A stint as an analyst at a venture capital firm showed Robert Moore he didn't want a career in finance. Instead, he wanted to build his own company. And his work at Insight Venture Partners convinced him and co-worker Jake Stein they could succeed by addressing an under-served business intelligence (BI) market.
Moore used his computer science and statistics knowledge to analyze business data supplied by startups seeking funding from his employer as part of the due diligence process. "We'd give that information back to the companies, and they'd use it to improve their business," he said.
After deciding there was a big opportunity in providing those same kinds of analytic capabilities to companies without big software budgets and staffs of dedicated data analysts, Moore and Stein founded RJMetrics. (The name contains the first letters of each of their names.)
Putting BI in the Cloud
"The legacy business intelligence industry was selling really complex software to the Fortune 2000," said Moore, RJMetrics' CEO. "But the companies we were investing in were not big enough to use that clunky, expensive BI software. Lots of other areas of enterprise software were moving to the cloud, like CRM and HR systems. We decided to build a solution in the cloud and make BI available not just to the Fortune 5000 but to the Fortune 5 million."
The two men created a cloud business intelligence platform designed for fast-growing companies, especially those with online business models. The BI solution pulls in data from sources ranging from databases to Web analytic tools to third-party APIs and centralizes it in a cloud data warehouse. "Business users can log in with our software to explore the data, to see how different departments perform over a given time period or understand what is happening with customer lifetime value," Moore said.
RJMetrics gears its product toward the data sources and business needs of online companies, Moore said, focusing on areas especially important to them such as customer lifetime value and cohort analysis. Online companies enjoy an advantage over brick-and-mortar competitors because of the data that is generated when people visit their websites.
However, he said, "Because you are not face-to-face with them, it can be hard to get a sense of sentiment or intent. You must be very creative about marketing and take advantage of all that data you collect to be effective in acquiring new customers, converting leads that come to your site or getting existing customers to come back."
Cash and Control
Working for a venture capital firm also led Moore and Stein to take a somewhat conservative approach to raising capital, putting in several years of bootstrapping and opting for debt financing before raising $6.5 million in a Series A round last May. Doing so allowed them to retain more control over their company, Moore said.
"We wanted to make sure our vision for a cloud-based BI product was one that could be successful and real, which to us meant producing a product that delivered on what we said was possible and gaining customers and making them happy," he said. "We decided we didn't really need capital in order to do that. I could build the product and Jake could acquire the customers."
The hurdles involved in starting a competitive tech company are much lower than they were a decade ago, Moore said, thanks to cloud software, open source software and a proliferation of information and best practices shared by other entrepreneurs.
"What you can do with $250,000 today is probably equivalent to what you would have needed $5 million to $10 million to do 10 years ago," he said. "So many tech problems have been solved in ways that have become commoditized and very inexpensive, so now it's about working on the purest piece of your value proposition."
Another way Moore and Stein kept costs down is by basing RJMetrics in Philadelphia, an area teeming with tech talent thanks to nearby schools like the University of Pennsylvania, Drexel University and Princeton University, Moore's alma mater. Stein is a product of the University of Pennsylvania's Wharton School.
"If we started our business in San Francisco, we would have had to raise three times the amount of capital just to keep the lights on and the doors open," Moore said. "Lots of outstanding people come to this part of the country to get their education, and we’ve been able to tap into that vein of talent and keep them here."
Moore said he and his co-founder chose to follow in the footsteps of successful entrepreneurs like ExactTarget founder Scott Dorsey and Omniture founder Josh James, who located their businesses in Indianapolis and Utah, respectively.
Next Generation of Business Intelligence
RJMetrics now has some 300 customers, including Threadless, Hootsuite and NoMoreRack, and 60 employees, with much of the growth occurring in the year since the company's Series A round. The software often replaces "someone in-house who writes SQL queries, dumps data in Excel and builds PowerPoint presentations" rather than a competing BI product, Moore said.
The company is currently focused on adding features to its product that allow multiple users to collaborate around the same analyses or data points, Moore said, noting that RJMetrics gives all of its customers unlimited usage rather than assessing a charge for each user. "That's beneficial to us because the more people use it, the more valuable the product is to them."
There are no plans to sell, he said. "If you look at the traditional BI industry, multiple multi-billion dollar companies got built solving the same problems we are now solving for a smaller universe of companies. The next generation of billion-dollar BI plays will be built over the course of the next five to 10 years, and we plan on being one of them."
Quick Facts about RJMetrics
Co-founders: Robert J. Moore, Jake Stein
Funding: $7.5 million, including a $6.3 million Series A round led by Trinity Ventures and SoftTech VC
Product Category: Data analytics
Customers: 300, many of them online retailers like Threadless and Craftsy
Ann All is the editor of Enterprise Apps Today and eSecurity Planet. She has covered business and technology for more than a decade, writing about everything from business intelligence to virtualization.