What's Next For New Unicorn Segment.io?

According to Market Research Future, the global customer analytics market is expected to grow 15% annually to $7.3 billion by 2023. Recently, San Francisco-based Segment.io announced its seventh funding round that enrolled it into the Billion Dollar Unicorn club.

Segment.io’s Offerings

Segment was founded in 2011 by Peter Reinhardt, Ilya Volodarsky, Ian Storm Taylor, and Calvin French-Owen. The founders were roommates at MIT and had participated in Y Combinator’s summer 2011 program. Before reaching its current avatar, Segment had gone through a couple of failed business models. Its first attempt at Y Combinator’s incubator program in 2011 was a product that let students in college lectures alert professors when they were confused. The product did not fare well because when students took out their laptops to use the tool, they mostly ended up using Facebook instead.

The team then tried building an analytics tool, a competitor to Google Analytics or KISSmetrics. They built a library called Analytics.js that combined all the analytic services and APIs together. They released an open source version of this library on GitHub, and it just started growing by itself. While working on that they realized that building a tool that connected the available analytics tool would be more worthwhile. And, that is how Segment.io was born.

Today, Segment.io operates a customer data infrastructure platform that allows organizations to collect, unify, and connect their end customers to more than 200 marketing, analytics, and data warehouse tools. Segment’s hub model offers its customers the benefits of the low integration cost of large monolithic suites while providing them with access to an entire ecosystem of specialized, best-in-class tools that make data powerful.

Simply put, Segment.io collects customer data from multiple sources ranging from websites, emails, mobile apps, and brick-and-mortar stores and integrates them to create a single customer profile. It is built on the assumption that a traditional CRM tool is no longer enough and that companies need a seamless experience for their customer data while ensuring that growing privacy regulations are met. Bearing this in mind, Segment.io has been able to attract big names like Levis, Glossier Inc., IBM, Atlassian, and Intuit to its portfolio.

Segment.io’s Financials

Since releasing its product in 2013, Segment has seen strong market demand and performance. Its employee base has grown to more than 400 at the start of the current year. It remains privately held and does not disclose financials, but its management had revealed that it was generating “tens of millions” of dollars a year in revenues. Owler estimates Segment.io to be operating at $15 million annual revenues.

Segment has raised $283.7 million in funding so far from investors including e.ventures, Meritech Capital Partners, Thrive Capital, GV, Y Combinator, Accel, Sapphire Ventures, and GC Capital. Its last funding round was held earlier this month when it raised $175 million at a valuation of $1.5 billion. An earlier round held last year had valued Segment.io at less than a billion dollars. Segment plans to use the latest funds to drive international expansion across North America, Europe, Middle East and the Asia-Pacific markets. Earlier this year, it opened its EMEA headquarters in Dublin, Ireland.

Segment.io operates on an API-driven model. It offers SDKs for iOS, Android and Xamarin app tracking that make it simple to send data to any analytics or marketing tool without having to learn, test, or implement a new API every time. Its server-side sources lets organizations get analytics data directly from their servers. It also offers integrations to several cloud apps allowing customers to export data from its third party tool and import it directly into their Segment warehouse.

Segment believes that it struck a “gold mine” when it came up with its business proposition. It expects the entire data integration market to be a $200-$300 billion market opportunity.

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