“Rather than going after the gold mine in global apps, we decided to provide the pick axes and shovels,” said CEO and co-founder of Localytics Raj Aggarwal, in regards to a spark of clarity that he and his fellow founders shared in 2008.
Little did Aggarwal know that, when realized, that spark would go on to become a highly valuable and profitable big data mobile analytics company, reeling in – not to mention, turning down – millions in funding and tripling its annual revenues only a few years out of the start gate.
But back to the gold mine in global apps.
In early 2008, Aggarwal and his two co-founders Henry Cipolla and Andrew Rollins began to play around in the emerging app developer space. With years of consulting within the mobile space at Bain & Company and Adventis, Aggarwal quickly became enthralled with the idea of creating and customizing an application that could be downloaded by anyone in possession of an iPhone.
“I was very bullish on apps, and was frustrated with seeing how innovation was curtailed because the carriers held all the power," noted Aggarwal, who once worked with the “fearless” Steve Jobs and AT&T to facilitate the iPhone’s industry-disrupting mobile data plan. “With apps being a constant, anyone could create and innovate in the app ecosystem.”
“But we quickly realized that the tools and platforms for app makers to create a successful business didn’t exist,” explained Aggarwal. “So we thought we would try to help them, and show them who was using the app.”
After working together for nearly 10 months, the three-man team joined Techstars Boston's first class in 2009, exposing themselves to the wealth of talent and expertise within the city’s business and tech community. The startup then added a pair of engineers, and after what must have been thousands of hours of mentorship and hard work on the clock, closed its first angel round, worth $750,000, in the end of that year.
In 2010, Localytics began to build out its nascent product, an analytics platform designed to grab much-need marketing stats for mobile applications, and started gaining revenue – and a certain Boston-area venture firm noticed.
An investor inked up a term sheet for the startup, which Aggarwal said, they turned down “to retain flexibility in its business model.” At the time, the company had a smart, big data-driven platform, but it lacked a deliverable; the team needed to figure out in what direction Localytics was headed on its own, without having to answer to VCs.
Rather than accepting the deal, the company opted to raise another angel round of $2.5 million a few months later in 2011.
“We raised a good amount of money and we raised it under good terms,” shared Aggarwal. “We knew that analytics was something that was super important, but also that it was a means to an end. People need to take action on data, and it wasn’t 100 percent clear to us what that would be, and we weren’t fully convinced that what the [investors] had in mind would be something we wanted.”
What they wanted, Aggarwal noted, was an “original hypothesis.”
“It’s a rollercoaster ride. There were times when you think you are screwed,” said the company’s CEO. “But we thought if we could just keep talking to customers and figuring out what they really wanted, it would work out.”
Once entrenching themselves in their market, the members of Localytics discovered that what their customers needed was a marketing solution atop of its analytics platform. Soliciting advice from entrepreneurship and tech gurus Don McLagan, Shawn Broderick and Duncan McCallum, along with the people in DogPatch Labs and countless other members of the business community, Aggarwal and the Localytics team acted accordingly, and blazed its product's path, sans stakeholders' pressures.
Since pairing its big data analytics platform with marketing tools, the startup has welcomed big-name brands like eBay, Salesforce.com and The New York Times to its wheelhouse. In 2012, Localytics raised $5.5 million in Series B from Polaris Partners, New York Angels and LaunchPad Ventures and tripled its revenues. From its headquarters in Downtown Crossing, the startup now employs a talented team of around 50 engineers, marketers and sales folk, supporting its product and overlooking the implementation of its mobile marketing campaigns across more than a billion devices.
It’s safe to say that, even though he went for the pick axe, Aggarwal, and the rest of the Localytics team, has certainly struck gold.
And luckily, Aggarwal has a glimmering nugget of advice he’s willing to offer to the budding entrepreneur:
You need to really understand your customer. Be in touch with them and talk to as many people in the space as frequently as possible – even people who aren’t even your customers, and not just in Boston, but anyone who will listen and in-person. That’s what helps you learn, and take what might be a [little] idea, and figure out what might be right or wrong with it, and change accordingly. It’s an ongoing process, and we’re still doing it.
