How Small Businesses are Being Empowered with Big Data
A Moment with Dan Forootan, CEO of Ryzeo
Question: Can you tell us a little about your background?
Dan: I started my first company at 16 years old when I was in high school. I loved technology and Bill Gates was my idol. I started playing with stocks in eighth grade. I had a cousin that was in Cupertino who was starting to dabble in websites and we were talking on a phone and we started developing websites. I had a customer that had four sites and started working with them and noticed that [my customer] was spending a lot of hours to have me work on something but he was also paying $19.95 to this one company that was doing really nothing- and it turned out to be a hosting company. I thought, 'that sounds like that sounds good to me.' So, I put something together for web hosting that was the first business was called EZ Publishing Web Hosting at the time. So we grew that and did a small exit- nothing too major- may be enough for an
investment property, but I took some of that money for a second company which was an email marketing company called StreamSend and we just exited that this past August which was a nice sized exit- eight figures. After that we started working on Ryzeo which helps e-commerce companies raise their revenue.
Question: Where do you see the future going in technology right now?
Dan: Right now, it's all about data, a lot of data collection is happening. Companies for a long time have been trying to figure out how best to use the data. The larger companies, the Facebook and Google of the worlds, have massive data stores and a lot of large significant teams to deduce information out of them. They own the data, they share that data to other companies in the form of advertising- Facebook got in trouble for sharing a little too much- but the smaller size companies don't really have access to the same capabilities out there. They don't own their own data. One of the things we started noticing is that e-commerce as a segment has a lot of click stream. Click stream meaning, you go on a website and start browsing the categories or different products- that click stream should become available and owned by the actual small business as opposed to having that go farmed into a particular system and then them having to pay for access to that data through advertising channels. We asked ourselves, can we collect this data make it actionable for our size company? Moving forward, the responsible utilization that data is probably a big aspect of the future of what's going to happen in the world of small business marketing.
Question: How do you foresee the role of AI in the future?
Dan: There's two views of this. There's a doomsday view where people are going to lose jobs because it will take over everything. I don't know where that's going go, it's a very long-term perspective right now. Right now, the systems do a better job than people recognizing faces on images. Systems are about 95% certainty and I think people are like 85% when they see something quick. But from what I'm seeing it's going to be a big aid. It's going to help people do their jobs better. In our world, something as simple as discounting strategy, a smaller business is going to have to make decisions on how they discount their products. Partnered with an AI solution, the AI can make some good suggestions based on whether you've been browsing a product something versus someone that hasn't. Maybe your discount rates are different than someone else, it can help do that kind of activity better for them. Long-term, it's hard to say because machines keep learning how to do tasks better but I think in the short term they're just an aid to help people do their job better and more efficiently.
Question: Tell us a little about the concept behind Ryzeo.
Dan: I learned quite a bit in my last venture about email marketing. Email marketing is very flat. It's almost like you get a great list of contacts send out a campaign to them and it's generally with some small differentiators like name and so forth- that's the campaign that comes out. What we started noticing is that well there's a way to pair behavioral data into marketing. Large companies like Amazon are doing it. That's something that they've got armies of engineers and developers helping make that happen. The smaller e-commerce companies are market segments between $500K-$20 million in revenue. They have a huge amount of data that's available to them that they just don't know how to access and tap into. Ryzeo's whole purpose was to figure out a way to help them understand the value of this data and how to utilize this data across the marketing channels that they're utilizing today and also how to do it in an efficient manner so that it doesn't create extra work for them. Our market consists of very busy people with thin margins so they don't have a huge marketing team available, so they need to find a way to utilize data, and do it quickly without having to go spend a large amount of money on a VP of Marketing for $250k to make that happen. We've boiled it down to the simplicity for them. We do the on boarding and do the full implementation, we set everything up and they start collecting revenue and reporting on the value and the ROI based on the campaigns and our campaigns bring in the activity of their customers. For example, if you went to a website browsed and saw shoes and you saw a category of shoes and you were looking at black shoes, what will end up happening is that we'll know that data, we'll know the type of products you might be interested in and we could push very similar type of solutions to you and have you be receiving messages that are more one-one targeted versus just something that a marketer put together and thought that you might be interested in. That's really offered a great value. We actually guarantee a 10x ROI on the spend, because we know that using this data we're going to be able to actually deliver a great value and ROI to the company and then the customers end up purchasing.
Question: How you differentiate yourself from competition?
Dan: There's a lot of players shooting for SMB in our market segment. The thing with SMB is they must be able to get value from the solution and it's not just a piece of technology that they need. The way we've differentiate ourselves is we've built great technology, make sure that it's kind of forward-leaning in terms of being able to collect the data process the data and create campaigns in an automated fashion and then to that we've added services layers to help these companies understand the strategy of how this should be executed, so the blueprints for it and also remove the equation for them having to have a marketing team that's large enough and technical people to get implemented and set up. For us, the customer comes, in signs an order form, twenty days later they're up and running using data, they had no clue was available to them and they start seeing ROI reports on a quarterly basis.
Question: How do you approach and manage risk?
Dan: One skill that I have is I spot opportunities and some trends, but I'm also not fearful to dive into somewhere new. I try to dive in new and then you go in with a little shield and start getting hit with and you figure it out very quickly. My view on the risk part is, you dive in with a very minimal amount of investment, as much as little as possible and then start following the patterns. In our case, we put something together, it didn't cost too much to put the solution together, we started talking to customers as we're building the solution and we start seeing patterns forming. When one people buys you're like, I don't know what's going on maybe it's just luck. When five or ten buy, now you got a pattern. What we've ended up building behind that pattern is, continue to make investments to make a scalable model- to take five and then turn them into 250. We'll take 250 and turn them into 1,000, and 1000 and turn it into 10,000. During this time, you keep continuing to learn and as you learn you start picking out the patterns and if you pick the right patterns, they're in the right order the line starts forming and going up and I think that's been one skill set is finding the right patterns and ignoring the noise around that.
Question: Is Ryzeo set to be a national or international service?
Dan: In the US there are about 130,000 e-commerce companies (that fall in the range of having between $500k-$20 million in revenue). If you expand it to include other e-commerce companies in the US that fall into that category, the number becomes 750,000. If you go into the world, that number multiplies significantly higher. We really homed in on the US to drive our sales and product strategy to be able to efficiently and effectively nail that starting segment and over time we can grow that.
Question: In the e-commerce segment is there a particular industry that is more ripe for your product?
Dan: So we looked at that a little bit. Right now, our customers are across all the verticals in e-commerce. But it follows almost what the verticals are in general- like clothing is a big one for e-commerce. So proportionately we have more clothing companies and so on.
Question: When you add new customers how did the competitors weigh in?
Dan: It's nice when we get one customer in a particular vertical because success from that turns into a reference customer. So, you've got reference customers available to show you've brought success to them. In some ways it helps get other customers in that vertical to sign on because they've seen that you've brought success to another person that they've become aware of in the past.
Question: What is browse abandonment?
Dan: Browse abandonment very simply is, you go to a website- an e-commerce website- you're browsing products. The second you go in, you're on the home page and say you like this product. You click on it, might go to a category, you might start searching- all these actions you take are great indicators for the brand that you're more and more interested. Now you're doing the browse and your phone rings, you have a client call you or you're at home and you're distracted or you start going to another website and shop. You've abandoned your browsing activity, now it's up to the brand to make sure to remind you to come back to make and finalize your purchase and that's where we come in on the browse abandonment side. We help re target back to you- make sure that you have the right offer, the right messaging- maybe a set of products that are related to what you were doing in real time and then get you to come back and make a purchase.
Question: Who is your ideal client?
Dan: Our ideal client is probably doing about million dollars, they're a smaller team but a growing company, I could actually think of a couple... the president is going crazy because of the sheer amount of items that's on his or her plate and they make decent money but they have razor thin margins so the help that they've ended up hiring to aid them in various areas of their business are more tactical from a cost basis than strategic vice presidents would be. The reason they select us is because we remove a lot of headaches in the marketing area off their plate and we bring in the customer data and help increase the revenue.
Question: For more information how does a person contact Ryzeo?
Dan: Ryzeo.com or you could shoot me an email at email@example.com.
Question: In terms of AI, where do you see this industry going?
Dan: Well it's tough to say, the technology for AI is moving very very fast. Where our company is trying to take it is we want to be able to drive marketing campaigns across multiple channels via email, Facebook Messenger, chat or social media in a way that its automated and has the AI engine do it on autopilot. We think that it will save time for the marketer to be able to have these campaigns be automatically generated based on the data that they've collected and that's our view of the world and then the marketer can start fine tuning a little bit based on the reporting they see.