Startups to watch

Editor's Note: In its March 2007 issue, Business 2.0 claimed that privately held startup SuccessFactors was profitable, with an estimated $100 million in revenue, based on reports from venture capitalists. However, on July 20, 2007, SuccessFactors announced that it had filed a registration statement for a proposed public offering, citing revenue of $32.6 million and a loss of $32 million for 2006. The number of shares to be offered and the price range for the offering were not indicated. The financial figures disclosed in the filing are inconsistent with those reported in our story.

Even the corporate world is catching on to the promise of Web 2.0 technologies. After all, why can't enterprise apps be as easy to use as the latest Google mashup?

They can. And when they actually work, watch out. SuccessFactors, a profitable five-year-old startup in San Mateo, Calif., takes in an estimated $100 million in annual revenue by selling a suite of simple Web-based tools that automate important but previously paper-driven management chores - performance reviews, succession planning, and compensation.

Ultimately the service helps to match employee skills with company objectives. North Carolina-based Quintiles, a pharmaceutical services firm with 17,000 employees, deployed SuccessFactors last year to better pair worker aptitudes with jobs; its annual employee churn rate subsequently fell by nearly a third.

CEO Lars Dalgaard claims that SuccessFactors has some 2 million users and more than doubled sales last year. Its customers, which pay an annual fee of $50 per user, range from small tech companies to corporate giants like ConAgra Foods. That kind of growth has not gone unnoticed among investment bankers, prompting talk of an IPO this year.

Tell us what you think of SuccessFactors: Has the company created the ideal corporate tool?

Funding: $45 million (Canaan Partners, Cardinal Venture Capital, Emergence Capital, others)

Founder & CEO: Lars Dalgaard (shown above)

Headquarters: San Mateo, Calif.

Employees: Approx. 400

Founded: 2001

Business model: Subscriptions

Bragging rights: 1,200 customers, including Wachovia, MasterCard, and Kimberly-Clark; 2 million users

Next up: Expanding into Asia and Europe; developing web services tailored to specific industries, such as health care and retail

Contact: Info@successfactors.com