By Nick Patience
In less than three months of availability, DataSage Inc has managed to rack up an impressive customer list for its software that analyzes clickstream and purchasing data, and makes recommendations on marketing programs, both online and offline. And the company is on course for an IPO sometime next year according to VP marketing Paul Cataldo.
This week at the eRetailing event in New York the Reading, Massachusetts-based company is launching a try-it-and-see program for its netCustomer product called iStart whereby companies can, for $10,000, run some data through the analytics once and see if the results are something they could use. DataSage believes that the market is moving beyond mere collaborative filtering – the practice of predicting what users will want based on what other users have bought – to individualization, eventually creating a virtual store for each customer that visits a web site.
Since the launch of netCustomer, DataSage has signed up the likes of Amazon.com, Staples, Bradlees, Sears, Outpost.com and My- Meals.com, among others. That’s in addition to longtime DataSage customer Wal-Mart, which started using the company’s technology before it was formed into a product. Indeed it was during their time working as consultant for Wal-Mart that the founders of DataSage, including CEO Dave Blundin, who was also one of the founders of Microstrategy Inc realized that the data mining technology Blundin and others had developed at MIT could be the basis of a company.
DataSage has signed numerous partnerships with platform vendors, email suppliers, collector software, recommendation engines and commerce servers, among others and the product integrates with outbound marketing programs and has native links to Oracle, Informix, Red Brick and Sybase.
The architecture centers around what the company calls a knowledge hub into which the data from the application server, web server, recommendation and collector engines are fed and run through DataSage’s algorithm, which stores all the data in memory. The software then churns out a single report while also feeding the data back to the recommendation engine, which could be something like NetPerceptions or Andromedia’s LikeMinds so it can act upon the data as well as writing back to the database. It can also accept algorithms from the likes of SAS and Clementine.
Along with the Windows software version, DataSage also plans to launch an ASP service, and is putting the finishing touches to that now. Cataldo says the company mostly comes up against the likes of Epiphany, but he claims that company is still a way off filling in all the features of its product. Companies such as Rubric and Annuncio are partners, rather than competitors, he says.
DataSage secured seed money from Sigma and One Liberty in 1997 and $7m more from them, Advanced Technology Ventures and El Dorado last year. It is in the process of securing a mezzanine round now, with a view to an IPO next year. The company has apparently been approached a few times with a view to being acquired, which is hardly surprising given the multiples commanded recently by Andromedia, Vantive and Clarify. The company is believed to have a run rate this year of about $10m, has 70 staff, with 90 by the year end and sees a split of about 50-50 in revenues between software and services currently, but sees that moving towards 70-30 in favor of software eventually.
