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It’s no secret that LA's tech scene is most known for its consumer-facing and e-commerce companies. Thanks to JustFab and Snapchat, LA companies in these verticals gained national attention and raised $500 million in 2013 alone (over half of the total amount raised in LA last year).
But Retention Science, a two-year-old retention marketing company, has set out make a name for LA's enterprise-facing software companies too by helping their e-commerce clients retain and engage customers with its platform.
“LA isn’t known for doing hardcore tech,” CEO and co-founder Jerry Jao said. “But we have a very different DNA.”
Indeed they do. Just look at Retention Science's team for proof: engineers and data scientists make up 75 percent of the 20-person team. Jao said that for a good part of the day, the data scientists are “looking at a black screen with numbers” in order to improve the predictive algorithm that makes Retention Science go ‘round.
How Big is the data behind it all?
The algorithm ensures that Retention Science’s clients (which include The Honest Company, Dollar Shave Club, CafePress and undisclosed “traditional big box retailers”) can automatically re-engage customers to maximize customer lifetime value.
“In a way, we are only as good as our predictions are,” Jao said. “So there’s an element of trying to hone in on our accuracy. Just like Google is constantly adjusting its search algorithm, we do that in our own fashion. It requires a lot of smart people really thinking about it, putting different weight on different data attributes. It’s about constantly honing in on predictive technology.”
As they hone, they are constantly testing as well because, believe it or not, data scientists “don’t always hit it right the first time around.” The team looks at historical data and runs testing models to compare accuracy before and after algorithm changes. In addition to testing the actual models, they also test how scalable the models are by breaking them.
“We try to break our models because we have so much data now that we need to make sure it is scalable if we work with some of the biggest companies out there," Jao said.
Right now, their clients typically have between 1 million and 10 million users in their databases and as many as 21 million. That gives Retention Science hundreds of millions of data points to deal with.
So even though Jao said he isn’t a fan of the term "Big Data," he does admit that “the amount of data we process is pretty crazy.” The huge scale of the data means that the company’s biggest cost is investing in their server, Jao said. The company raised about $2 million total in seed funding to help with that cost from angels investors such as Paige Craig, Kunal Anand and a few Ph.D. data scientists from companies like LinkedIn, PayPal and IBM.
What's next?
The high profiles of its investors are perhaps what initially gained Retention Science media coverage from Fox News LA, LA Business Journal and Fast Company. But, as the company has no deliberate marketing efforts, it’s clear that it's the company’s impressive work that is keeping the attention of locals and outsiders. Jao said Retention Science is excited to take this organic attention and use it to become a thought leader in retention marketing - and in the LA tech community in general. He said he sees Retention Science doing this over the next few years by hosting data science discussions, for example.
“In order to be a real technology company, we need to continue to evolve and we need to continue to learn,” Jao said. “In the future, I see us becoming a leader in the community in terms of driving some of the disruption in the technology field. I see us giving back to the LA community and hopefully lifting the bar for building strong technology here in LA.”
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