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Optimizing Websites With Machine Learning: BloomReach CEO Raj De Datta (Part 7)

Posted on Wednesday, Mar 14th 2012

Sramana: You entered 2010 with a proof of concept based on pilots in a few different companies across different verticals. What came next?

Raj De Datta: In 2009 we knew we were able to give companies a significant lift. We did not know how to sell our capability or how to price our capability. We always believed that if we could build a scalable technology, we could create an interesting business. We did not have a sales force until August 2010, so I went out and sold the first 10 deals.

As soon as any of our customers reached a point where the traffic we drove them was significant, we would approach them and start negotiating deals. That is how we ended up creating our business model. We had a lot of debates about charging per page, on traffic levels, on page views, and a lot of other thoughts. We decided to price our offering the same way that customer acquisition was priced, which resulted in a pay-for-performance model.

Sramana: The measurement system for pay-for-performance works if your client is doing e-commerce. If you are a content site, that theory does not work as well.

Raj De Datta: The cost-per-click pricing model worked in all cases. Everybody was willing to pay a certain amount of money for acquisition of new customers regardless of the website they were operating. The amount of money that content sites were willing to pay was an order of magnitude smaller. Anybody who is bidding for AdWords will fit our business model.

Sramana: Are you focused on large companies now?

Raj De Datta: We did make a conscious decision to go after the higher end of the market. We felt that 80% of advertising dollars are spent at the top of the market. If we had to choose a competitor to have one segment, we wanted them at the low end of the market.

Sramana: What is your competition?

Raj De Datta: People who are doing SEO or SMO in-house. There are technologies that will generate lots and lots of pages without the deeper analytics. They are contributing to the flood, but they do not understand user behavior. Our first priority is a great user experience, even if that means less traffic in the short term.

We have a new product called BloomLift that uses the same concept as BloomSearch and BloomMobile to make landing pages. When you come to a landing page from search, it knows enough about you and the content on the site that it can populate that page with more relevant information. The impact is that more people will convert. It makes your advertising dollars more profitable.

Sramana: From 2010 to 2011, have you focused primarily on selling to large accounts?

Raj De Datta: Yes. We ended 2009 with six people, and we ended 2010 with twelve people. We ended 2011 with 50 people. We have over $5 million of revenue today. There is a weird quirk in our decision to sell to CMOs. Marketing folks tend to turn over fairly quickly. They are there for 18 to 24 months.

Sramana: What has your financing strategy looked like?

Raj De Datta: We have raised $16 million to date. Bain Capital was our series A investor. Lightspeed Venture Partners did our second round in September of 2010.

Sramana: I can tell that you are working with very deep technology.

Raj De Datta: My co-founder deserves the credit for that. I have not talked about him enough. He is the author of this technology. He attracts serious technologists to our company. We have built this company on a value proposition we wrote together in the early days. We have a few key principles. We are unbelievably transparent with data including financial information. We are extremely non-hierarchical. We have no titles in the company. We put tremendous value on ownership. Most of the folks who work here are 27 years old, and they have never done what we do. We believe in smart people who can figure things out. We have a no-drama principle. We want people who are easy to work with.

Sramana: Culture is set in the leadership of a company.

Raj De Datta: We try to be humble about what we have accomplished, as well as the journey ahead. It is not a bravado-oriented place. We base ourselves in ROI and customer value. We want to focus on significant innovation. We want to solve real problems that are very hard to solve.

Sramana: This sounds like a fascinating company. I look forward to following your continued success.

This segment is part 7 in the series : Optimizing Websites With Machine Learning: BloomReach CEO Raj De Datta
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This was a fascinating interview.

I wonder what the implications are for customers at the smallest end of the scale in 2013. This is definitely a company worth watching.

Denver SEO Company Monday, April 30, 2012 at 11:26 AM PT

Small companies cannot afford this technology yet, but perhaps that’s an opportunity of another entrepreneur to come up with a comparable product for the low end.

Sramana Mitra Wednesday, May 2, 2012 at 7:27 PM PT