Rhythms In The Data

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Once upon a time -- perhaps 20 years ago -- only very big companies could do much of anything with the data they started collecting at every cash register or during each transaction. It took mainframe computers and hordes of programmers and systems analysts to write custom software programs that could make sense of this torrent of store and product sales data.

Some programs were better at this than others: The airline industry, for instance, figured out that if it raised ticket prices closer to departure, revenues would actually increase, because business travelers often made last-minute travel plans and were the least sensitive to price. The world of "yield management" was born: how to maximize revenues based on historical patterns in sales data.

Then along came the personal computer, and companies' information technology groups were tasked with creating "strategic" computer programs that could contribute to the bottom line. However, it turned out that parsing and sifting and sorting sales and product data in ways that actually illuminated hidden patterns and relationships still needed hordes of programmers and very smart managers. Not to mention lots of data. So the small grocery chain still had to guess at what price toilet paper would sell, while its bigger competitors were figuring out that underpricing bathroom tissue and putting certain overpriced items right next to it would actually generate more profits.

The rich got richer, the small were at a big disadvantage, and consumers flocked to "big box" stores where all the power of data mining was being used to separate customers from their money while making them think they were getting a great deal … which they were, on one or two items. It was all those other things they bought that made the profits for the store owners.

Now the internet may be able to give some of that software advantage to smaller retailers by offering price optimization as a service to be paid monthly rather than a large upfront investment. Revionics, a startup in Granite Bay, has built a software service that lets smaller retailers put their sales data into the system and see patterns in their data. If it works it will be a boon to many smaller companies. And it might, just might, make Revionics and its founders rich, as well.

Not in Silicon Valley

"I keep thinking back to the time I sat in my living room working on a business plan, wondering if it would work and trying to find a reason not to do it," Revionics' founder Jeff Smith says with a laugh. "I just never found one."

Now, five years later, Smith is glad he didn't. Revionics, which is Smith's shorthand for "revenue bionics," is riding the giddy and tremulous crest of a wave similar to other software companies that developed solutions for unmet business needs. It is a familiar storyline -- from garage and killer application, to angel financing, new offices and employees and ultimate market domination.

So far, Revionics has closely followed that script. It has moved from idea to application to capturing financing from 30 different investors in Sacramento, the San Francisco Bay Area and Southern California, including most recently $7 million this October from Menlo Park-baseed Sierra Ventures. A $3.2 million infusion of financing late last year led to a new 7,000-sq.-ft. office and the hiring of more than 30 employees, with more on the way. The company is not yet profitable, but with seven-figure revenues (exact figures haven't been disclosed) and a fivefold increase in its customer base in the past six months, Smith says it soon will be.

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