Rhiza follows a unique path to success, which is how Josh Knauer likes it

 

Doing things differently as a tech company means at Rhiza, there’s no slides, pingpong tables or cargo nets in the ceiling.

“We hire adults — professionals who want to come to work to excel at their career and make a difference in the world,” says Josh Knauer, president and CEO.

Someone once had an extra air hockey table that they donated to the office. He says it was never used — except as a conference table.

“We actually ended up giving it to one of our interns for their house,” Knauer says.

Instead of a Google-esque atmosphere, Rhiza has a workforce of almost 50-50 men and women, including half of its management team. It also has a higher average age and skill level for its industry sector.

Knauer says they have a babies-in-the-workplace policy where moms and dads are able to bring babies to work for the first six months of the child’s life, a focus on healthy food and a transportation policy that encourages people to bike to work or take public transportation.

He’s hopeful initiatives like these will help the company maintain its values and beliefs as Rhiza undergoes tremendous growth.

A year ago, before it took on its first external investors, Rhiza had 12 employees. Now, they’ve added more than 20 new hires, and Knauer expects to be at around 40 employees by year’s end.

And Rhiza has also bucked another trend — going from consulting-type services to a products company, which is opposite of many other businesses.

“It’s been a challenge and a really fun one, like a puzzle that we’ve been able to put together,” he says.

Operational switch

Having a clear plan, but being adaptive on that plan is critical, Knauer says.

A 2008 spinoff from a Carnegie Mellon University research lab, the business was founded with the idea of being a products company. However, its earliest clients paid Rhiza to build custom data analytics tools.

When the company found its niche working on marketing-related data, helping large consumer products and services companies make decisions about where to spend their marketing dollars, management knew it was time to make the switch.

Knauer says they didn’t lose a single client, even though it was challenging to get them to buy into a model that went from everything being focused around their customized needs to general software as a service accounts.

By negotiating long-term contracts with good payment terms, Rhiza was able to manage the cash flow of moving from billable hours to long-term subscriptions, too, he says.

“Through really good communication and transparency for us in the process, I think we were able to help them down that path, and now all of those customers are growing with us and certainly none have gone away,” Knauer says.

A position of strength

Building fundamental tech companies through rational planning and execution, while understanding your customers in great detail has been Knauer’s modus operandi for more than 20 years.

He says that he’s learned not to take on external investors for as long as possible so that you’re in a stronger position when you finally decide to.

“We were profitable and had a great customer base and a product by the time we raised that money last June (in 2014),” Knauer says. “And that put us in the driver seat for choosing the right deal that we wanted, as opposed to being forced into one.

“Many entrepreneurs, especially in the tech stage, raise money first and then figure out what they’re doing and that is not the best way to start.”

Rhiza transitioned over to its new business model in 2013, and then took the first six months of 2014 to pitch to a host of venture capital firms and review their term sheets. Its three investors were then very carefully chosen.

Another key to success is building a competent team of people who are more skilled in areas that you aren’t, while putting aside your ego and allowing them to flourish and grow, Knauer says.

Big plans thanks to big data

With its business model transition and capital raising behind it, Rhiza is poised to scale up. Its newest marketing tool has already attracted international customers like BBC Worldwide, the marketing arm of the BBC.

Knauer says collecting large amounts of data from internal and external sources is just 25 percent of the challenge for companies like these. They often mistakenly see big data as an IT concern, which is the biggest misconception he sees.

“The other is that the big data itself, the raw feeds of data that are coming off of cash registers in stores and purchases off of your website and Twitter feeds — the words that people are using in Twitter — that somehow just collecting that raw information is going to lead to insights that are valuable.

“And there’s a lot that happens between that raw data, which is the big data, and the useful data,” he says. “And that’s really where Rhiza plays.”