Netail, a spinout company from Google Brain co-founder Andrew Ng's Landing AI group, is expanding to Pennsylvania and will establish Pittsburgh as its headquarters.
For Mark Chrystal, the CEO and co-founder of Netail, Pittsburgh will serve as a launching pad for a company that only recently came out of stealth mode. The revenue-producing startup specializes in tracking consumer products across the internet using AI to then allow its retail customers to better optimize their prices against competitors in real time.
The shift in Netail's home base from Palo Alto to Pittsburgh, which was announced Tuesday, follows the raise of a $5 million seed round co-led by Landing AI and Pittsburgh-based Magarac Venture Partners. It marked the first close for MVP's $150 million fund, a deal that took about six months to complete.
Netail employs about 13 people across its Palo Alto office and an office in the South American country of Colombia. In addition to opening its HQ in Pittsburgh — the exact details of where it will be are still in the works, though Chrystal wants to be close to the campus of Carnegie Mellon University — Netail will also open a satellite office in Hong Kong as a result of the funding raise. Chrystal expects to ramp up hiring in Pittsburgh after migrating most of these workers here in the coming months but couldn't share a specific figure at this time.
"We're building a significant, global software company in Pittsburgh," Chrystal said. "As you look out into terms of a five-to-10-year horizon, you're certainly looking at ideally many hundreds of employees, if not thousands."
As for Pittsburgh's strengths, Chrystal touted the region's talent coming out of CMU as well as its lower cost of living expenses compared to other cities as being a worthwhile place to aid Netail in getting to its next stage of growth. Chrystal expects this recent funding round to ensure the company's runway for several years to come.
"I think it's one of the most livable, attractive cities in the U.S.," Chrystal said of Pittsburgh. "Great schools, great standard of living. Recruiting engineers in Silicon Valley and in the Bay Area is extremely expensive, frankly, and so actually it makes a lot of a lot of sense for a startup to base itself in Pittsburgh given the difference in cost of living."
How the Netail connection came about
A chance phone call from a California contact during the summer put Netail into Magarac Venture Partners' orbit.
Jay Katarincic, an MVP partner and founder, found a former partner of Draper Fisher Jurvetson on the line. Katarincic for two decades had been a partner at Draper Triangle Ventures, an affiliate. MVP had just reached the first close of its $150 million fund, meaning it could start investing.
“He said, 'I just saw a really interesting company; they want to potentially locate in Pittsburgh, but they’re not going to do it if they can’t find an investor,’” Katarincic recalled.
Then the caller added, “I think you can really help them. Do you mind talking to them?”
That triggered a series of meetings for MVP with Chrystal and Andrew Ng, Netail's chairman and co-founder. Both had ties to Pittsburgh. Ng graduated from Carnegie Mellon University in 1997, earning bachelor of sciences degrees in mathematic/computer science, statistics and economic.
“He’s the real deal,” Katarincic said of Ng. “You don’t get named as one of the most influential people in the world by Time magazine if you’re not the real deal. And he’s the most down-to-earth guy.”
That designation from Time came in 2012 as Ng, an adjunct professor of computer science Stanford University since 2002, emerged as a major AI entrepreneur. He was a founder of Google Brain, a deep learning system developed in 2011 through the use of Google’s computational resources, and of Coursera, the online education unicorn that launched in 2012. Coursera (NYSE:COUR) raised $519 million in its early 2021 initial public offering. Ng serves as chairman.
Chrystal is co-founder of MachineCore and had been chief analytics officer and senior vice president of eCommerce at teen apparel retailer rue21, as well as serving as a vice president at American Eagle Outfitters, both of which are based in Pennsylvania. His educational background includes a doctorate that focused on consumer behavior in digital environments and a master's degree in machine learning and AI, among others.
"I know enough to be dangerous there," Chrystal said. "I try and stay out of the engineer's hair but I know the right questions to ask at least."
But then he stepped out of that in-line corporate world to build software for major corporate retailers. That software building is what led to his co-founding of Pittsburgh-based MachineCore, which uses AI to analyze customer feedback that's then converted into actionable recommendations for management. Chrystal would then go on to be connected with Ng, who serves as Netail's chairman, to lead Netail.
"I knew that [retailers] were desperate for [Netail's offerings], and frankly a lot of them won't survive without this type of solution," Chrystal said.
