Hearsay Social Secures $18 Million to Help Franchised Brands Master Social

National Insurance, Real Estate Agents, Banks, Car Dealerships, Coffee Shop Chains Can Keep the Social Message Uniform, Legal

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Hearsay Social, a startup that works with national chains like State Farm and 24-Hour Fitness, raised an $18 million second round of funding, just months after raising a $3 million first round in February from Sequoia Capital.

National or global brands can use Hearsay Social to exert some control over the social media messages sent out by thousands of different local proprietors, agents or franchise owners to assure that the tweets and status updates adhere to corporate guidelines, as well as the law.

"Brands can have hundreds or thousands -- and usually we see tens of thousands -- of local social-media presences that they don't even know exist, much less actively manage them," said founder and CEO Clara Shih, who catapulted to some tech-celeb status in 2007 when as an engineer at Salesforce she coded the first business application on Facebook.

Hearsay Social software creates a way for corporate HQ to find and guide local representatives to social-media uniformity with products like "rogue page finder." For example: 24 Hour Fitness has 425 individually managed clubs and 20,000 employees in the U.S., many with their own social-media identities. Other clients have thousands of local representatives, agents, advisers, franchisees or store managers who are increasingly creating or claiming local social-media pages.

It's not even all about brand guidelines and good corporate governance -- some of the businesses want to make sure that what their reps are saying is in compliance with the Securities and Exchange Commission, the Federal Trade Commission and other industry regulators. Banks and insurance agents especially must stay within very specific guidelines down to the words they use. Ms. Shih said words such as "free" and "we guarantee" can never appear on social posts by financial institutions.

Hearsay Social -- like many other social-media management companies -- can filter posts for dubious language. The kind of software that can keep brands out of trouble may soon become essential. According to Gartner, half of all businesses will have been asked to produce archived data from social-media sites for legal purposes in the next few years.

"Every Fortune 1,000 company wants to use social media to increase sales and brand awareness, but few have harnessed its true potential as a solution for customer engagement," said Jon Sakoda, partner at venture capital firm NEA. He went on to explain that Hearsay Social can manage brands' social media accounts "while mitigating regulatory risk and satisfying brand compliance."

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