Building a Cool Technology Company from Chicago: Narrative Science CEO Stuart Frankel (Part 7)

Sramana Mitra: Fascinating. Other than the 50% of revenue coming from financial services, are there any other dominant sectors? Obviously, media continues to be one?

Stuart Frankel: We continue to do a little bit in media. Our business with the US intelligence community is a fair chunk of our business today. We also have customers in marketing services. We work with advertising agencies to automate the preparation of campaign performance reports. You’ve experience in that area, so you’ll understand this. Account managers have all of this data associated with advertising campaigns, and they spend a lot of their time analyzing that data and preparing reports for their customers. Quill can do that for them.

We’ve a very large medical billing customer that works with small to medium-sized medical offices. They do the billing and collections for these medical offices. They have a proprietary system that tracks all of this information. They give their customers access to the system and so the customers can log in and get a lot of information. This is often used by doctors or people who work in these organizations who have lots to do and don’t want to spend their time trying to figure out what’s going on. They just want somebody to tell them what’s going on. We’ve now embedded a narrative report that gets generated dynamically that explains the information such as the billings and collections aspects of their medical practice. Data is still there. The charts are still there. For those people who want that and have the time and skills to dig in and really understand that, they can do that. For those who want to, very quickly, understand in a way that’s easy to digest, there’s a written report for them. We’re seeing more and more integration of Quill with existing recording and visualization platforms. It’s a very complementary technology to those existing technologies.

Sramana Mitra: Where in the chronology of all this did you switch from your validation segment to the more lucrative monetization? I’d say media is your validation segment. Then finance is your major monetization segment. When did you make that shift?

Stuart Frankel: It was something that evolved over time, but I would say at the beginning of 2013 was really when we formally moved the business to enterprise software business. As opposed to being in the media content creation world, we moved over to business intelligence, Big Data, and enterprise software. That period was also where we started to bring in different types of experienced employees on the sales side and on the professional services side.

Sramana Mitra: What has been your financing strategy?

Stuart Frankel: We’re venture-backed. Right when we started, we did a seed round that was mostly individuals and a couple of smaller angels including myself and our COO and people that I had previously worked with. We did our first institutional round in January of 2011. Battery Ventures was the investor in that round. We’ve done a couple of additional rounds of funding since then. We did a round in 2013. It was led by a firm here in Chicago called Jump Capital and another large investor came in at the same time. It’s called Sapphire Ventures. They recently changed their name but they’re the SAP venture fund. Just at the end of 2014, we did another round of financing led by USAA—the insurance and financial services firm that serves members of the US military and their families. Finally, we took a strategic investment from In-Q-Tel in 2013 as well.

Sramana Mitra: Whatever you feel comfortable sharing, how is the revenue tracking? What kind of growth have you seen? Obviously, you’ve brought to market something that is somewhat unique.

Stuart Frankel: The revenue story is good. I can tell you that the business continues to double year-over-year. It’s done that for the last few years. We expect that growth to continue, if not, accelerate. We’re primarily a SaaS business although we have some traditional on-premise deployments. Our bookings have been growing quarter-over-quarter for the last many quarters. As I mentioned before, we’re seeing significantly increasing demand for what we do. We hit the timing of this business pretty well. We’ve got the technology to the point where we can work with so many different types of organizations. That’s matching up with the demand we’re starting to see. I would say, from a commercial standpoint, the business is performing quite well.

Sramana Mitra: I love the story. Thank you so much for your time.

This segment is part 7 in the series : Building a Cool Technology Company from Chicago: Narrative Science CEO Stuart Frankel
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