Sramana Mitra: Given that you are now versed in that B2B analytics world – you have chosen a good side problem and instead of going to the B2C space, where there is more active big data work going on – what are some open problems that you see that you can draw the attention of entrepreneurs to?
Jim Swift: Sometimes it is hard to organize how you attack problems in the analytics space. Here is how I find it useful to think about, and this is where in each of these layers there are levels of innovation where entrepreneurs are going to be able to create interesting businesses and useful solutions.
I think there are three tiers within the problem. The first one is the data tier. If you look at what is going on in the consumer world, I think there are a lot of useful parallels. If I was starting a business, I would go back and look at the last 15 to 20 years of the consumer world. We went from demographic data to life event trigger data for risk in marketing to behavioral data – store-level purchase behavior data all the way down to basket-level detail. Fifteen years ago, we still were tearing off carbon [copies] of the credit card receipts we got. Now almost every receipt we get runs through a computer and has basket-level detail printed on it. This just shows you the power of that information. It forced the entire world to move quickly to make that data not only captured and useful, but available in real time. We are able to do all kinds of analytics to support businesses, whether is it managing inventory, product placement, or offers at the point of sale. All that real time [work] has been enabled.
Apply that to the B2B world and think of the things that happen. The first thing is the data. You can’t have really good processes without really good data. The second tier is the analytics that you build on top of it – what you make sense of out of the raw data. It is not usual that the raw data itself is consumed in that form. You usually find the three things that relate to each other and form the basis of the important “Aha!” you deliver.
The third layer is the application layer. So the data, the analytics that make sense of it, and the applications delivered into business processes. At the data layer I think there are tons of opportunities to create new ways to describe businesses. I think behavioral is the key. There are lots of different types of behaviors. I mentioned hiring and purchase, investment and risk tolerances, and all kinds of other things that happen. I think there are opportunities in that layer. When you get to the analytics layer, you have several different dimensions. You have the visualization of the data. I often say, “Just let me see the data” and I can usually get a good feel for what is going on, but I need a way to see it. There is the statistical approach to the analytics – that means building the tools people can use, and it also means becoming an expert in the field, where you can provide services that help interpret the data in the analytics layer. At the application level, obviously, there are millions of things you can build. There are an endless number of mobile apps that are emerging that use consumer information or for consumers that use some form of big data.
The same is true on the B2B side. It is slower to move because the investment hurdles are higher, but we are seeing an increase in the amount of mobile that is going on in the B2B space. You have a million businesses making a million dollars each. Most of them exist just for those three layers of the B2B world – there is so much opportunity.
SM: In general, we have seen a huge increase in selling stuff to small businesses. Small businesses have always been a big part of the economy. If you look at selling technology to small businesses, that part of the ecosystem has gone up like crazy. Part of the reason is because there is so much cloud technology available that makes things more affordable, and even small businesses have become much savvier in finding things, buying things through Google search, etc. I think on the purchasing side, selling for a business that is selling to small businesses is very attractive.
JS: Keep in mind that there are six million businesses in the U.S. that have employees, and there are many more with no employees, that are just home businesses – about 25 million. Of those six million businesses, fewer than 15,000 are public, including penny stocks. Of all the companies in the U.S., 99.9% are private companies. There are only about 18,000 companies that have more than 500 employees. There always seems to be a disproportionate amount of attention paid to large companies. I can see why: It is because you have brand recognition and all these household names around you every day, but what makes this economy go is really the small business, and they employ more than half the workers in the U.S. They are doing all kinds of things, and they act like consumers in some ways, because they are people.
SM: The entire segment acts like consumers, but at the same time it is not exactly like consumers, either.
JS: From a risk standpoint, we have a lot of companies that are using the products that we are building to assess risks of customers – whether it is the risk of will the sale still be there, or the risk of payment being conducted. We are also seeing an increase in use on the supplied management side. So, you have suppliers that you rely on, whether it’s for assessing the viability of a supplier for the first time or for looking at the continuity of the supply chain.
The worst thing that can happen to you as a small business is that you are moving along, you have orders you need to fulfill, and all of a sudden the supplier that gives you one of the key things that go into what you make can’t deliver. You spend so much time trying to find customers, and when you can’t fulfill that order, that is really painful, from a cash standpoint and a personal standpoint. We are seeing more and more awareness on that side, and we expect that to be a growth area for us where we are building analytics that are specific to the health of a supplier. Sometimes you get into these cases where it is not that the supplier is unhealthy, but that they are selling too much and they won’t be able to meet the demand because they just landed a huge customer that is going to eat up their entire product. There are all kinds of issues through the supply chain where better intelligence about the company you are acting with becomes important. In figuring out how to do that, I still come back to the behavioral data. I want to know what is going on in this company and how it is changing over time, and as a result what the impact on me might be.
SM: Thank you; this has been very informative.
JS: Thank you. Goodbye.