Why is this $41m-backed Silicon Valley start-up moving to the UK?

Meet BloomReach, the cloud marketing start-up launching in the UK this week with plans to “transform” our personal shopping experiences…

For new businesses looking for start-up inspiration, look no further than BloomReach.

Launched officially in February 2012, the Silicon Valley-based cloud marketing platform which looks to improve online shopping experiences has raised over $41m in funding and counts more than 100 leading American brands including Staples, Guess and Williams-Sonoma, among its clients.

These achievements have much to do with co-founder and CEO Raj De Datta, BloomReach being his third start-up venture. Having steered the company from an early-stage idea, to assembling a team of “Google scientists” De Datta has built a personalised discovery platform that’s raised eyebrows over the water.

Not content with focusing on the US market, De Datta this week announced BloomReach’s entry into the UK and is confident the move will enable the company to capitalise upon the opportunity presented by UK marketers “who are living on a different island” to UK consumers.

We caught up with the serial tech entrepreneur-turned-LinkedIn author (see his controversial blog on “wasting time” at Google and McKinsey) to find out more about the UK launch, how London compares to Silicon Valley, and why he left the corporate world to pursue start-up ventures…

Tell us more about BloomReach, where did the idea come from?

“We felt that, in many cases, the digital experiences that large retailers and other e-commerce business were offering to consumers were just not all relevant to what those consumers were seeking. […] So we felt a new kind of platform had to be built that would house these websites to make every page totally relevant for what you were looking for at that moment, so that you have a better experience and save time. We assembled a team of Google scientists and said ‘can you build this idea of a personalised discovery platform?’ – we’ve had tremendous success in the US doing that.

“I spoke to a lot of chief marketing officer’s (CMOs) and I really felt like they were hungry for next generation technology that would understand content and deliver a great user experience. It was all very clear; CMOs were spending hundreds of millions of pounds on marketing that was fundamentally guess work and there wasn’t a data driven response.

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“Secondly, I felt like we had an innovative approach; we had an angle where I could get together with these Google scientists and build an engine as intense as Google in terms of impact and really leapfrog a lot of firms out there.

“Thirdly, I had a great team which is always important. It was a group of people that I felt were among the top 100 computer scientists in the world – there were six people when we first started, now there’s hundreds.”

You founded the company in 2009 but didn’t launch until 2012, why?

“We believe in marketing reality not fantasy. We waited; we thought let’s build great technology, let’s build our customer base, let’s provide value then we’ll talk about [going public], probably a lot later than most people would.”

You’ve announced your launch in the UK today  why the UK?

“Our story now is our entry into the UK market. Before we got here we felt we really needed to understand the market and so we commissioned research which is quite staggering; when you look at the UK consumer and when you look at the UK marketer, they seem to live on different islands in some ways.

“The consumers [surveyed] really feel like companies like Amazon own the consumer experience – 82% feel like Amazon is the best provider of the customer experience and personalisation. And when you look at the consumers, almost a third of them (31%) say that personalisation is important to them but when you look at UK marketing executives less than 2% believe it’s a priority.

“The UK is a market I’m personally familiar with because I lived here for three years and I was involved in starting a business here over 10 years ago. […] The last I looked at it the percentage of Google’s profits that come from the UK it’s something like 10%, which is quite a large number, so the market opportunity is very large.

“This pain point and the survey validates the [market opportunity] and we feel like the market data substantiates the problem. We’ve also had the good fortune that a lot of our customers have been setting up in the UK so they’ve driven us here, to some extent. Brands like Forever 21 which started in the US and has come over here, or StubHub and others – they had US businesses and now have large UK businesses and all of them are fighting against Amazon.”

How does your new tool BloomCompass, also announced today, tie into this?

“There’s three parts to our platform; firstly our organic search platform, secondly SNAP which stands for ‘search, navigate’, ‘personalise’ so that when you arrive on a website the search box, the navigation and the browser are all on point to what you’re looking for, and finally Compass – it’s really a system for digital marketers to help them identify relevant opportunities to make more money.

“Marketers can look at Compass and say, on the page related to men’s shoes, it looks like this particular pair of shoes is really trending they can then think about whether they should consider promoting that and pushing that to the top of the page – Compass gives them data on that. Usually people just go by gut feel of what they think is trending, now you’re able to open a dashboard and see the things that you should be doing to make your company deliver more money.”

Having raised $41m in funding, what has the money been used for and where are you in terms of traction and product development?

“We raised $25m of the $41m just about two years ago now, fall of 2012, and it was really aimed at building more products; we expanded our R&D spending probably by double. Our second goal was expansion; we have recently opened a New York, office and now have our geographic expansion to the UK with offices in Covent Garden -we’ve hired a great team to lead that in the UK”.


BloomReach's new Covent Garden offices

BloomReach’s new Covent Garden offices

How did you attract investment?

“First of all there’s me so there’s some credibility there but I went to investors and the conversation that I had with them focused on asking them ‘do we agree that there’s a problem of making websites relevant to consumers and that’s worth billions of dollars as an opportunity?’ And they all said ‘yes, we agree’. Then I said ‘do you also agree that the only reason we will fail is if we don’t deliver on that promise, the promise if solved will deliver a lot of value, so the question is the promise’ and they said ‘yes, we agree’.

“I explained to them that to mitigate that risk I would have to hire the top five scientists in the country to solve this problem, be able to attract them to work with me, and then give them enough money to fail a whole bunch of times. At the end of that journey, with $5m in the bank, I can give them a runway to fail and we will get it right and that’s when the billions of dollars will come. That conversation worked – the investors gave us that initial $5m and then I took $1m and left $4m in the bank for a long period of time and I refused to hire more than three or four people because I felt like the seventh person could change the outcome until we proved that it would work.”

Was it easy to secure the follow-on funding?

“I wouldn’t say easy is the right word, it was a matter of course. The business was always outpacing expectations, there were a lot of people interested in investing and fortunately we had choices. Those choices were there because the business was outperforming and we ran the business very carefully that was the first thing.

“The second thing was that we always raised money when we didn’t need it – we raised the second round of funding, $11m, when we had only used $1m out of the first $5m so that there was a lot of capital available. It always takes a fair amount of work to raise capital – it’s not straightforward.”


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