How an under-30 startup CEO is using big data to help Fortune 500 companies turn profits.
By Ben Nye (Arkansas)
Interview by Spencer Montgomery (South Florida)
AS OF OCTOBER, 2014, DataRank had been in its new office in Fayetteville, Ark., for a month. The office is modestly furnished, and has few flourishes and closed doors. Casually dressed workers input complex-looking code sequences into their desktops while seated at centrally located tables. There are no cubicles to be found.
The DataRank logo — a perky blue whale — occupies a prominent place in the office and offers a possible metaphorical interpretation to the company’s business model. Like a whale, DataRank swims comfortably through a sea of social media data and reemerges from the depths with useful analysis on consumer behavior. This unique business model driven by sophisticated algorithms has given the company a competitive advantage and has Fortune 500 clients lining up to pay for access.
Co-founder and CEO, 27-year-old Ryan Frazier (Arkansas), is perfectly comfortable in his role as a technology startup executive. Frazier’s low-key demeanor gives way to a keen entrepreneurial acumen that has caught the eye of investors and customers alike. Frazier and his young company have also gained attention from media outlets that cover startup news such as TechCrunch, Forbes, and Mashable.
Like many entrepreneurs seeking to keep costs down, Frazier has been a jack of all trades to ensure the success of his young startup. When the company moved into its first office in 2013, Frazier and his team moved all of the furniture themselves. “These tables,” indicates Frazier seated at a long, wooden table “are incredibly heavy as you can imagine.” With its most recent move, DataRank paid for movers.
It’s the second office in less than a year for the startup founded in October 2011 — the third, if counting the large house that the company’s founders lived in together. “When dirty dishes are slowing down business development or creating feuds within your coworkers, that’s not an ideal situation,” Frazier recalled.
The new office came towards the end of what proved a banner year for the three-year-old startup. In February 2014, DataRank received $1.4 million in capital from a combination of investment firms that specialize in technology startups. What’s more, DataRank doubled the employees on its payroll in 2014 while surpassing its sales goals every month.
AT ITS HEART, DataRank is a technology company. Nowhere is this more evident than the company’s leveraging social media data for its customers. Using its algorithms, DataRank reviews large swaths of information and then sorts and ranks it based on relevance to specific products or brands – a process that Frazier compares to operating a search engine such as Google. “At the simplest level it’s a tool for companies to learn about their customers,” says Frazier.
While DataRank isn’t unique in providing customer insights, its sources and methodology have distinct advantages. DataRank has a much broader scope and provides more timely information than traditional customer insight methodologies such as focus groups and surveys. Unlike focus groups and surveys, DataRank is not limited to the responses of a preselected group nor to time constraints.
Instead, DataRank gathers information from online conversations as they occur on Twitter, Facebook, and other social platforms and then provides an ongoing, real-time survey. The potential data source is also growing. A July 2014, article in the Wall Street Journal estimated that there are 1.32 billion monthly Facebook users and 271 million Twitter users. In essence, there is a global conversation about products and brands for those with access.
Along with the ever growing sources for what they call “social listening,” DataRank is in ideal position to take advantage of the surprisingly rich business climate of its home in Northwest Arkansas.
Consisting of four cities: Fayetteville, Springdale, Rogers, and Bentonville, Northwest Arkansas is home to several large, well-known companies. Wal-Mart, the world’s largest retailer, calls Bentonville home. Tyson Foods and JB Hunt trucking – fellow Fortune 500 companies – are in neighboring Springdale. Benton County, the home of Wal-Mart, has seen its population grow from 97,000 in 1990 to over 221,000 in 2010.
Spread across the region are over 1,600 consumer goods companies attempting to sell their products in Wal-Mart. Known for its efficient supply chain, Wal-Mart has a reputation for being quick to change the products carried on its sales floor. DataRank’s ability to show how customers react to brands and products on social media is a tremendous boon for suppliers wanting shelf space in the world’s largest retailer. This is just what DataRank has done with several Fortune 500 clients that carry products in Wal-Mart.
While DataRank has seen great success through its three year history in Northwest Arkansas, this is hardly the norm for most startups, despite their perception as overnight success stories. According to a recent report in The Wall Street Journal, an estimated three out of four startups don’t return a dime to their investors.
On their own, innovative ideas don’t make startups successful. “Cash is king in startups and they have managed exceedingly well,” explains University of Arkansas entrepreneurship instructor Jeff Amerine. “The DataRank team is innovative, frugal, and agile. The founders have been very, very capital efficient.” Making a startup successful also takes lots of hard work, the kind that caught the eye of DataRank board of director’s member and fellow Sigma Nu alumnus Brian Henley (Arkansas). “They have a culture there of a lot of hard working young people,” said Henley.
DESPITE DATARANK’S home in Fayetteville, the company embodies much of the fast-moving, startup culture that has emerged out of Silicon Valley. It’s easy to compare DataRank’s story to HBO’s new show Silicon Valley, which features a young entrepreneur with a revolutionary and highly sought after computer algorithm. The comparison isn’t lost on Frazier. “The main character [in Silicon Valley] hyperventilates a lot and gets really worried about these decisions that he has to make,” says Frazier relating his own experience to the show. “Inevitably, whenever he finally gets over the hump there’s some bigger challenge that he has to face.”
The Silicon Valley connection goes much deeper than similarities to the HBO show. In 2013, DataRank participated in Silicon Valley’s prestigious Y Combinator program, what The New York Times has called “a sleep away camp for startup companies.” The program hosts two groups of startup entrepreneurs per year while providing mentorship and an initial investment of $120,000 for each selected startup. Previous Y Combinator alumni include prominent Internet and technology companies such as Dropbox, Airbnb, and Reddit.
Frazier and his team faced stiff competition for a slot at Y Combinator before the program ever began. In 2011, Y Combinator’s founder Paul Graham listed the acceptance rate for its startup program as three percent. The program immediately preceding DataRank in the spring of 2013 had an acceptance rate of only one percent.
“Y Combinator was an incredible experience for us,” said Frazier. “To have the partners of Y Combinator believe in us and what we were doing was great validation that the work we were doing might be important.”
As the first Arkansas company to participate in Y Combinator, DataRank has brought some of the Silicon Valley culture back to their home state. Like other Silicon mainstays, DataRank has its own slogan; “Best idea wins,” says Frazier. It’s not quite as disruptive as Mark Zuckerberg’s “Move fast, break things,” or repeated as often as the Valley catchphrase, “fail fast, fail often,” but it does a good job connecting DataRank back to its Bay-area roots.
DataRank also favors the non-hierarchical office structure that allows for a relaxed culture. Its “flat” office culture led to DataRank’s open floor layout designed to allow team members to easily share ideas and work together on projects.
“There’s a lot more freedom and flexibility in the startup environment, which is the way that I like to work,” adds Frazier. Of course, the increased freedom and lack of traditional office hierarchy comes with more responsibility. “There’s a lot of trust in them to manage their own time effectively,” says Frazier discussing his fellow DataRank teammates. “We don’t say, ‘these are your tasks, go complete them.’ For some people that doesn’t work well.”
The entrepreneurial journey that Frazier embarked upon when founding DataRank has been multifaceted and has included valuable lessons. However, Frazier’s experience as an entrepreneur predates DataRank’s founding in 2011. His entrepreneurial prowess became evident while still an undergraduate at the University of Arkansas.
In 2009, Frazier and a team of classmates were finalists in the Arkansas Governor’s Cup, a statewide competition for business students. The success was an indicator of more to come, and through entrepreneurial courses and holding leadership positions in the marketing association, Frazier continued to hone his skills which caught the eye of instructor and future DataRank investor Jeff Amerine. “When I met Ryan in 2009 as a junior at the [University of Arkansas] he was better prepared for life and running a venture than most people with 20 years more experience.”
Despite his talents for entrepreneurship, Frazier did not immediately start DataRank upon graduation. Instead, Frazier took a position with an office supply company as director of marketing and sales. In his downtime, Frazier began developing the ideas and concepts that would become DataRank. “When I was working for another company all the types of things I do now were more like hobbies outside of work.” What was avocation became vocation in 2011 when, after reconnecting with former classmates Chuong Nguyen and Kenny Cason, the trio moved to Fayetteville founding DataRank.
Like any entrepreneur, Frazier faces many challenges, especially staying available at all hours. “When you own your own company, there’s never a time when you’re not potentially working. It doesn’t necessarily get easier over time. As you get more familiar with what you’re doing, the stakes get higher,” Frazier says. Unlike more conventional day jobs, Frazier faces pressure that only comes when answering to investors and high-profile clients.
Amidst the pressure of being CEO and an entrepreneur, Frazier has searched for ways to find balance. “You can’t be the kind of person who says ‘I need to have my work done every day’ because there are days when you could stay until 2 a.m. and you’re not going to be done. So you have to be able to say ‘I did a great job today and these are the things that I accomplished. Tomorrow I’m going to get back at it again.’ Once we kept growing the company, we had to start putting up some of those boundaries so that you could unplug and find some time for yourself.”
Entrepreneurial experiences like Frazier’s may become increasingly more common for the current generation entering the workforce. Brian Henley, who is a software company executive and serial entrepreneur, thinks the rise of startups comes from changes in corporate America. “Corporations have changed to where they don’t really offer lifetime employment anymore; they don’t offer pension plans. That’s led people to not expect to work for one company their entire lives.”
“Corporations have changed to where they don’t really offer lifetime employment anymore.”
The change in work environment has also created opportunities that were unavailable to previous generations entering the workforce. Unlike previous generations, it’s now much easier to raise the money needed to start a company, said Henley. “You used to have to raise millions of dollars to test an idea and most young people didn’t have access to that kind of money. Now it takes tens or hundreds of thousands of dollars.”
Millennials are also in a unique position to take advantage of the opportunities found in social media and mobile technology. Henley notes that as early adopters, “they have the most ideas about how to leverage that technology with new products and new businesses.”
SIGMA NU has played an important role in Frazier’s development as a leader and in the development of his company. DataRank employs Brother Corben Young (Arkansas), a 2013 University of Arkansas graduate, and along with Brian Henley, has one other Sigma Nu sitting on the company’s board of advisors.
Much of Frazier’s leadership style can be traced back to his experience in Sigma Nu where he served as the Recruitment Chairman for Gamma Upsilon. “It’s interesting because a lot of the learning around leadership actually did come from Sigma Nu.” Frazier also credits several of the Gamma Upsilon chapter leaders he interacted with as inspirations and role models. “[It was] really learning from them and determining ‘how are they leading?’”
Frazier also found that his collegiate Sigma Nu experience provided a stronger bond and more motivated culture than what he saw in other organizations. “The unique and energizing thing about Sigma Nu was that the majority of everyone there really had a lot of drive. There were a lot of talented and intelligent individuals.”
It was his involvement with the Fraternity and other extracurricular activity at the University that Frazier found to be the most productive in his development as an entrepreneur. “Get involved in the leadership of the Fraternity or in other organizations that are focused on the things that you’re passionate about. Any kind of experience you can get leading these groups of 20-100 people is really valuable,” said Frazier providing advice to other would-be entrepreneurs.
For Frazier, much of entrepreneurship ties back to ethical leadership, especially fulfilling his word to clients, investors, and coworkers. “When you say you’re going to do something, you do it. You don’t leave someone by the wayside or waiting.”
Undoubtedly, Frazier’s commitment to ethical leadership through entrepreneurship will continue to take him far – a view that is shared by Jeff Amerine, the Arkansas entrepreneurship instructor. “Ryan is a hitter and DataRank is only the first of many great things he will do.”