Toronto’s Canopy Labs brings big data analytics to small, medium business — needs scale
Wojciech Gryc and Jorge Escobedo
Data mining analytics platform for medium sized businesses
One of the company’s founders is a former Rhodes scholar; the other has a Ph.D in Theoretical Physics and conducted research on string theory.
Bringing big data to small business is a huge job.
Toronto-based Canopy Labs is only a year old, but they’ve already run pilot projects on their data-mining analytics platform with a diverse group of big names, including the Toronto Argonauts, the Canadian Opera Company and deal-of-the-day website WagJag.
The early success has come fairly easily, but further expansion means increasing overhead, and if the company’s strategy for building out it’s platform isn’t directly on the mark, scalability will be handicapped by the cost of development and winning new customers.
The company’s software takes a business’ customer data — everything from emails and sales records to call centre recordings — and analyses it using custom-built algorithms to reveal how loyal and satisfied individuals are feeling. It also predicts how soon customers will return, and what they’re likely to buy next, giving businesses the ability to laser focus their marketing strategies.
Canopy Labs CEO Wojciech Gryc compares his platform to the personalized recommendations offered on websites like Amazon and Netflix. It’s a telling reference; due to the high cost and specialized skills required, this kind of large-scale data analysis has previouslyonly been available to multinational businesses.
In order to change this, Canopy Labs has built an affordable, plug-and-play solution that any customer-facing business can use by simply uploading their data to the company’s website.
Their target market includes any business with between 5,000 and 100,000 customers — they’re charged $250 to use the platform.
Gryc says his “baseline for success” is if business owners who don’t have a background in math are able to use the platform easily and see results.
Currently, the platform allows users to upload data from Excel and the popular Shopify ecommerce and MySQL database systems. But the program much less accessible for businesses using other software, and there are thousands of other programs and different versions out there.
This is a problem, but Gryc believes he has a solution.
“We envision our platform having ‘apps’ where you can obtain support for whichever business tools you use by installing our ‘app’ and then having our software automatically sync with your data,” he says.
This is easier said than done. Because the platform uses so many different types of information, it’s not simply a matter of making sure syncing apps work with accounting programs. They also have to sync with business intelligence, email and database software. Each program uses a different format to store data, and while some are built to communicate with other software, many more are not.
This means that the time needed to build an application can vary dramatically, ranging from two or three hours to three weeks.
Gryc says the effort is worthwhile, because it gets results.
“Every time we’ve seen a business move to a more personalized approach, (there’s been) a growth in revenue,” he says, adding that some clients have seen revenue grow by as much as 200 per cent after adopting Canopy Labs’ platform.
These successes haven’t gone unnoticed. In early December, the company closed a $1.5 million venture capital deal with the Business Development Bank of Canada, PayPal co-founder Peter Thiel’s Valar Ventures, and with several angel investors.
They were able to attract the investment largely because the market for business analytics software is growing rapidly, reaching an estimated value of $1.875 billion US in 2011 — an increase of 10 per cent from the year before — according to business intelligence firm IDC.
But that doesn’t help the scalability issue, and the problem goes beyond building apps for the multitude of available business software — the company can’t simply code a program once and walk away. Updates to business programs can change the way they store data, meaning Canopy Labs’ apps will also need to be updated as new versions of the various accounting, database and email software suites it supports roll out.
In other words, finding more customers means supporting more programs, which requires additional staff for the increased coding load. Overhead will increase with sales growth — a death sentence for companies attempting to scale up.
So, to combat this problem, Canopy Labs is conducting market research to find out which business programs are most commonly used. One thing they’re already finding out is that despite the multitude of options, most businesses are using the same programs. This means a little work could go a long way when it comes to making the program accessible to as many
clients as possible. They’re also tapping their VC funding to hire additional staff to meet increased demand.
“There’s a growing recognition, whether it’s by companies or organizations or even, to an extent, individuals, that they can add little bit of scientific rigor to how they make decisions,” says Jacomo Cormo, Canada research chair in information and performance management at the University of Ottawa.
He adds that the biggest roadblock for businesses wanting to put data mining to work is finding expertise, because the majority of people with the skills to do this kind of modeling are already working at large companies like Google and LinkedIn.
That gives Canopy Labs and its open-box software a competitive advantage. Gryc says there’s at least 90,000 businesses in their target market worldwide — medium-sized enterprises with a few thousand customers and low price points. For these companies, being able to personalize messaging based on data is particularly beneficial.
Now Gryc’s challenge is reaching out to them, and making sure his software is compatible with their systems when he does.
“We’ve picked our problem to solve,” said Gryc. “We’ve tested it, we’ve validated it, so we’re going to run with it.”