$137.8B U.S. ad spend for top 200 advertisers
Quants continue their sweep into marketing in search of interesting problems and viable business models in which to address them.
Case in point: the two atomic physicists who founded Menlo Park, Calif.-based Quantifind. They once worked on contract for the CIA -- using algorithms to detect the aliases used by terrorist groups and shell companies that were really money laundering fronts -- before they applied their technology to interpreting social data for big brands.
"It was a lot of fun," said Quantifind CEO Ari Tuchman, referring to the CIA pilots. "It wasn't clear there was a business there."
The company Mr. Tuchman and his co-founder John Stockton are building currently has 40 employees -- including nine Ph.Ds and a former Facebook engineering director -- and is now effectively coming out of stealth and looking to build its sales organization.
Its premise is to pair social chatter with financial data -- sometimes internal sales data from clients -- to detect correlations with revenue and speech patterns that are suggestive of real purchase intent. (For example, it's not feasible to predict whether people intend to buy a movie ticket if they've said they loved the trailer; but if they also mention babysitters, they're expressing intent, Mr. Tuchman said.) Quantifind is positioning itself against the plethora of social-listening companies that tout buzz and sentiment.
One potential use case would be to examine a viral event on social media that appears to be unleashing negative sentiment toward the brand; Quantifind could perhaps find that the purchase intent hasn't changed, so no crisis campaign is needed. Another is that a movie studio discovers that the group with highest purchase intent for an upcoming release is different from the target audience of its marketing.
"Sometimes the conclusions you reach are unexpected," Mr. Tuchman said. "A shampoo brand might think people are buying the product because of its scent, but it's really because of damage control."
Quantifind currently has about a dozen customers, four of which are movie studios, which is the vertical they launched the marketing business with in 2012. Under Armour has been a customer.
Messrs. Tuchman and Stockton had a long and circuitous journey toward building a marketing business. They left Stanford -- where they had been doing postdoctoral research -- in 2007 and began filing patents and applying for grants. They won two in 2009 from the National Science Foundation and the U.S. Army. The latter would have had them building landmine and IED detectors, an extension of research they had done at Stanford. They ended up choosing the former and taking a seed round from Andreessen Horowitz.
"When we thought about our backgrounds in experimental physics, the real game, the real power, came a lot more from the signal processing and data analytics than it did from building better hardware," Mr. Tuchman said.
From there, Quantifind worked on several disparate projects, not settling on a business model. It did the pilots for the CIA but also worked with the Stanford Bioinformatics Group to research a blood thinner called Warfarin, which can be dangerous when prescribed at the wrong dosage, and patients' tolerance for it varies. Quantifind applied its algorithms to gauge which gene mutations in individuals might impact what their optimum dosage would be.
Then in the fall of 2011, it raised a Series A round led by Redpoint Ventures for an amount it's never disclosed and started hiring more coders to grow its staff of seven. It also had a serendipitous meeting at Andreessen Horowitz with T.J. Marchetti, a senior digital marketer at Disney at the time. He mused about whether the Quantifind technology could help movie studios sell tickets.
"That was the first sense we got that there was actually a commercial application for the stuff we were doing," Mr. Tuchman said.
Pivot to marketing
The company began working with customers other than movie studios about a year ago, largely through referrals from its venture capital firms -- which now also include U.S. Venture Partners, which led a Series B round for an undisclosed amount in September. It's worked with marketers spanning categories but hasn't had one in finance or health care yet. Mr. Tuchman also recently met with the chief technology officer of "one of the big" U.S. political parties but says Quantifind will keep out of politics for the time being.
Though marketing is proving to be a promising area to build a business around, Mr. Tuchman ultimately has bigger goals for the core technology. In the case of health care, for example, he envisions applications like the company's algorithms being used to process unstructured data from the notes of doctors and nurses who've recently admitted a patient and then detecting patterns related to how that patient will progress.
"Marketing has been an awesome way to demonstrate this and bring value, but our goal is to expand it to other total verticals," he said.