EXCLUSIVE INTERVIEW

No More Napkin Plans: Q&A With Syncplicity CEO Leonard Chung

Syncplicity, a startup online data management company, announced last October the closing of its post-seed funding round for US$2.35 million. The company offers an automated, all-in-one service for online and offline file syncing, backup and sharing.

Silicon Valley-based True Ventures led a group of private investors in compiling the funding pool. Syncplicity will use the funds to accelerate enhancements and extend functionality of its on-line service to speed up the growth of its customer base.

In what Syncplicity CEO Leonard Chung describes as a more challenging investment environment, his company was one of few early-stage startups that won the endorsement of investors. He started his company in April 2007 and then recruited two cofounders.

“Syncplicity is an example of a really good entrepreneurial founder who started out attempting to raise a much larger round because of a perception that he needed to raise that much larger round to get the attention of Sand Hill Road,” Phil Black, cofounder of True Ventures, told the E-Commerce Times. “He didn’t need a $5 million round of capital at that moment, and his characteristics were a perfect fit with the True Venture model of raising a smaller round of capital to get launched and start the process of expanding its market.”

Funding Woes

Venture capitalists invested $7.1 billion in the third quarter of 2008, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters. That reflects a 7 percent decrease compared to the second quarter. Internet-specific companies received $1.1 billion in the third quarter, a 36 percent decline in dollars over the second quarter of 2008.

“The data for Q4 will be fairly telling. We had been on a $7 billion-per-quarter investment pace as an industry, and I have to assume that those numbers will be lower. The early, early stage investments are somewhat valuation insensitive, but prices will be generally lower,” explained Black.

In this harsher investment climate, Chung steered his young company through a rough course that other startups seeking funding failed in traversing. True Ventures invests in promising entrepreneurs at the earliest stages in the highest-growth segments of the technology market. The partners at True Ventures have started more than 10 companies as founders.

“We’re very focused on the team that we invest in and felt that Leonard Chung and his cofounders have what it takes to succeed in today’s entrepreneurial market. We believe Syncplicity is best positioned to emerge as the dominant player in this space,” stated Black.

The company has the ability to integrate with Web applications and mobile devices as well as adhere to open, Web-based standards and industry standard protocols, explained Black.

Niche View

Having successfully weathered a critical storm, Chung has an unusual view of the window for fundraising that has essentially frozen shut. That freeze makes the ability to secure funding today extraordinarily difficult. This is particularly true for young tech startups like his that are looking to close their Series A round, noted Black.

The E-Commerce Times discussed with Chung his timely perspective about the state of the fundraising environment and challenges he faced.

E-Commerce Times: How does your company’s vision differ from that of others in the data management services?

Leonard Chung:

The great need for businesses is having the data you need before you know you need it. Many large companies offer this for a high price. We are the only company to offer a complete turnkey and support solution for data management through the Web. We offer an open API (application programming interface), support for many platforms and accessibility. This is our Software as a Service (SaaS) delivery model.

ECT: How does your pricing structure compare?

Chung:

Most of our competition offers traditional backup with high operational expenses. We provide a cost savings to SMB and consumers through our cost-effective online service. Most businesses pay about $30,000 for a VPN (virtual private network) solution for all of this. We are 10 times less. We are still adjusting our pricing structure for services that will be added. We are growing our customer base and are adding features.

ECT: How was your quest for funding different than you expected from previous experiences in raising capital?

Chung:

We got through the very beginning of the economic downturn. Then our venture capital source renegotiated. This is an example of the golden rule of VC financing for startups. The man who’s got the money makes the rules. The typical process used to be that to get a business appraisal and use it to come to an agreement on the term sheet. Then the startup goes to due diligence and then gets the funding. Now what is happening is the VCs are renegotiating the evaluation in the due diligence stage. The startup has nothing to fall back on, so this new process leaves the company in a lurch with Series A funding for all or get nothing.

ECT: So you had trouble raising the amount of funding you needed because of the current economic downturn?

Chung:

We computed the value of our company based on a business model plus an industry multiplier. This multiplier is based on different evaluation models depending on the industry involved. A startup with no revenue yet is forced to rely on a guesstimate of future value to get new a multiplier. The lower the multiplier, the worse the money deal. The new formula leaves less money for the start-up with more ownership of the company held by the VC funding agency.

ECT: How is this situation impacting technology start-ups?

Chung:

Another factor is that the deal volume is not uniform. The so-called VC math has gone out of alignment over the last few years. As a result, VCs are not giving out money because SMBs are not taking the deal.

ECT: So you are saying that VCs are now presenting a new attitude toward technology start-ups?

Chung:

It used to be that SMBs would come with a plan written on a napkin to a meeting with a VC agency. Now VCs are demanding more preparation. For instance, VCs want more investors. As a result, entrepreneurs are increasingly going to different sources of funding, such as angel backers. Another change is that [because of the funding crunch] companies are starting without having full capacity in place. Instead, they use a pay-as-you-go model. For instance, we started Syncplicity by renting storage and servers as we go.

ECT: What is the impact in terms of dollars and cents?

Chung:

This change in the VC funding environment is leading to different economics. It used to cost $4 million to launch a company. Now you can do it on hundreds of thousands of dollars because you don’t have to buy everything. A lot of VCs do well with their first funding round, maybe $100 million. Each partner needs $33 million to bring to the table. But for the second round of funding, SMBs expand, and this forces up the amount each partner has to kick in.

ECT: You mentioned earlier that start-ups are not getting what they need from VC funding or are rejecting the funding offer due to its high stake. What other options do start-ups have?

Chung:

I am seeing a lot of people taking initial money from angels and friends and family. VCs take a huge chunk of a company. Angels require a smaller amount of money at lower equity. Angels are moving into that spot and doing more than VCs.

ECT: So you took Syncplicity in a different funding direction?

Chung:

We took money from True Ventures in the early stages. The company makes money from management fees. The difference is that VCs tend to push for more money.

ECT: Where do you see this economic downturn going in terms of the VC funding space?

Chung:

I’m seeing entrepreneurs being more savvy about from where they take money. VCs are now only one of several funding sources. I am also seeing VCs not providing money initially but instead waiting for series B and C funding rounds.

Clarifying Round

The E-Commerce Times asked True Ventures’s Black to comment on the VC funding market. Black agreed that the angel funding developments could play a key role.

“I think the more interesting data from our standpoint is the angel market. That market will be significantly impacted. Not only are individual angels feeling poorer, there is an added concern about whether or not the angel-funded company will get that next institutional round,” he said.

For instance, True Ventures continues to invest alongside angel investors over 75 percent of the time. His company removes the financing risk in the early stage for those angel investors, he explained.

As for new hurdles that technology startups might face, Black sees none in the actual process. But that process will be elongated, he said.

The assumptions about revenue generation and customer acquisition will be more detailed and thoroughly examined. Entrepreneurs may opt to bootstrap or raise lower capital to get started. This will bypass the large institutional rounds and requirements, he concluded.

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EXCLUSIVE INTERVIEW

The Business Case for Clean Data and Governance Planning

Do you know if your company’s data is clean and well managed? Why does that matter anyway?

Without a working governance plan, you might not have a company to worry about — data-wise.

Data governance is a collection of practices and processes establishing the rules, policies, and procedures that ensure data accuracy, quality, reliability, and security. It ensures the formal management of data assets within an organization.

Everyone in business understands the need to have and use clean data. But ensuring that it is clean and usable is a big challenge, according to David Kolinek, vice president of product management at Ataccama.

That challenge is even greater when business users must rely on scarce technical resources. Often, no one person oversees data governance, or that individual lacks a complete understanding of how the data will be used and how to clean it.

This is where Ataccama comes into play. The company’s mission provides a solution that even people without technical knowledge, such as SQL skills, can use to find the data they need, evaluate its quality, understand how to fix any issues, and determine whether that data will serve their purposes.

“With Ataccama, business users don’t need to involve IT to manage, access, and clean their data,” Kolinek told TechNewsWorld.

Keeping Users in Mind

Ataccama was founded in 2007 and basically bootstrapped.

It started as a part of Adastra, a consulting company, which is still in business today. However, Ataccama’s was focused on software rather than consulting. So management spun off that operation as a product company that addresses data quality issues.

Ataccama started with a basic approach — an engine that performed basic data cleansing and transformation. But this still required an expert user because of the user-provided configuration.

“So, we added a visual presentation for the steps that enable data transformation and things like cleansing. This made it a low-code platform since the users were able to do the majority of the work just by using the application user interface. But it was still a thick-client platform,” Kolinek explained.

The current version, however, is designed with a non-technical user in mind. The software includes a thin client, a focus on automation, and an easy-to-use interface.

“But what really stands out is the user experience, which is built off the seamless integration we were able to achieve with the 13th version of our engine. It delivers robust performance that’s tuned to perfection,” he offered.

Digging Deeper Into Data Management Issues

I asked Kolinek to discuss the data governance and quality issues further. Here is our conversation.

TechNewsWorld: How does Ataccama’s concept of centralizing or consolidating data management differ from other cloud systems such as Microsoft, Salesforce, AWS, and Google Cloud?

David Kolinek: We are platform agnostic and do not target one specific technology. Microsoft and AWS have their own native solutions that work well, but only within their own infrastructure. Our portfolio is wide open so it can serve all the use cases that must be covered across any infrastructure.

Further, we have data processing capabilities that not all cloud providers possess. Metadata is useful for automated processing, generating more metadata, which in turn can be used for additional analytics.

We developed both of these technologies in-house so we can provide native integration. As a result, we can deliver a superior user experience and a whole lot of automation.

How is this concept different from the notion of standardization of data?

David Kolinek
David Kolinek
VP of Product Management,
Ataccama

Kolinek: Standardization is just one of many things we do. Usually, standardization can be easily automated, the same way we can automate cleansing or data enrichment. We also provide manual data correction when solving some issues, like a missing social security number.

We cannot generate the SSN, but we could come up with a date of birth from other information. So, standardization is not different. It is a subset of things that improve quality. But for us, it is not only about data standardization. It is about having good quality data so information can be properly leveraged.

How does Ataccama’s data management platform benefit users?

Kolinek: The user experience is really our biggest benefit, and the platform is ideal for handling multiple personas. Companies need to enable both business users and IT people when it comes to data management. That requires a solution for business and IT to collaborate.

Another enormous benefit of our platform is the strong synergy between data processing and metadata management it provides.

The majority of other data management vendors cover only one of these areas. We also use machine learning and a rules-based approach and validation/standardization, which, again, are often not both supported by other vendors.

Also, because we are technology agnostic, users can connect to many different technologies from the same platform. With edge processing, for instance, you can configure something once in Ataccama ONE, and the platform will translate it for different platforms.

Does Ataccama’s platform lock-in users the way proprietary software often does?

Kolinek: We developed all the core components of the platform ourselves. They are tightly integrated together. There has been a huge wave of acquisitions lately in this space, with big vendors buying smaller ones to fill in gaps. In some cases, you are not really buying and managing one platform, but many.

With Ataccama, you can purchase just one module, like data quality/standardization, and later expand to others, such as master data management (MDM). It all works together seamlessly. Just activate our modules as you need them. This makes it easy for customers to start small and expand when the time is right.

Why is a unified data platform so important in this process?

Kolinek: The biggest benefit of a unified platform is that companies are not looking for a point solution to solve just a single problem, like data standardization. It is all interconnected.

For instance, to standardize you must validate the quality of the data, and for that, you must first find and catalog it. If you have an issue, even though it may look like a discrete problem, it more than likely involves many other aspects of data management.

The beauty of a unified platform is that in most use cases, you have one solution with native integration, and you can start using other modules.

What role do AI and ML play today in data governance, data quality, and master data management? How is it changing the process?

Kolinek: Machine learning enables customers to be more proactive. Previously, you would identify and report an issue. Someone would have to investigate what went awry and see if there was something wrong with the data. Then you would create a rule for data quality to prevent a recurrence. That is all reactive and is based on something breaking down, being found, reported, and then fixed.

Again, ML lets you be proactive. You give it training data instead of rules. The platform then detects differences in patterns and identifies anomalies to alert you before you even realized there was an issue. This is not possible with a rules-based approach, and it is much easier to scale if you have huge amounts of data sources. The more data you have, the better the training and its accuracy will be.

Other than cost savings, what benefits can enterprises gain through consolidating their data repositories? For instance, does it improve security, CX outcomes, etc.?

Kolinek: It does improve security and mitigates potential future leaks. For example, we had customers who were storing data that no one was using. In many cases, they did not even know the data existed! Now, they are not only unifying their technology stack, but they can also see all the stored data.

Onboarding new people onto the platform is also much easier with consolidated data. The more transparent the environment, the sooner people can use it and start gaining value.

It is not so much about saving money as it is about leveraging all your data to generate a competitive advantage and generate additional revenue. It provides data scientists with the means to build things that will advance the business.

What are the steps in adopting a data management platform?

Kolinek: Begin with the initial analysis. Focus on the biggest issues the company wants to tackle and select the platform modules to address them. Defining goals is key at this stage. What KPIs do you want to target? What level of ID do you want to achieve? These are questions you need to ask.

Next, you need a champion to advance execution and identify the main stakeholders who could drive the initiative. That requires extensive communications among different stakeholders, so it is vital to have someone focused on educating others about the benefits and helping teams onboard the system. Then comes the implementation phase where you address the key issues identified in the analysis, followed by rollout.

Finally, think about the next set of issues that need to be addressed, and if needed, enable additional modules in the platform to achieve those goals. The worst thing to do is purchase a tool and provide it, but offer no service, education, or support. This will ensure that adoption will be low. Education, support, and service are very important for the adoption phase.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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Sports Betting Platforms Gambling With Substandard CX

Online gambling is at an all-time high in accessibility and popularity. But many betting app developers are rolling the dice blindly without addressing users’ customer experience (CX) concerns.

More states in the U.S. are legalizing sports betting with legislation pending in many others. Major sports leagues such as the NFL and the PGA Tour are adding legitimacy to the organized sports betting space by securing high-profile gambling partners. Sportsbooks like FanDuel, DraftKings, BetMGM, and Caesars are expanding in concert.

With money on the line, literally, with betting apps, these companies have a heightened burden to provide customer support. That could well be a survival requirement since many of their online bettors have never previously gambled on sports, let alone placed bets via mobile apps.

Appeasing Regulators

So far, sports betting platform rollouts in new states have been relatively seamless. Yet some obvious CX issues must be addressed before watchdogs and regulators step in.

Sports betting companies need to tackle four potential stumbling blocks:

  1. The product is still new to many customers. Gambling companies need to clear up confusion on the legal methods of sports betting and drive confidence that bets will be paid out.
  2. Most sports betting companies are pushing mobile apps for daily usage and interaction, leaving a strong need for tech support to help with logins and payment issues.
  3. Geolocation issues are a major factor. If users are near bordering states where sports betting is illegal, their phones might mistake them for being in the wrong location and their bets will not go through.
  4. Seasonality. Major sporting events such as the Super Bowl, March Madness, The Masters, FIFA World Cup, and the World Series amplify betting activity. As a result, gambling companies must have robust CX infrastructures in place to handle increased seasonal demand.

One of the biggest challenges is volume projection and staffing due to the sector’s rapid growth and lack of historical data, according to Chris Crowley, chief commercial officer for CX provider Alorica. A significant and continuous increase in users is coming from existing states, as well as new states legalizing sports betting apps.

“As the user base increases there is an increase in transactions across voice, chat, and email — especially from new users and novice users of sports betting apps. The ability to develop the appropriate staffing models and to train the staff effectively is crucial to delivering an exceptional customer experience,” he told CRM Buyer.

Betting on Digital-First Stability

Another big test for the sportsbooks, noted Crowley, will be finding the bandwidth to handle peak seasons when major sporting events drive a flurry of betting activity.

To withstand scrutiny from regulators and watchdogs, these companies require trained staff who can work with customers across voice, chat, text, and email.

“Like other digital-first companies that are born highly focused on product, sports betting companies may not yet fully appreciate the need for tech support and account management,” he cautioned.

For example, most sportsbooks rely on website FAQs to support their customers. Many of the new customers are gambling on sports for the very first time.

CX is critical to handle these concerns because money is involved. Customers rightly want access to a support person when they spend money to get something in return, such as a bet to win or deposit to get a bonus or free bet.

App Speed Risky Business

Logistically, the speed of the app interface makes betting easier. But it also increases the risk of mistakes, warned Crowley. That is why it is crucial to have knowledgeable and readily-available support offerings from live agents and automated channels.

Fierce competition to develop repeat customers makes CX crucial to this emerging market. Companies such as DraftKings, Caesars, BetMGM, and others are currently spending tremendous amounts of money to rapidly grow their user bases through aggressive marketing.

“To get the necessary return on this investment, they must develop user loyalty as it is so easy for users to jump to another app. One poor service experience can turn a novice bettor off forever,” said Crowley.

Another reason CX is important is sports betting has its own community and lingo. It can be unkind to newcomers who do not have a firm understanding of betting odds and how promotions work.

“A big issue surrounds where ‘free’ does not always mean free. Having a customer service team backed by a real CX strategy gives new users a lifeline to figure out the nuts and bolts of sports betting,” he explained.

Driving Factors

Social acceptance of sports betting is now common. State governments increasingly are becoming supportive of the industry.

Additionally, with the rise of second screens, sports fans have found new online communities that share their love of the game, Crowley noted. Fans today are often on Twitter and Reddit while watching their teams play, reading and reacting to what other people have to say about the game.

This further encourages fan engagement. Online sports betting has benefited from the influence of social media and, to an extent, cord-cutting, which has evolved the way we consume sports, Crowley observed.

“As sports betting gains wider social acceptance and state legalization continues, the industry will rapidly grow. For many, sports betting has become synonymous with watching and attending sports events,” he said.

In a short period of time, this will be an ingrained part of our social norms. The number of American adults betting on sports doubled in the last year alone. It is crucial that companies in this sector invest in a robust CX operation and explore strategic partnerships with vendors that can keep customer engagement impactful, secure, and scalable, urged Crowley.

Morphing World of Rules and Regs

The regulatory environment is rapidly changing in the mobile sports betting industry and online gambling.

Overall, online sports betting platforms are progressing with new functionality at breakneck speeds due to the fast changes in state regulations and requirements. Most of the major sportsbooks and online sites are still in the process of obtaining required licenses in recently-legalized states.

The Supreme Court decision in Murphy v. NCAA gave states the ability to pass their own sports betting legislation. Some 30 states — plus D.C. — have legalized sports betting with 22 legalized for mobile and online sports betting. Twelve states have active or pre-filed legislation on the ballot for 2022.

State laws vary greatly. Regulations range from betting in onsite casinos versus mobile/online to the age of bettors. Restrictions cover the types of bets, such as collegiate sports versus pro contests. Tax rates vary by state also.

Some states allow tribal and commercial casinos. Others like Oregon, New Hampshire, and Rhode Island only allow one or the other, or a state lottery commission runs the betting.

“Like any consumer-facing industry, there are also protections around personally identifiable information,” Crowley said. “As sports betting and mobile/online wagering become more common across different state jurisdictions, the landscape will only continue to evolve.”

On Deck, Real-Time Customer Service

Online sports betting requires unambiguous fairness and transparency. The entire customer journey should be shepherded by a customer support offering that can resolve issues in real time.

The typical response time so far is 24 to 48 hours later for some betting companies, according to Crowley. This process includes accessing relevant information, placing bets, and collecting the winnings.

“The industry would be wise to establish a new CX standard, one that will give confidence in the integrity of this emerging business model,” he recommended.

Plenty of disclosures, FAQs and robust “help” systems with omnichannel functionality will become the norm in the mobile and online sports betting experience, he concluded.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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