The halcyon days of people clicking on Google search links and instantly converting into customers are over. But a startup called Qubit, founded by four ex-Googlers, has built a big-data analytics platform that it believes could make selling online today and in the future nearly as easy and successful; and it’s announcing a substantial $40 million in funding to fill out that ambition.
The goals are as lofty as you might expect from early Google employees-turned-entrepreneurs. “My objective is that 1.5 years from now, I want the Internet marketing community to say, how did we do what we do without a platform like Qubit?” said CEO and co-founder Graham Cooke, in an interview. “I’m taking the best of my five years of Google and applying it here.”
This Series C round was led by Goldman Sachs; but notably it also includes investment from two strategic CRM giants — new backer Sapphire Ventures (the investment arm of SAP) and existing backer Salesforce Ventures. Previous backer Accel also participated.
London-based Qubit plans to use the new funding in three areas, Cooke said: to expand into more verticals beyond e-commerce; to add more features and functionality to its flagship Visitor Cloud platform; and to hire more talent, in particular engineers and specifically to build out its presence in Silicon Valley.
Qubit — whose name comes from “quantum bit”, the quantum equivalent of a binary bit — has already made some significant headway outside of its original singular focus of e-commerce, Cooke added. Today, half of its business already comes from categories outside of retail like travel, finance and e-gaming.
The company — which was founded in 2010 and whose other co-founders include Ian McCaig, Emre Baran and Daniel Shellard — has in total some 300 customers, including large brands like Topshop, Emirates and Walmart-owned ASDA. It claims to process some 2.5 billion online customer interactions daily. Qubit has grown over 100% year on year, and it is on track to see a $100 million annual run rate “pretty soon” as well as be cash-flow break-even in the next 18 months.
Qubit is not disclosing its valuation but Cooke describes it as “good” considering the current climate. And, he added, it’s a number that will not leave employees with stock options straight out of luck should the startup get acquired or see another liquidity event (a fate we’ve seen employees at other startups befall, unfortunately).
“We’ve raised $40 million in a difficult market, to put it mildly,” Cooke said with a little laugh. “We’ve come away with a valuation that is good for the business and great for employees. In many startups, employees are under water, and they are not meeting the company’s valuation with their stock. We wanted to avoid that.” The company has now raised $76 million to date, after most recently raising $26 million in September 2014.
The problem that Qubit is tackling is a well-known one: a lot of buying online is built on an outdated premise that companies can sell to customers without knowing too much about them, just by offering their wares in a place that they may be most visible. Such as in a Google search. This is something that Cooke describes as the “expectation economy”.
“When I started at Google at 2005 the amount of conversions that were one-click purchases was huge,” he said. “Click on a Google ad, go to the website, make the purchase and you’re done. But now, without a doubt, it’s harder. People are on a lot of different devices, sometimes five or six, and they are on a longer journey of discovery where they may have heard about you and just want to look a little closer.”
They may not buy anything at all, he said, “so analytics and personalisation and optimization to allow marketers understand what is happening and what the next move should be” are of top importance. “It’s about the customer, not the product,” Cooke said.
This is where the Visitor Cloud comes into play. The service exists in the form of a real-time dashboard that provides customer segmentation and across different platforms, different routes for coming to a company’s site or products as they are sold online, and other variations.
Clients are given graphic representations (by way of a Tableau integration) to understand the trends better — no need for marketers to brush up on data science to use the platform, and given the tools to execute moves based on those insights — whether it’s provide a special discount to an identified VIP or lure the casual visitor in with another sweetener.
Another aspect of Qubit’s business is that it uses machine learning and big-data analytics to crunch the numbers around each businesses traffic to figure out patterns for customer types. It uses this to help suggest how to market to these users. This is in contrast to one of the more popular routes for trying new campaigns today: A-B testing.
“We are challenging the status quo of personalisation or A-B testing without better knowledge of your customers,” Cooke says. “90% of A-B tests are ineffective and don’t drive any uplift at all because you are testing things that don’t matter.” Cooke also says that he sees Adobe Marketing Cloud as a big competitor.
There is another noteworthy aspect to what Qubit is doing, and that is on the subject of user privacy. A lot of marketing and ad tech today might give users pause because of how it potentially steps around and over data boundaries, which not only unnerves many consumers but makes the user experience often quite spammy and annoying. (No, I really don’t want to buy that teapot, Amazon. Please, stop showing it to me already.)
Qubit says that its own approach to this is to narrow its own big-data focus, looking only at a company’s own traffic, and not doing any kind of comparisons with traffic from other companies, anonymised or otherwise.
“We see ourselves as a CRM technology, so we are providing customer data that is first party and owned entirely by the enterprise in question,” Cooke said. In other words, no cross referencing between Topshop and ASDA as one example.
“We don’t do that and the reason why is that for Topshop, its customer information is an asset. We allow them to mine it and store it effectively. This is an important premise for our tech and for privacy. Ultimately the relationship is between the customer and Topshop.”
As part of this round, David Reis, MD and head of technology at Goldman Sachs Merchant Banking Division in Europe, is joining the board of Qubit alongside Bruce Golden from Accel and Balderton Capital General Partner Bernard Liautaud.
“We share [Qubit’s] belief that the next era of commerce requires a flexible platform capable of delivering differentiated customer experience,” said Reis. “Qubit saw early how powerful a lever customer experience is going to be for businesses and built an infrastructure that starts with the data and allows its clients to engage with their customers based on a richer and deeper understanding of their behaviors and needs.”