Analytics is an extremely compelling area of investment due to several technology disruptions in the market today. While analytics has been around for awhile, the opportunity for predictive analytics based on big data is relatively new and is booming. When looking at this sector, I think analogies can be drawn to prior data technology waves that have taken place over the past few decades.
The first data wave was OLTP (online transaction processing) that came about when computers started being used for record keeping of commercial transactions so as to eliminate paper. OLTP was simply about reading and updating records, and transformed a number of industries such as banking, credit cards, airlines, mail-order, manufacturing and supermarkets/retail. This wave led to a number of successful companies being built, but was just the very first stage of what we are seeing today in data.
Data Warehousing was the second data wave, which was all about historical analysis of integrated transaction data representing the operation of a business. Warehousing uses complex logical queries using SQL– a programming language designed for managing data in relational database management systems (RDBMS). Data Warehousing was a way for corporations to effectively use digital information for decision making and business planning. The technology has the ability to analyze data, often from dissimilar databases and in unique ways, allowing decision makers to extract information quickly and easily in order to answer questions about their businesses.
During this wave, we saw companies like NVP portfolio company Prism Solutions (an early pioneer in data warehousing) go public in 1996 and eventually sold to Ascential Software (a data integration company)—which was later acquired by IBM for $1.1B in 2005. During the same timeframe, we also invested in Showcase Corporation, a data storage and business intelligence company. Showcase became a profitable company, went public in 1999 and was later merged with SPSS, a large Chicago-based analytics player. IBM would ultimately acquire SPSS for $1.2 billion in 2009.
Today, we are placing our bets on the third data wave which is an entirely new phenomenon—predictive analytics enabled by big data. Big data is about handling Volume, Variety and Velocity (real-time) and more importantly, about new kinds of inferences that are probabilistic. We are finally getting to the point where we have the data and systems in place that can execute prediction reasonably well – fundamentally this is micro-segmentation that has not been possible in the past because of the inability to handle large numbers of factors in making predictions.
InsightsOne empowers B2C companies to exploit the unprecedented power of big data to grow profits and increase consumer engagement. The company offers real-time precision targeting and marketing insights to consumer marketers so they can optimize the relevance and profitability of offers to consumers. Based on powerful Hadoop-based micro-segmentation technology, InsightsOne extracts signals from social, mobile, unstructured and structured data to optimize offers delivered by email, mobile, in-app, social and web communications.
This deep data is becoming increasingly valuable to today’s consumer marketers. While technologies in the first two data waves were focused more on cost containment, cost control and increased productivity for employees, this third data wave is all about leveraging the power of big data to understand your customers—utilizing the power of precision targeting to help companies enhance revenue and ultimately increase their bottom lines. Corporations today will use this to differentiate against one another and gain a competitive edge.
As I mentioned in the funding announcement, making the decision to invest in the InsightsOne team was an easy one because of the deep domain knowledge and track record the founders bring to the table. The company was founded by the team that built Yahoo’s consumer data and analytics platform, recognized as one of the first to exploit the power of big data to increase consumer monetization and engagement. InsightsOne spent years building a relevant, next-generation technology solution based on thorough customer feedback and testing with CXO’s, instead of spending time and money developing a platform and just hoping the customers would come.
This is why InsightsOne has experienced such early traction—including securing a number of Fortune-500 companies who are already increasing their profits by more than 20%. This is extremely rare at this stage of a company’s growth, and we believe InsightsOne is just scratching the surface of this hugely untapped market. We’re honored to partner with such an experienced and innovative group of entrepreneurs, and we’re excited about the third data wave opportunity that lies ahead.