Passenger provides an on-demand platform for companies to collaborate with their customers. The company was founded in 2005 when social networking, web forums and chat rooms had started becoming a common way for consumers, especially younger consumers, to provide feedback (solicited or otherwise) on products. Passenger’s co-founders, Andrew Leary and Justin Cooper, realized that companies were struggling to capitalize on their knowledge about consumers.
Before becoming the co-founder and CEO of Passenger, Leary was managing partner of StreetWise Concepts & Culture, a marketing agency. Cooper, who serves as Passenger’s head of Innovation and Marketing, was director of strategic marketing at A.D.D. Marketing & Advertising, another marketing agency. The two have spent many years building and managing private brand communities for Fortune 500 communities, specializing in word-of-mouth marketing. They met in 2002 while developing voice of the customer programs for the a mobile phone supplier. Over the next few years, they observed the role that consumers were playing in both marketing and product innovation and finally founded Passenger.
Since both Leary and Cooper came from wom marketing backgrounds, they knew what was missing from the technology perspective and knew which tools, strategies and processes would be most successful in driving customer collaboration. After working with engineers to hone the platform, which was launched in 2006, Leary and Cooper went back to some of their old clients and partners to show them what it could do. Some of their first customers came from these initial conversations.
Though Passenger currently sells directly to enterprises, it is developing a channel strategy based on interest from various advertising and marketing agencies. The company charges clients per community, per year, and delivers the platform as a SaaS model. Passenger claims that the average deal size is $300,000 per community and powers up to five communities per year for some customers. Its target customer is any brand that would benefit from an ongoing conversation with its customers. Clients include consumer brands such as Adidas, Chrysler, and Coca-Cola, as well as entertainment and media brands that create content for a consumer audience such as ABC Studios and FOX. The company has quadrupled its customer base since August 2007 and has a 100% retention rate. Though Passenger did not provide any revenue figures, it said that revenues increased tenfold from August 2007 to August 2008.
According to the company, Gartner just released a report that said more than 60% of all companies will have a community for engaging their customers by 2010; this is clearly a trend Passenger wants to work to its advantage.
Passenger has raised a total of $20.6 million: Leary and Cooper funded the company in its first nine months, and they raised a $4.3 million Series A from Shelter Capital Partners in June 2006; an $8.3 million Series B from Disney’s Steamboat Ventures, Shelter Capital Partners, and StarVest Partners in August 2007; and an $8 million Series C from insiders. This capital will be used to steer the firm towards profitability and aid its expansion into the UK.
This segment is a part in the series : Deal Radar 2008