As part of my ongoing series of interviews with the leaders that are shaping the future of market research, today I’m happy to give you a discussion I recently had with Matt Warta, CEO of GutCheck.
You might recall when GutCheck appeared on the MR scene in late 2010 with an announcement of initial funding of $2M. Many folks were shocked that the dreaded DIY model was being deployed within a qualitative research context, but others saw it as the logical extension of a highly successful business trend. As clients push for “cheaper, faster, better” solutions to fuel their insights needs enterprising and tech savvy entrepreneurs are going to heed the call. Matt and the team at GutCheck is an example of that.
For those not familiar with the company here is a synopsis from TechCrunch:
GutCheck is a new category of online market research that enables businesses and agencies to gain quick and simple feedback, directly, from target customers using IM functionality to perform interviews.
GutCheck, an online DIY tool, simply and quickly facilitates a one-to-one dialogue between a business and target customer. Target customers are found by using the GutCheck Recruitment Engine to choose the appropriate target demographic and offers the ability to further screen for a target customer through asking custom questions. The interview allows businesses to interview and ask their questions to learn how their target customers will respond to- new messaging, pricing changes, advertising concepts, updating packaging, product enhancements, gain feedback on product use or competitor product use – and many other business critical needs.
After all, who doesn’t want more direct feedback from their target customer?
One of the more exciting aspects of the GutCheck story is the fact that Matt, a VC and serial entrepreneur, was involved at all. I think it’s a great sign that someone with his background would choose to pursue a research offering and it speaks highly of the opportunities that exist within our space over the coming years. Many traditionalists may not like the model, but I think anything that helps attract investment dollars and drives innovation in research is a good thing.
I found Matt to be a great subject and his comments were highly insightful. I think you’ll enjoy them too.
LFM: Thanks for chatting with me Matt! GutCheck made quite the splash upon your launch, with many MR professionals reacting to the concept of “DIY” qual as a sign of the apocalypse. That appears to have quieted down a bit and folks are beginning to embrace the efficiencies that technology can bring to the research process, even qualitative research. Has that been your experience?
MW: That is a great observation. At and around our launch, there were a lot of folks in the industry who viewed us a threat. I think that has gone away to a good degree. I think there are a couple of reasons for this. First, we tend to attract clients who share our view of the world that by leveraging technology, they can be more efficient with their research projects, and those projects can be more affordable. The second is that we are very busy servicing those types of clients, and I tend not to spend a lot of time with or looking for clients who don’t believe in our vision. I also suspect that the adoption cycle for our technology within the Market Research field is no different than adoption cycles elsewhere. To lift some of Geoffrey Moore’s classic work, you have Innovators who are the folks that hang out at the Apple store at 1am to get their hands on the newest iSomething; early adopters who are looking for a fundamental breakthrough in the way they can do their jobs; and the early majority who are the biggest part of the market for any technology product, but who typically look to the early adopters for validation and reference. I think the market for our product is still very much in the early adopter phase. I have conversations with big brands every day who have either started using online qualitative research in the last year, or have started an initiative in the last 12 months to shift more of their work over to online. This wasn’t the case two years ago. Their reasons for doing so are pretty simple. Their budgets are tight, and they have less and less time to get things done.
I saw some MRA numbers about a year ago which support this view. MRA suggests only 15% of qualitative work is done online. When I presented at TMRE and I asked folks how much qual work they thought was being done online, many in the audience responded in the 3-5% range. However, if you look at the quant world, almost 50% is done online. We believe the early majority is going to take online qualitative closer to 50% like it is for quant once online qualitative is much quicker than what it has been and when it is available at a much more affordable price. I saw a recent new online qualitative product launch and the company was touting that it could do 15 completes on their DIY platform for under $6,000. That is $400 a complete for those doing the math at home. That kind of pricing is a big reason why online qualitative work has been kept in a box in the corner. I think the Market Research market follows the same economic principles of every other market. Meaning when costs go down (both hard costs and soft costs such as time) more of that good is going to be consumed. I think that gap is going to close considerably over the coming years as folks like GutCheck and others optimize our platforms and leverage technology to drive down the cost of doing online qualitative research and decrease the time required to complete those studies.
LFM: What is the GutCheck “story”? How do you arrive at the concept and how much traction are you getting now?
MW: I love this question. Prior to GutCheck, I had been a venture capitalist for well over a decade and prior to that I had founded a company. I had a bit of a mid life crisis and decided that I wanted to start my next company, and grow something meaningful. One of the entrepreneurs who pitched me when I was a VC is a guy named Carl Rossow. Most of your readers know him as the guy who founded iModerate and Benenson Strategy Group. For some reason, I never became friends with the CEOs who pitched me over the years. Part of that is you have to tell a lot of these folks NO, which isn’t a solid way to start a relationship. With Carl, it was different. We became friends and that extended over to Jen Drolet and the rest of the iModerate team. One of the great things about Carl is he has a ton of vision. Ever since I knew Carl, he had wanted to start a DIY qual platform.
So how did we get started? One of the first people I called when I wanted to venture out on my own was my good friend Carl. I was looking for some entrepreneurial encouragement, so I asked him to breakfast. I pitched Carl on a couple of ideas I was working, and he told me they were stupid in his own Steve Job’s esque way. However, he quickly redirected the conversation and told me he had just the opportunity for me, and we literally started the company right there and then on the back of a napkin.
That fateful day was around 2 years ago. We spent all of 2010 building out the platform and putting things in place with key partners of ours like uSamp and the former Opinionology team. We launched in March of last year. Traction has been good. We have worked with 100 or so clients already with a good mix of those on the brand side, and a lot of agencies. We are incredibly heartened by this progress, and have a new product coming out in the first quarter which we think will help us really accelerate the adoption cycle. 2012 is off to a good start and we are expecting to have a great year.
LFM: I had no idea you were a VC! That brings up an interesting question. In my experience VCs have stayed away from the MR sector, although certainly there seems to be more convergence now driven by the mobile/social data booms. What attracted you to this space, and do you think there is an opportunity to engage the investment community in new ways to help fund the development of new MR offerings?
MW: The thing that attracted me was the white space that existed. Historically, the VC investment community hasn’t been attracted to the MR industry because much of the MR industry has been services-based — and that is not typically an exciting business model for VCs. Given that, the MR industry isn’t crowded from a technology perspective like other B2B sectors. The shift in funding you noted is that the new opportunities tend to be technology platforms that have the opportunity to scale. If you look at the primary market research industry, there isn’t a huge technology platform that dominates the way a salesforce.com does in the CRM industry for example. Like most promising markets, there will be a proliferation of vendors at first, but it will consolidate over time. Clients don’t want to manage myriad vendors at the end of the day. They want one or two partners they can rely on to do most of their work.
LFM: Based on data that we’ve been collecting as part of the GreenBook Research Industry Trends study on methodology use and emerging technique adoption, I am convinced that that 2011 was the “tipping point” for a variety of new approaches, including online qual, for largely the same reasons you cited. That certainly seems to indicate that 2012 will be a big growth year for firms like Gutcheck, but I think it also means that the competitive set is going to grow exponentially. As you move further along the market maturation curve, how do you plan to continue to stay ahead of the new entrants, many of whom will be trying to leapfrog you from a tech standpoint?
MW: The high-level answer is that we plan on staying true to our vision of making online qualitative research accessible to brands of all sizes. In practice, that means making online qualitative very easy to use. I think the tipping point you refer to is going to be one of exponentially more experimentation. Experimentation will lead to repeat usage only if the the product promise is fulfilled. It is one thing to talk about making online qualitative quicker, more affordable, and easy. It is much different to actually fulfill on that promise. So for us, staying ahead of that curve is working at fulfilling that promise every day. If we do that, we are given the opportunity to start a dialogue with our customers. That dialogue mapped to our organizational capabilities will drive our innovation forward.
A good example of this is a new product we will be launching called Instant Research Communities (IRC). We start beta testing next week with a group of customers. I’ll let your mind wander on what this is, but the IRC concept grew out of dialogue we have created with our initial group of customers. Once they were able to see what on-demand qualitative could do for them in a 1 on 1 setting, they instinctively were able to apply that capability to other uses — which is the catalyst for our innovation process.
Finally, we plan on staying ahead of the curve by focusing. Our customers are asking for a lot from a new product perspective. They realize the capabilities of social, mobile and online in general are quite powerful. There are a lot of companies that get in trouble by chasing the shiny object du jour. We’ll stay ahead by sticking with what we are good at, and having the prudence to leave some opportunities for others where we know we don’t have a competitive edge.
LFM: IRC sounds pretty darn intriguing! I had also heard that you were exploring various mobile approaches so what’s next for Gutcheck? What can you tell us about your new product offerings coming down the pike?
MW: Like most product launches, we expect to get a lot of feedback on our IRCs, so I think we’ll be spending plenty of time in the near future implementing some of that feedback. We also have a lot other ideas we want to build into IRCs after they are launched, so we’ll be pretty focused on that product for awhile.
In terms of our roadmap, we look at the world in a few different dimensions. What are the applications are customers are asking us for? What can we do on the recruitment front to make our customers’ lives easier? How do enabling technologies like social, mobile, gamification, and video impact the first two areas, and how do we leverage constructs from these areas to move the needle in our applications. To be specific, we will be working hard on weaving some or all of those enabling technologies and constructs into our IRC product.
LFM: What’s your vision of the future of the broader market research space? How do you see things shaking out over the next few years in terms of the value proposition and positioning of the industry?
MW: I wish I had that crystal ball. We are obviously betting on more and more clients moving their qualitative projects online, and when they do, they’ll care about three things. They’ll care about the quality insights they receive; how much it cost them to gain those insights (both from a hard and soft cost standpoint); and how long it took to get answers. These are timeless currencies in my mind that aren’t changing. Those who are well positioned against those currencies will succeed.
LFM: This has been great Matt, thank you. Let’s wrap with some sage advice for our readers. As a serial entrepreneur and investor, any words of wisdom that you can impart to others who may be looking at trying to get their own visions made into a reality?
MW: First, don’t do it on your own. Find a good partner or partners who you really respect, who compliment your skills, and who you enjoy being around. Being an entrepreneur can be incredibly lonely if you are trying to do something yourself, and it is hard to get through valleys if you don’t have some good partners around you. Second, don’t hide your idea. The reality is someone else probably is thinking the same thing. You need as much feedback from as many smart people as possible as quickly as possible to make sure what you want to build matters. The idea is 10% of the game, and the execution is 90%. After that, enjoy the ride.
LFM: Thanks for your time Matt, this has been great and I hope you’ll keep me abreast of the new products you’re rolling out. Best of luck to you!
MW: Thanks for having me Lenny, this was fun.