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Building an Analytics Company to $10M+ in Revenue: Mode Analytics CEO Derek Steer (Part 1)

Posted on Monday, Oct 19th 2020

Analytics has been one of the most active areas of entrepreneurship in this past decade as data has exploded up and down the value chain.

This is an exciting journey of a company in the space.

Sramana Mitra: Let’s start at the beginning of your journey. Where are you from? Where were you born and raised? What kind of background did you have?

Derek Steer: My company Mode analytics is based in San Francisco. I’m a San Francisco native. I grew up here. I lived through the dotcom era, but as a kid, I didn’t experience it directly.

I have a lot of funny experiences with people that I meet regularly. They always ask about what it was like to go to the pier. A lot that I’ve gotten early on in life came from being around people who were in some way connected to the technology world whether their parents work in them or they are involved in it. 

Sramana Mitra: Tell me about the chronology. When and where were you in school? When did you come out of school? This gives me an insight into what was happening in the industry when you came out of school. 

Derek Steer: I went to Occidental College and I graduated in 2007, which was a better year to graduate than in 2008. I was fortunate enough in high school to study economics under a fantastic teacher who was known nationally. He was one of the folks who helped me write the economics AP tests. He was teaching his material and I realized in his class that economics spoke to me in terms of that way of thinking.

When I got to college, I majored in economics. I knew early on that that was what I wanted to do. When I graduated in 2007, I went on to work at an economic consulting firm that was analyzing anti-trust cases, mergers, and competitive dynamics, in particular, the impacts of events on the consumer.

This was when I started to learn a lot of data analysis skills that would eventually lead me to start Mode. It all happened not deliberately but as a happenstance by following the things that I enjoyed starting from high school and moving on. 

Sramana Mitra: What did you do in 2007 when you came out of college?

Derek Steer: I worked with this boutique consulting firm where the partners of the firm were all former FCC and DOJ experts who were in many cases responsible for writing the law to assess whether a merger is going to be anti-competitive.

My job was as a consulting firm analyst, which is similar in many ways to any analyst job in the consulting world. The specific focus I had here though was working on big data sets. I was developing some statistical analysis skills.

For example, I was doing an analysis on cross-elasticity in the breakfast cereal market to try to understand which breakfast cereals were most competitive with one another so that I could understand the effects of different pricing in that industry. Ultimately, that was going to get presented in court as part of some antitrust action. 

Sramana Mitra: Interesting. You have a different kind of background. How long did this all last?

Derek Steer: I did it for three years, then I had an identity crisis which sounds funny to me in retrospect. I had thought that I was going to go down this traditional path. My parents drilled me into becoming a lawyer, doctor, banker, or some traditional profession that leaves you with a stable income.

I imagined that I would go on to business school, which seemed the most appealing option to me at that time, but after a few years as an analyst in consulting, I realized that this thing is not for me. I hoped that business school would be good but until business school, I was going to travel. I always wanted to ride my bicycle across the country. One day, I just quit my job. I’d saved enough money, so I was able to go and bike across the country, camped, and stayed at cheap hotels the whole way.

When I got back, a friend who had mentored me at the consulting firm said that he works at Facebook now. This was in 2010. If you imagine Facebook in that era, they were still competing with MySpace. It was very different from how we think about Facebook today.

My friend was on the analytics team on Facebook and he said that the stuff that they are doing there is really fun. Everyone is smart and fast-paced. I ended up going to work there for a short period of time. That was my introduction to tech.

Sramana Mitra: This brings us to 2010?

Derek Steer: Yes. 

Sramana Mitra: What happens next?

Derek Steer: I went to Facebook with the idea of going to business school still in my head. I told my friend that I didn’t feel good about coming to this company and that I didn’t want to apply for a full-time job. I told him that I would be happy to do consulting work because I knew I wanted to leave in less than a year to go to business school. I arrived on the job at Facebook as a contractor. I was there every day, but I was technically hired as a contractor.

It was in the first month that I asked my manager to write me a recommendation to go to business school. I had put up a door from the moment that I got there, but as I started to hear back from business schools, I asked myself what I was working towards.

I think working at Facebook and the process of applying led me to question whether I wanted to go down that traditional path that my parents had drilled into me. It made me think that if I went to business school, I would still want to do this afterward so I thought that I should be thoroughly evaluating what my next steps are in the world of technology.

That led me to Yammer which was big at the time. It was fast-growing and really exciting. To this day, it remains one of the fastest SaaS companies. They were similar to Facebook in many ways because their products are similar, but it was an opportunity to join a smaller team that was fast-moving. I was able to directly apply the things that I learned at Facebook.

This segment is part 1 in the series : Building an Analytics Company to $10M+ in Revenue: Mode Analytics CEO Derek Steer
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