digiMine.com pans for consumer gold

Fast even by Internet standards, digiMine.com has sped from an idea to a start-up company with 20 employees in little more than a month.

In that time, company founders Usama Fayyad, Bassel Ojjeh and Nick Besbeas have raised $5 million from angel investors to get the company rolling and pay for an acquisition that gave them an instant engineering staff.

The founders’ track records in data storage and analysis and marketing at Microsoft have been a key door-opener for the young company (www.digimine.com).

It also helps that digiMine.com is offering a fix for Websites struggling to boost their sales. The company is in the hot data mining segment where Web-based businesses use special software to track visitors through their sites, deducting their interests for more targeted, personalized advertising.

For instance, if a visitor on a travel site is pulling up information about the Caribbean islands, they can be shown swimsuits and snorkels instead of snowshoes. That increases the likelihood they’ll make a purchase.

Additionally by using real-time data analysis, Websites can cross-sell customers related products or sell up to a better, more expensive product.

Data mining can also be used to predict what customers might be interested in purchasing for follow-up offers in e-mails thanking customers for their purchases. Electronic retailers, which are converting surfers into shoppers only about 2 percent of the time, are hoping such personalized advertising will result in higher sales.

The company is an application service provider, or ASP, that will “rent” its software on a subscription basses and provide hosting services. Providing services on a rental basis lowers the cost compared to selling the hardware and software outright. The ASP model has the advantage of producing a steady revenue stream from a broader range of businesses that couldn’t afford to buy.

“Our competitors are charging millions, so why should we only charge $10,000?” Fayyad asked. “It’s hard to walk away from something that lucrative, but if we stick to our vision and market, it is a way boring in bigger revenue. It’s a long-term play.”

If digiMine.com captures just 5 percent of the market for data mining warehousing, it will be a company with about $3 billion in revenue, Fayyad said.

What will set digiMine.com apart from competitors is its targeted audience, Fayyad said.

While most data warehousing and mining companies aim their services at the IT or information technology managers who understand the complicated technology, digiMine.com is gearing its services to the ultimate end users 0 the marketing managers creating the sales campaigns. These marketers generally couldn’t care less about nifty algorithms, so digiMine.com’s software is designed to be easy to use, Fayyad said.

Users will be able to drill down though data by moving virtual sliders guided by a set of parameters created by digiMine.com.

The company expects to enter its beta testing by early summer.

There is some adjustment to working at a start-up after working for one of the world’s most famous companies.

“At Microsoft, you didn’t need to finish saying the (name),” said Ojjeh. “Now it’s, ‘digiMine? How do you spell that?’”

The attraction of leaving what Fayyad described as “dream jobs” was risk.

“I had a long career in research and have been very insulated from the hiccups of business,” Fayyad said. “Research is mostly about failure. In my opinion, for any group that is very successful, if there have not been failures, they’re not taking enough risks.”

After a career developing services on top of platforms, it’s nice to get closer to the customer, Fayyad said.

COMPNAY: digiMine.com

INDUSTRY: Internet.

PRODUCT/SERVICE: Application service provider hosting data warehousing and data mining services.

YEAR FOUNDED: March 2000.

MANAGEMENT: Chief executive officer and president Usama Fayyad, founder and former head of Microsoft Research’s Data Mining & Exploration Group, previously at the Jet Propulsion Laboratory and California Institute of Technology.

Executive vice president of sales and marketing Nick Besbeas, previously group product manager in Microsoft’s Applications Division handling market research for Office, SQL, Exchange, BackOffice, FrontPage and SiteServer products.

Chief operating officer Bassel Ojjeh, former group manager in Microsoft’s Internet Business Server Division, overseeing e-commerce components of Commerce Server, also involved in the acquisitions of Fox Software Inc., Softimage and Interse Corp.

Chief financial officer Martin Vowels, previously an independent business consultant advising Corbis, Eagle River, Nextel, Nextlink and Light Sciences, also former senior director for Microsoft’s Information Technology Group and a PricewaterhouseCoopers consultant in the emerging business services group.

Board of directors and advisers include Pete Higgins former Microsoft group vice president in charge of MS Office and Internet & Multimedia divisions; Nick Hanauer, chairman for Avenue A and Gear.com, principal in Second Avenue Fund; former Starwave Inc. CEO Mike Slade; Keith Grinstein, former vice director of Madorna Venture Group; and Rajeev Motwani, Stanford University professor.


INVESTORS: Participant in $16 million initial round: Sam Jadallah and Rober Pollan, managing directors, Internet Capital Group; James Voelker, former CEO Nextel; Deutsche Bank Technology Fund; Second Avenue Fund; Cedar Grove Investments and Kellett Investments.


CUSTOMERS: None, preparing beta test.

FISCAL YEAR REVENUE: None. Expect to break even in 2001 and make a profit in 2002.

WHAT KEEPS YOU UP AT NIGHT? “My biggest worry is resisting temptation. Our offering raised by big money. That can make you forget your business model,” Usama Fayyad said. Said Bassel Ojjeh: “For us it’s continuing to focus on the right things. Are our decisions still on track? For us time to market is critical.”

By: Jeanne Lang Jones

Source: dbusiness.com


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