What happens when a trained philosopher and former banker founds an analytics start-up in Provo, Utah?
If that seems a strange question, it is perhaps nothing compared to the sort that InsideSales deals with every day. Formed in 2004, the company recently attracted attention in the US by figuring out that the moon’s orbit correlated with the success of company’s sales departments.
"Ultimately data tells you an answer and you don’t know really why," says Dave Elkington, chief executive and founder of the Utahn software company. "Our hypothesis is when the moon is further away, there’s less gravity and that lowers the atmospheric pressure and you feel different."
He may not be able to explain his findings, but the answers alone have caught the attention of Silicon Valley. Having claimed $200m (£134m) in funding over the last few years and having been valued at more than $1bn, InsideSales has earnt the title of "unicorn" – an industry term for firms worth ten figures.
Even Salesforce’s chief executive Marc Benioff decided to take an interest in the company recently, joining the venture firms Kleiner, Perkins, Caufied & Byers, and Polaris Partners in the third round of investing. But other than lunar readings, what does this company really have to offer?
Slowpoke start-ups
Much of the hype was prompted by early reports of the effect of InsideSales’ insights on sales revenue. According to the company one of its customers reported a 32% increase just three months after taking up the firms Neuralytics platform, which optimises how sales teams work.
If such success appears to have come out of nowhere it is because Elkington spent so much time in the wilderness (or at least Utah) refining the product. Having spent some years in banking after leaving Brigham Young University, also in Provo, Utah, he later became interested in the technology scene.
"It was right during the Dotcom Bubble when I was watching companies that had no right to IPO [make an initial public offer] and raise money doing so," he says. Shortly after this he went back to his old university to take a masters in computer science (never completed) and soon created Integ8ted Technology Solutions, an IT consultancy.
Out of Integ8ted, which served clients as prestigious as the NBA, Elkington eventually moved from professional services to software as he developed the Neuralytics program. "I didn’t want to raise venture capital, and the reason is if you raise venture capital before you’re ready you’re not a boss, you’re an employee," he says.
This was not the "agile" growth that Silicon Valley dreams about. "I collected data for eight to ten years before there was enough of it to be meaningful," Elkington says. Yet after biding his time he was left with a compelling product, one that would attract the attention of many beyond the Beehive State.
If successful businesses are based on problems, then the one Elkington sought to crack was the low conversion of web leads, in which a customer contacts the business online. According to his research firms typically took days to respond to these, and half the time would never call, despite the cost to generate them.
The key asset of InsideSales is that it can tell companies what will make their salesmen most effective. For instance, people tend to buy more product when the weather is bad, because they are sitting inside rather enjoying the outdoors.
Much of the insights rely on treating businessmen like consumers. "At the end of the day people are still people and they still want that kind of service," Elkington says. Since the software is powered by machine learning currently under development by a team of 20 PhD graduates, the aim is to ensure that no salesman makes the same mistake twice.
Taking Europe
In spite the hype around his product, Elkington’s philosophy retains the long-term view that characterised his early years. With that $200m he has built up the firm’s staff to 700 from 300 a year ago, and is now driving subscriptions in much the same manner as his software-as-a-service rivals.
"I have no interest in a profit right now so long as I can buy market share," he says. "Within 30 days we could turn a profit easily, but I’m hiring as fast as I can." One recent catch is Jim Steele, former chief customer officer of Salesforce, also the former berth of Martin Moran, who will head the company’s expansion in the EMEA region from London.
"I just hired Salesforce’s Michael Jordan," Elkington grins, wisely deciding not to go further with the basketball metaphors. Silicon Valley may be sold – it is now Europe’s turn.