Sophia’s Dave Patterson – Nothing beats selling to customers

Sophia CEO Dave Patterson

Gary: So, Dave, tell us a bit about Sophia.

Dave: The technology behind Sophia was developed jointly at the University of Ulster, where I was a researcher heading up an AI lab and at the St Petersburg State University, Russia where Vladimir Dobrynin, Sophia co-founder, was based. We were focused on search-related problems, so we started the company based on the premise that we would develop technology to solve key problems in the search arena. Now, unlike Google, which is primarily Internet search, we were focused on organizational, enterprise search. So we were looking at unstructured content within organizations – pdf files, Word files, html files and so on.

Now whilst Google has done a great job with Internet search, search within the enterprise has typically been done very badly. And people are very frustrated with their enterprise search tools and capabilities. So that was our initial target space.

Because Sophia is a semantic technology it is very different from conventional search provided by Google, Lucene or Fast, e.g. These are all based on Boolean searches where you put in a key word and then you get presented with all the documents that contain all those key words. But in a semantic search, you say what you’re looking for and the system understands your meaning, and brings you back documents that may not even contain that term but contain similar concepts to it. So it’s a much more powerful search approach.

So that’s the approach Sophia took. But it was also about the context of the search – so that if I search for “java”, I want information on the island in Indonesia, and not on coffee or computer programming. So it’s all about understanding the user’s context and the meaning behind what they’re searching on. So that makes the search more specific and reduces the amount of information the user has to sift through.

Gary: And this can go across a whole raft of applications and datasets within the enterprise?

Dave: Absolutely. And then the other thing is that we didn’t think search should just be about the recovery of information explicitly asked for by the user, but it should be about the discovery of new information that the user is unaware of or hasn’t thought to look for.

Gary: Give us an example of how that works in practice.

Dave: Well, the user may set off looking for one specific thing, but there may be other information that is related to that which the user is unaware of. One of the datasets we indexed with Sophia was news stories that happened before the end of 2007.We were showing someone working for a pharmaceutical company, who was interested in Alzheimer’s,this data indexed by Sophia and discovered that Alzheimer’s was related to Post Traumatic Stress Disorder (PTSD). The interesting thing is that this relationship was unknown until 2009 – there were no scientific publications showing such a link before this date. But Sophia automatically discovered the correlation and that knowledge through its understanding of content that finished in 2007!

So this shows the very powerful discovery aspect to the Sophia technology that directly impacts on innovation and creativity in organisations. So Sophia does both recovery and discovery.

Gary:  So currently, are you selling a software product or a whole service round a technology?

Dave: It’s a product. But we can also build a Sophia index for a very large dataset – like say, Medline, the big medical abstracts library – and make that available to researchers and drugs companies. But equally we can sell the technology for installation behind the firewall so they can work on their own datasets. We offer both, depending on what the customer wants. And, also we can offer the technology from the Cloud – that’s the way Random House, the publisher, uses Sophia. So we’re versatile in the way in which we can engage with customers.

Gary: So that’s what you’re doing now. How did things develop along the way?

Dave: Well, as I said we started out focusing on search. But things change – and this is important, I’d say, for anyone else building a new technology company – you can’t be too fixed in terms of how you’re going to deploy your technology and who your customers are and where your niche is. You’ve got to pay attention and learn from every sales pitch you do. Listen to the feedback from customers – positive and negative – and learn from it. Be open to change. Where you start off and where you think you’re going will, in all likelihood change somewhere along the way. So you’ve got to be flexible and willing to change your perspective.

We learned that search wasn’t our sweet spot right now. We learned that customers, while they loved the technology, were reluctant to hand over the responsibility of search within their organizations to a small start-up from Belfast. And it took quite a while to see that this was a problem as companies were not up front about telling us this – or maybe we just weren’t asking for feedback directly enough!

So we decided to make a change in the business and we changed focus. So instead of Sophia being the search tool of choice within the organization, all that clever knowledge that we discover & extract from documents, we now package up and make it available to the organization’s existing search tools, to make them smarter.We call this new product the Digital Librarian. So if they’re using Google, or Fast or Lucene, we add the powerful functionality of the Sophia Digital Librarian to it. This adds a semantic dimension and a discovery dimension to these other products.

Gary: Does that allow you then to develop business relationships with these other suppliers?

Dave: It moves us from the front line of support, so they are not relying on a small company in Belfast. It means we’re not competing against established players in the marketplace, but we’re complementing and adding value to an organization’s existing investments. It’s a much easier sell; it’s a much lower risk proposition for the customer.

Gary: So does that give you an opportunity to sell on the back of those other companies through partnerships?

Dave: Yes, there are a lot of companies out there which are resellers of these products. So we are in the process of building relationships with some of them so that the Digital Librarian becomes integrated with theirs, so that when they make a sale, they can offer Sophia as well.

Gary: So what markets are you targeting, then? You’ve mention pharmaceuticals and medical research – anything else?

Dave: Well the publishing industry has become every excited about our technology. We demo’ed the Digital Librarian for the first time last September to publishers and we had our first sale within three weeks! What we now have to offer is so much more compelling for them than simply search. Publishers like the Digital Librarian because it creates this extra meta-data that describes their content. Their problem is to try and compete online and generate revenue from that, rather than just in print. So they have to be able to leverage their content more intelligently – and that’s what we do, by making their content more “findable” when people are searching. One of the things that our technology can do is to, say, look at a web page someone is browsing, understand what the content is about and then recommend books related to the subject matter.

Gary: So this starts to be a commercial tool for these companies to sell their wares. It becomes a very targeted marketing tool.

Dave: It’s all about contextualized advertising and recommendation. What is the most relevant indication of what someone is interested in at any moment in time? – the content they are reading online. And if you can understand what they are reading and then come back with relevant recommendations, it’s very powerful for the publishers.

Gary: So, although the technology is quite generic, you’re focused at the moment on pharma and publishers?

Dave: Yes, you’ve got to have a clear focus – if not you’ll not achieve anything.

Gary: How long has Sophia been going?

Dave: The company was established in late 2007 and we spent about 2 years making a product out of the prototype system we spun out from the University. The University invested in the company at this early stage,and then we got a round of angel investment in summer 2010 – the largest ever private investment round, via Angel investors, in Northern Ireland history. So that helped us through the process of commercialization where we realized that search wasn’t the right direction. So now that we’re sure of the tack we’re taking, we’ve got significant traction in the marketplace.

Gary: So when did you actually start selling?

Dave: Just after last summer. And since then sales have really taken off!

Gary: And you opened a US office?

Dave: We decided at the beginning of last year, that we needed to be looking to the US market and building a customer base over there. And mixing with other tech companies and investors and people in Silicon Valley. We decided we really needed not to take the traditional approach of building up your home market before looking to the States – so we jumped into the US market. This combined with our belief that people here are much more conservative in their adoption of new technologies. Whereas the Americans love new technology and to say you are a start-up over there is a positive – here when you say that to prospects, they lose interest. And it really was a shock for me when I found I could talk freely about where we were as a company. Over there, people want new technology, want to trial it, test it and are prepared to pay for it.

Start-ups are where real innovation comes from in the States – not the large companies, it’s the small start-ups who do the innovation, so people equate innovation to small companies. When they hear you’re a start-up they automatically assume you have something really cool to offer.

Also in the recession, the conservative approach to business is much worse over here. So we decided to jump over to the US and it’s been a brilliant decision.

Gary: So how did you do that? How does a Belfast company get going in Silicon Valley?

Dave: Well our chairman, Chris Horn, has a lot of experience in the Valley and he knows a lot of people. And through his network we were able to find a great sales guy to head up our sales operations. He’s got 25 years experience in the Silicon Valley software industry and he understands the challenge of bringing new technology to market. I’ve learned a lot from him.Also Invest NI were really supportive and their office over in San Jose is really keen to help any Northern Ireland company. And so they helped with networking and introductions to companies and so on. Things just grew from there.

And then I just had to spend a lot of time with our sales guy out there, and we knocked on a lot of doors, did a lot of calls and built things one step at a time.

For example, on one of the first calls we were on together, he started telling the customer that we were a start-up with brand new technology. And I was thinking – no, no, don’t tell them that! But actually out there, people love that.

But even when I’m not in the US, I’m focused on that market.After a day’s work here there’s an evening to be spent with phone calls to the US, and emails – to whatever time it takes. So it’s a long day, but when you see progress and things moving forward, it’s worthwhile.

Gary: So most of your customers are in the States?

Dave: They are. We do have some here, but most of our focus is on the US. And interestingly, because the publishing industry is big for us, these companies are mostly around New York. So we’re in the situation of being a Belfast company, with a base in San Francisco and our customer base is in between. And then of course, there are the Russian R&D guys – we have a research base in St Petersburg headed up by Vladimir, who is now our Chief Scientific Officer. It’s very cost effective and we’ve a great working relationship, so it works well. So, although we’re small, we kind of span the globe!

Gary: Over 5 years, what you’re doing and your life has changed enormously. It’s a big change from being a researcher in a University, in a big, secure environment with, possibly not too much pressure.  But now suddenly you live or die by the decisions you’re making, you’ve people depending on you for the payroll and so on – that’s a very different set of  circumstances for you. So how has that change felt – have you loved it or did it seem daunting at times?

Dave: Definitely daunting at times – but at the same time, it’s really exciting. It can be depressing, it can be really uplifting – it depends on what time of the day you talk to me! Each day is so different, you never know what’s going to happen.

It was never something I set out to do, I never thought – I really want to run my own company and be CEO. I loved my job at the University. We happened to do this research that had commercial potential and I had the opportunity to start a company and it just seemed the right thing to do at that point. It’s not every day you get that type of exciting opportunity. So we started the company, we got funding and at that stage, when we had investors, I felt we were doing it for them as much as for myself and for our employees. I feel a real sense of responsibility for the people who have invested, that we deliver for them and succeed.

As well as that, I want to do the right thing by the guys in the company too. They work really, really hard and they put in a lot of time and effort. It’s a matter of not wanting to let anyone down.Not least of all my family – they put up with me being away a lot.

So it’s been great, really enjoyable…and who knows what the future holds. It’s looking really exciting at the minute, but you take a day at a time.

Gary: So what gives you the greatest buzz now?

Dave: The same thing as right at the start – through having a sense of pride that people are getting value from using something I helped develop. Whenever I show the technology to people and they go, “Wow, that’s so cool”, that gives you a real high. And then you invoice them and they send you money!

When we first started with the research, that’s what it was – it was never intended to be commercial and to think what has happened through wining the 25k Award, the All Ireland Seedcorn competition, a in the UK, partnering with IBM and all the investment rounds – that’s all been really satisfying, but nothing beats selling to customers.

Gary: What’s the future, then?

Dave: We’re now looking for engineers here in Belfast, we’re looking for sales and bus dev people in the US. We’ve a great sales pipeline and we need more engineers to help support that business. So if anyone fancies a challenge, or is looking to be a part of something really exciting in Northern Ireland & gets a buzz from doing things differently – get in touch!

Gary: So you’ve all the organizational challenges ahead!

Dave: Mmm. Not looking forward to that!

Gary: What advice would you give to anybody thinking of starting a new technology business?

Dave: It’s not for everybody. If uncertainty’s not something you’re comfortable with, you don’t want to be doing this. The biggest thing is – don’t think you can do it alone. You need to build a team. No one person has the skills to do everything. Get a team around you who can add value. That’s what it’s all about – adding value to the company.

But we need to encourage more people to do this. We need to enable more people to try things. We need to remove the stigma from failure – that’s so counterproductive. We have a lot of innovative people in Northern Ireland, if we can just get the support networks right. Early stage funding’s a massive issue – I’m not sure what the answer is, but it’s a big challenge. However, that’s as it is, we just gotta get on with things & not make excuses.

Gary: Do what you’ve done, Dave – get on a plane and get over to Silicon Valley and make things happen!

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About Gary Burnett

Fabrio's Gary Burnett has many years experience in the ICT industry, working in Ireland, the UK, Europe, India and the US. He helps technology companies change and grow.
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