some success turning financial institutions -- including Bank of the West, RPM Mortgage, and Mutual of Omaha -- into customers. Hearsay helps them compile content libraries and look at market analytics across various social networking sites in the hopes of driving in consumers in a more targeted, strategic way. But with the new cash infusion, Hearsay is hoping to broaden its customer base beyond financial firms.
"It was a good opportunity for us to bring in capital and accelerate the business," said Clara Shih, Hearsay Social's CEO and co-founder, in an interview. "This is a milestone for investment in the company."
The $30 million in new funding will help the company expand abroad and develop new software products, says the 31-year-old Shih -- who was tapped by Howard Schultz to join Starbucks' (SBUX) board of directors at the age of 29. She and her co-founder, Steve Garrity, started Hearsay Social out of a San Francisco apartment living room and have since grown the business to include outposts in New York and London. The two parts of the name, "hear" and "say," represent the intent of the company to provide two types of solutions for companies who wish to make sales with social media. The "say" comes from the capability of companies to manage their personal voice, while the "hear" comes from the data analysis service which, through software algorithms, determines sales opportunities.
As popular as many social-media platforms have become, though, it's been no easy feat converting the consumer obsessions into viable enterprise applications. Part of that -- particularly in the case of financial institutions, as Hearsay discovered -- has to do with compliance and regulatory issues, something Shih has had to contend with for many of her firm's clients. "Regulations are put in place to protect an investing public," she says, with some equanimity. "There will always be a healthy balance between helping companies and regulation."
There's also the challenge of making company social media outreach feel like an authentic conversation with the public, rather than a ham-handed marketing tool (as it too often does). To its credit, Hearsay already seems like it has a feel for toeing that line. Says Shih: "We believe this is just the beginning."