To make money on new software, sometimes you have to give it away.
Thanks to that counterintuitive approach, tiny local IT startup Vyante Inc. has persuaded companies like Eli Lilly and Co., Roche Diagnostics, Dow Agro-Sciences and 5MetaCom to test the beta version of its new software, which tracks and measures the impact of their brands online. Vyante hopes eventually to convert the companies into paying customers.
“We’ve persisted against the odds,” said Vyante Senior Technologist Benjamin Ranck. “It was a hard fight to build ourselves up to where we are. But we’re still here, still working hard.”
For now, the 2-year-old company has just two employees: Ranck, 25, and his partner Aaron Kopel, 30, who serves as CEO. The pair met working together at Conseco Inc. on a Sarbanes-Oxley compliance project. One day in 2005, Kopel raised the idea for a new online business. He aimed to help companies follow their online “chatter.”
“The jumping-off point for us was realizing there are bigger and better things out there than sitting in a cubicle,” Kopel said.
Working out of their homes, the pair spent nights and weekends developing Vyante’s “ChatterSpike” software. It trolls Internet search engines and news feeds looking for any appearance of chosen terms, such as a company’s name, the names of its competitors, or the product names of its brands. Once found, the software aggregates the results, telling users how frequently they’re being mentioned online. The data can then be used to discern how much “buzz” a marketing campaign has earned.
Vyante raised $85,000 from its founders’ friends and family to get started. In June, the company landed a $100,000 Phase I grant from the National Science Foundation’s Small Business Innovation Research Program. Last month, the Indiana Economic Development Corp. matched it with another $100,000 grant from its 21st Century Research and Technology Fund matching program. The money allowed Vyante to take on four interns. Kopel and Ranck also have visited a half-dozen Midwestern cities searching for equity investors, and now are in negotiations for a potential mid-six-figure commitment from angel investors.
Venture capitalist Brian Williams, a regional venture partner with Chicagobased Hopewell Ventures, is serving as a Vyante adviser. As the Internet-and particularly the blogosphere-grows, Williams said, companies increasingly have difficulty keeping tabs on how they’re publicly perceived. Vyante could give them a tool to trace their reputations. It also could allow them to gauge online chatter’s volume.
That’s particularly important during a product launch, when firms have a limited amount of time to make a big splash.
“Launch period is critical,” he said. “As a brand owner, I can do all I can in terms of buying commercials, putting ads in the newspaper or buying billboards, but once the product is in the market, I’m sort of blind as to how the public is reacting to it.”
That’s perhaps even more important when a business picks up negative momentum. During a product recall or scandal, companies have to move fast to protect their reputations. But once their names stop appearing in front-page headlines, it’s difficult to assess the size of the dent to their standing.
“If something bad is happening out there, you need to deal with it before it reaches critical mass,” Kopel said.
Kopel and Ranck are betting that companies will pay top dollar for such data. Once their software is fully developed, they plan to charge users $1,000 per month for subscriptions plus another $50 per month for every term they choose to search under. They said the first fully working version of their software is nearly ready for launch. They hope to add more features soon, such as “sentiment analysis,” which would tell users whether their online reputation is positive or negative.
Converting free users into paying customers is Vyante’s next major challenge, Williams said. Its success will likely be based on the value of the data Vyante can deliver clients. Eric DeWitt, vice president of business services for Carmel-based communications and advertising firm 5Meta-Com, has been using the free software for several months. He’s provided regular feedback on how it could be improved.
“We were very skeptical at the beginning as to what this software package could do, but we figured we’d give it a shot,” he said. “I won’t say that it’s perfect. They’ve got work to do. But they’re working very hard on getting it there, and taking the feedback from their customers to figure out where that software package needs to be.”