#25 Applying Artificial Intelligence to the Time Optimized Sales Model
Episode #25 of Students vs. Startups has Mike Donnelly, CEO and co-founder of Seventh Sense. His company helps companies learn what the best time is to call or email potential prospects.
Our students are Mike Abel, Peter Pilawa, and Arthur Deegan. All have a Master’s Degree in Technology Management from Georgetown’s School of Continuing Studies.
This is a 24 minute podcast
Startup: Seventh Sense
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“So, in short, we’re Moneyball for email” Michael Donnelly, CEO & Co-Founder Seventh Sense
“So we have built an incredibly complex data pipeline to bring in billions of events.” Michael Donnelly, CEO & Co-Founder Seventh Sense
“We can also tie into corporate email systems, where we sit there and quietly listen to when consumers or customers are replying to those emails.” Michael Donnelly, CEO & Co-Founder Seventh Sense
“we’ve been able to see massive year over year growth of connect rates. Michael Donnelly, CEO & Co-Founder Seventh Sense
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Transcript – about a 19 minute read
John Gilroy: Welcome to Students vs. Startups: Showdown on the Potomac. My name is John Gilroy, and I’ll be your moderator today. Let’s have a big round of applause for show number 25. Let’s go! Broke the two dozen mark, great.
If you’ve heard the podcast before, you know we’re in the Washington, D.C. area. We’ve kind of appropriated a room over at Eastern Foundry, and we took over a conference room. We have students on one side of the table, we have a startup on the other. Have a little conversation in 26 minutes, walk out of here as friends. Make sense to you, Michael?
Mike Donnelly: Absolutely.
John Gilroy: Now, one side of the table, we have two students, and we actually have one graduate from the program here. The first person that’s graduated, his name is Mike Abel, and he in fact has a master’s degree in Professional Studies in Technology Management from the School of Continuing Studies at Georgetown University. Michael, how are you?
Mike Abel: Doing well, John.
John Gilroy: Let’s hear about your kids, and all that stuff, let’s hear about it. And boy, three kids, right?
Mike Abel: All is well. Three kids at home, and they’re all doing well. They’re hanging out watching the Bee Movie last I checked with them.
John Gilroy: Wow that sounds pretty exciting. And our student is Peter. He’s a wannabe, because he’s a candidate for a master’s degree; he’s reaching for that elusive brass ring that Mike already has got. Peter, a little about your background please.
Peter Pilawa: Yeah, hi. I’m working in automotive, and I really enjoy John’s class and the program, and hopefully I will be soon joining the alumni group here. So, excited to be here.
John Gilroy: Really really good. And rounding off our students, is Arthur Deegan. And Arthur is a student, and he works at Georgetown too, right Arthur?
Arthur Deegan: Absolutely. I work at the Georgetown Law Library, and you know, just hoping to pay off someone for a degree sooner or later.
John Gilroy: Well these are pretty sharp students here, I don’t know if Michael’s gonna hold up to this intense questioning we have here. And our startup today, the company’s called, “Seventh Sense,” and the founder is Michael Donnelly. Michael, how are you?
Mike Donnelly: I’m doing excellent; appreciate you having me on, John.
John Gilroy: Well give us a little thumbnail sketch of your background please.
Mike Donnelly: So, graduated from Radford University with a degree in Geology, then moved to doing software development for a company called Celera Genomics, which was the company that mapped the human genome. That actually was here locally. Then I made the jump to the dark side of sales, was in enterprise tech sales for about 13 years, and finally founded Seventh Sense.
John Gilroy: Wow, wow. Interesting background. I’m sure a lot of listeners are kinda curious about this name of this company, but I’m gonna ask you a more obvious question. So what business problem do you solve?
Mike Donnelly: So, in short, we’re Moneyball for email. If you’re familiar with the movie Moneyball, that’s what we do for email. I don’t know about everybody in the room, but business professionals, as well as consumers, every day, we’re getting more email this week than we did last week, last week we got more email than the week before. So there’s just this huge tidal wave of communication coming at us, day in and day out.
And that presents a huge challenge for both marketing and sales professionals. Especially as we’re trying to do outreach to our intended audience.
John Gilroy: Great. Arthur, want to start off the questions please?
Arthur Deegan: Well so you mentioned Moneyball, are you using kinda like big data analytics to figure out what’s hitting? How does it work?
Mike Donnelly: Absolutely. So we have built an incredibly complex data pipeline to bring in billions of events. So we have strategic partnerships with companies such as HubSpot and Marketo. And we connect into those systems, we pull in the events that are generated through those marketing automation systems. We can also tie into corporate email systems, where we sit there and quietly listen to when consumers or customers are replying to those emails.
And then we build a profile on each individual contact, and then we display that information in different ways, and we provide predictive analytic tools, so that the companies that are working with us can be more successful in their outreach.
John Gilroy: Peter.
Peter Pilawa: So, tell me Mike, what was sort of the driving moment for you to found your company? What was sort of the moment that, “I have to do something.”
Mike Donnelly: Yeah, so great question. One of the things that I recognized, maybe about five years ago, was I was spending a tremendous amount of mental energy thinking about, “Hey, if I want to reach,” and I’ll use some real names here, Dave Sheedy at comScore, who was a big customer of mine, I knew intuitively that he would respond to me between nine and 11 in the morning. If I sent him an email after 11 o’clock, he would never respond to that email.
Whereas Kyle Knack at National Geographic, I knew that he would intuitively answer my phone calls between five and 6 o’clock at night. And one day it just dawned on me. “Why am I thinking about this when it’s all just sitting there in the underlying data?”
And so, we went off and we built a prototype to see if we could illuminate people’s patterns of behavior, or communication habits. And, sure enough, after we started analyzing that data we were able to really see the results.
John Gilroy: Wow. Michael.
Mike Abel: So if I get this and I understand what you’re doing, you create the ideal situation to email someone, and the ideal time, place, information that you want to convey, so that you’re gonna get, what? The highest response rate? Or what are you trying to garner from this targeted communication?
Mike Donnelly: Yeah, so today it’s all about increasing response rates. We also do have a very large local customer called Carahsoft, they’re a multi-billion dollar company, where we analyze all of their phone data as well, and we can actually predict when their customers or prospects will answer their phone.
So there’s a lot of different applications or use cases with the technology.
John Gilroy: Michael, I gotta ask, the name of the company. Why Seventh Sense? Second sense, twelfth sense, why seven?
Mike Donnelly: It was the name available.
John Gilroy: We’ve heard this before on this podcast, haven’t we?
Mike Donnelly: We originally incorporated under “Telepath Data, Incorporated.”
John Gilroy: Telepath, woo, I don’t want that.
Mike Donnelly: But then we had two people come to us, literally in the same week, and say “It sounds like a phone company,” so we quickly rebranded.
John Gilroy: Yeah, yeah. I have a friend who has a company called “Letromec,” and everyone thinks it’s a vacuum cleaner. Should’ve changed the name on that one. Peter, you got a question, please.
Peter Pilawa: Yeah I got a question for you. So what will it make it very difficult for a competitor to enter your field? I mean, what is sort of your uniqueness of your business?
Mike Donnelly: So I think, artificial intelligence and big data is still very, very much in its infancy. And building those pipelines is incredibly complex. Again, not to say that somebody can’t do it. I think any idea that’s out there, somebody can try and recreate, it’s all about the execution of the idea.
And we’ve done a pretty good job of selecting our partners, and we’re trying to build, really a cornerstone in the market.
John Gilroy: So, Arthur, would you say this is a time-optimized sales model? Is that a good summary of what he’s doing here?
Arthur Deegan: I wouldn’t say time-optimized, but I would definitely say data-driven. What I really want to know is kinda, how do you find funding for this?
Mike Donnelly: So today it’s been self-funded. We did a small friends and family round upfront, but it’s been self-funded. And our goal is not to go after investment capital, whether that’s through private equity or your traditional VCs.
We just feel that, right now, it’s just far too disruptive for us to focus on the business. And we’re already hitting … The past few months we’ve been profitable as a company, and that’s the way that we want to grow. I’m happy to dive more into the background of that as well, because we … That’s not the way that we initially envisioned starting the company.
Mike Abel: Profitability is great, that’s awesome. So, how long have you been in business?
Mike Donnelly: So we started the company about three and a half years ago. Both my co-founder and I went full-time about, 28 months ago? And the first year and a half of that was very heavy research and development and a lot of pivoting and figuring out what works, what doesn’t work, different ways to display the data, different ways of using the data. So we’ve finally latched onto a market and a use case that seems to really have some steam.
Mike Abel: What is it that you brought to the table that really uniquely puts you in a position to make this successful after three years?
Mike Donnelly: So it was, I think the pain that I was feeling as a professional salesperson. My numbers … I had responsibility for millions of dollars of yearly generated revenue. And if I couldn’t reach prospective or even existing customers, there was no possible way. And, in addition to that, even if I got a response a week later from an email, that could potentially hurt my revenue goals.
Mike Abel: So is a lot of the algorithm and the logic that’s built into that based on your experience?
Mike Donnelly: At first, it was. And then that … The algorithms have actually evolved and gotten much more intelligent in the way that we build those profiles.
John Gilroy: Peter, this sounds like artificial intelligence, or machine learning, or what’s the phrase of the day that describes this? I don’t know how to describe this.
Peter Pilawa: You can add big data to it in too, you’ve got a perfect mix here. So, that brings me sort of to that question. Where is Seventh Sense in five years from today?
Mike Donnelly: The goal of the company is to just continually evolve and grow. While I don’t like to talk about potential, “Are we gonna get acquired, are we gonna IPO,” things like that, a lot of that is just far too much out of our control.
So I’ll control the things that I can today, which are grow the business, make sure customers are incredibly happy, and if those customers are happy, we live in a world today where it’s not word of mouth it’s “world of mouth,” and we’ve now started capturing customers all over the world. So everywhere from … We have customers in Australia, Germany, the U.K., South Africa, so we’re starting to really become a, really a global company.
John Gilroy: We’ve had other companies on here whose target mark was Washington, D.C., and after three or four years, all the customers are outside of Washington, D.C. And one thing all the customers want to know is pricing information, I think.
Mike Abel: Absolutely. So, what does it take to actually put a price model together for this? And what is that like in terms of customers, how do you bill it, and how have you been able to grow it over the course of the first three years?
Mike Donnelly: So we’re a SaaS platform. We offer it as a monthly subscription, and those subscription rates, you can start for an individual sales rep as cheap as ten dollars a month, and then it expands to thousands and thousands and thousands of dollars a month.
Mike Abel: And then is it strictly the SaaS model upfront what you do, or do you have any incentives to … What type of metrics do you have that would show that you are growing the business, and show that you are providing a benefit to your customers?
Mike Donnelly: So, we look at a number of things. On the marketing side, we do a lot of A/B testing with customers to show the actual impact that the system is having for them.
And then on the sales side, it is a lot of … Unfortunately, anecdotal, more so. But for organizations as large as one of our largest customers, we’ve been able to see massive year over year growth of connect rates. Whereas, the previous four years before they implemented our system, they were seeing declining connect rates. And then they implemented Seventh Sense, and the next thing you know, it started going the other way.
John Gilroy: Now, Arthur, this sounds like a great testimonial here, I mean that makes all sense to me, doesn’t it?
Arthur Deegan: Yeah and so how are you getting new clients? Are you using this product to kind of foster …
John Gilroy: Good question, never thought of that.
Mike Donnelly: Yeah, we definitely eat our own dog food. I don’t really send an email without looking at, “Hey what’s the most optimal time to reach this person?” Even if I only have one data point on them. Again, Moneyball, it increases my probability of getting a response if I send it even when I had success before. And I’m not having to spend my mental energy on that.
So back to your original question of, “How are we generating new clients?” It’s numerous ways. So, as I mentioned earlier on, we have strategic partnerships with HubSpot and Marketo. I would say our relationship with HubSpot is far, far deeper and wider, because our integration there is just much more powerful. The fact that we can integrate, not only on their marketing side but also on their CRM side, which, they’re making tremendous investments in. And HubSpot pushes us leads, so a customer may come to them and say “Hey we’ve got this problem,” and HubSpot says, “You need to call Seventh Sense.” That’s one way.
In the marketing world, there’s also a lot of these marketing agencies that exist. In fact, I think you had one on the show a few weeks ago. And they have numerous clients that they work with, and so we’ve built out an agency partner program, where those agencies can come to us, not only utilize our technology to deliver value to their existing customers which makes them stickier, but we’ve also developed some services, some add-on services that they can deliver to their customers, to increase their retainer.
John Gilroy: Mike, there’s a phrase you used, I just want to make sure all the listeners know. It’s CRM; perhaps you could define that for our listeners.
Mike Donnelly: Customer Relationship Management, there’s a couple big players in the market. Obviously the biggest of those would be Salesforce. And HubSpot is making a huge push into that market right now.
John Gilroy: And the big elephant in the room of course is Microsoft, and do you integrate with Microsoft as well?
Mike Donnelly: So we don’t do any specific integration with Microsoft CRM. We do integrate with the email platforms of Microsoft Office 365-
John Gilroy: And with Gmail I assume, yeah.
Mike Donnelly: So we have connectors for Microsoft Office 365, Microsoft Exchange, Gmail, which is now called “Google G Suite,” is what it is. And then HubSpot and Marketo. And we are looking at expanding some of those … Expanding the number of integrations that we have.
John Gilroy: Peter, you think it’s a good fit for a big company or a smaller company? Where I think this is a good fit?
Peter Pilawa: Well, I think this could be a good fit for a mid-size company to begin with. Could eventually expand to a large-scale company. Which brings me to a question in terms of … Because we’re students here, what kind of talent do you look for, for your business? What are the skills you’re looking for?
Mike Donnelly: So, I can take that even back to … I ran a pretty large team at EMC after Isilon got acquired, then they moved me into a leadership position. I look for, one of the biggest things that I look for, personally, is the adaptability to learn. Does the person want to learn? I truly believe if somebody is curious, if they have a very curious mindset, they can accomplish a tremendous amount in business.
That was my career path. I was curious about software development, so I self-taught myself to be a software developer. I was curious about sales, to see if I could actually do that, and had a very successful sales career. Then I was curious about, “Can I build a business?” I’m still not so sure if that’s where this is gonna end up, but I think curiosity is probably the number one trait that I look for when I’m either interviewing folks or talking to people.
John Gilroy: When I go to Twitter and type in “Seventh Sense,” I see is the Twitter handle is, “@knowingwhen.” That’s your Twitter handle, huh?
Mike Donnelly: Yep.
John Gilroy: That’s kind of a telltale sign there, isn’t it? So Mike, we got a multi-skilled, a player right here, don’t we?
Mike Abel: We have a lot of talent that I see across the table, yes, absolutely. And because of that. I’m gonna give you a quick pop quiz, and I’m curious about your answer on this.
John Gilroy: They learned something in the classroom.
Mike Abel: So, it’s all about knowing when to send an email. So, I’m a 33 year old, father of three, technology manager in the D.C. metro area. When is the ideal time to send me an email?
Mike Donnelly: So it all depends on the individual. And that’s really our mindset, is we want to get out of this mindset of persona-based selling or persona-based marketing, and move into true personalization. In the short-term, it’s really about knowing when. There’s some things that we’re working on that look at frequency, and we’ve actually started developing this for a couple of our clients.
For example, I go to Nordstrom.com, I buy a shirt for the first time, I give Nordstrom my email address. Nordstrom then sends me an email every other day about a sale. I do not need an email from Nordstrom every other day. So what happens is, I’m too lazy to unsubscribe, which causes deliverability issues for Nordstrom because Google and Microsoft are all looking at, “Hey are people engaging in these emails?” And if not, that’s how they go into the spam folder.
So what we’re doing is, we’re looking at, “At what frequency is a good time to send you email?” So, if Nordstrom changed their tactic and started sending me an email once a month, they have a much higher likelihood of me going, “Whoa, I really like the shirt I got from Nordstrom the last time. Let me go see what’s on sale right now.”
And so, really again, looking at that on a personal basis, because there are people that will read Nordstrom’s email every other day. And just because they’re an IT technology manager that has three kids, you’re gonna be different than the IT technology manager that works next door that also has three kids.
Mike Abel: So I expect you have multiple data points you’re looking for. You said you could make a prediction based on at least one. So what type of data points are you looking to really put together that personalization?
Mike Donnelly: So today, our system looks at … Out of marketing automation systems, we look at “open” data. Which is when you open an email, it actually fires a request to the marketing automation system to download a transparent picture, which you’re probably not aware of, but that’s exactly the way that it works. And then that’s how they can tell that you opened that email. Then when you click on a link in an email, that link it directly associated with you; it’s a specific link that is … That has your fingerprints on it. And so we look at that data.
Then we also look at the type of conversion that you’ve had. Whether or not that’s you made a purchase, or you signed up for a webinar, or something along those lines.
And then on the email side, so your corporate email system, we look at the time of your reply. And all of that gets bunched together, scored differently, scored differently depending on how it happened, whether or not it happened on a desktop, a mobile device, and then we build … That’s essentially what goes into our algorithms to build a profile on an individual.
John Gilroy: Now, Arthur, wait a minute here. You were in the classroom a couple months back, and your instructor said, “Personas are the way to go.” We have a startup right here that does not use personas. What’s with this guy in the classroom? He must not know anything, huh?
Arthur Deegan: I mean, it makes … You’re in a optimization business, where you’re trying to get data for very specific things, so why would you … When your solution is to try to address a single person, why wouldn’t you also try to address a single person when you’re looking for business?
Mike Donnelly: Correct. So the way those market automation systems work is, think of them as putting a tracking cookie in every single email that goes out, whether it goes to five thousand or five million people.
Mike Abel: So let’s talk for a second about Eastern Foundry. So, why did you choose them as an incubator and how have they done in terms of continuing to help you grow this business?
John Gilroy: Well, he didn’t. I met Mike at an event six months ago, I thought he’d be a great guest. In fact, I was showing him what Eastern Foundry’s all about.
So what do you think of Eastern Foundry? Good place, bad place, have you heard about it before?
Mike Donnelly: Oh, it looks to be a fantastic, exciting … You know lots of things going on, I mean, the D.C. market … It’s invigorating to see how many startups are really starting to come to fruition. John knows our incubator space, which is, we work out of Carahsoft’s office. So their CEO has been a huge supporter of ours and gives us a lot of great access.
John Gilroy: And the story from Carahsoft is pretty obvious. Over a billion dollars increase in sales last year, and some people are pointing right at this young man right here.
Peter, question for us please.
Peter Pilawa: Yeah, so if I want to fund my own company, I might have that ambition, what advice would you give me, having learned over the last three plus years?
Mike Donnelly: So the VCs will tell you that you need to quit your job in order for them to fund you. I think that was an early, that was … You get lots of advice from lots of different people. I don’t think that’s the case at all. We were working incredibly hard to … Nights and weekends, we both had full-time jobs. It’s not sustainable forever, but if you want to fund your own company, don’t be afraid of doing that. And really just diving in. It was late nights, early mornings, weekends, to really get to that stage, and that would be … Again, if you’re gonna go the route of bootstrap and really build your own company because, traction takes a long time.
John Gilroy: You know Michael we brought in speakers in the classroom for these youngsters here. And one guy said, don’t be deceived by going for the IPO, that could be the death knell for you, that can just drive you crazy. What would you like, to start your own company, go to IPO, or have it privately held? How bout you?
Mike Abel: Starting a company is I think everybody’s dream at some point or another. It makes a lot of sense, but it’s really impressive to see people like yourself who’ve made that leap, because there is a lot of security that exists in getting your day-to-day paycheck. And then having the opportunity to go out on your own and then say “Hey, yep. This is enough of a commitment that I’m gonna go do it,” that’s impressive.
So you said that you did do both for a while. You opted to work your full-time job and then eventually you decided to go this full-time. What was that pivot point? Why did you opt to do that? Was it strictly financial, was it just not being able to do both entirely?
Mike Donnelly: There was a couple of interesting events, so when we were early on we wanted to go raise capital. And, I think the market, the startup market tells you that’s what you have to do. And so we listened to the market. We just, we didn’t know any better. This was our first time around.
And so as part of that, we decided, okay, if we want to raise capital we have to quit our jobs and focus on this thing full-time. And that’s what we … Again, that’s what we did.
John Gilroy: Michael, we’re running out of time here. If people are listening to this podcast and want to get more information about your company, what website should they visit?
Mike Donnelly: They can visit www.TheSeventhSense.com, all spelled out. Or, feel free to send me an email directly at Mike@TheSeventhSense.com.
John Gilroy: Yeah and it’s a word. S-E-V-E-N-T-H, not the numeral, right?
Mike Donnelly: Correct, yep.
John Gilroy: Good good good good. Well, running out of time here. I’d like to thank our sponsor, The Radiant Group. If you are interested in getting involved in geospatial projects, contact The Radiant Group.
We are hosted by the Eastern Foundry, a community of government contractors who are bringing innovative solutions to the government marketplace. For more information, go to Eastern-Foundry.com.
If you would like to participate as a student or a startup, contact me: JohnGilroy@TheOakmontGroupLLC.com. And thanks for listening to Students vs. Startups: Showdown on the Potomac.