When you win Disney as your first client, you know you’re on the right track. When investors then throw a couple of million in your direction after seeing a quick demo, well…you’re definitely on to something. The only question mark left is whether you can drive forward without crashing and burning. So far, Steve King and Hugo Amos are still squarely on the road. In fact, their company Black Swan finished top of The Sunday Times Sage Start-up 15 in 2015. And in 2016 it was at the summit of the same newspaper’s SME Export Track 100, marking it out as one of Britain’s fasting-growing SMEs.
Black Swan is in the business of “applied prediction marketing”, which means it uses big data to predict future trends, allowing companies to market their products and services more effectively. Its digital platform gobbles up masses of data from the internet before applying algorithms. Out the other end pops Black Swan’s golden egg: commercially useful predictions of consumer behaviour.
The Disney win is a great example. CEO Steve explains: “We came up with a hypothesis: we told Disney we could prove that when it rains, more people go to the cinema. Our idea was that if we could demonstrate this mathematically, we could tell Disney exactly when to buy its media. We did all the maths, got all the weather data, collated the sales data and put it all together. And we found out that rain doesn’t in fact cause more people to go to cinemas! However, we discovered that a period of low atmospheric pressure does influence consumer behaviour. After two or three days of low pressure, more people visit the cinema, probably as an antidote to all those grey days. When it rains, they just stay in.”
Despite the fact that the original hypothesis was wrong, the staff at Disney were impressed, and they immediately kick-started a relationship that’s still flourishing today. More big clients followed, including Vodafone, Samsung, and Hugo’s old employer, PepsiCo.
It was while working at PepsiCo that Hugo, now Black Swan’s chief strategy officer, first met Steve. He was Steve’s client. Before long, the pair were chatting in a pub near London Waterloo, comparing notes on the frustrations of corporates not using the data they had. Creativity enhanced by a pint or two, they ended up scrawling a bunch of interconnecting words, lines and circles on the back of a receipt. Those lines were the origin of Black Swan, whose name comes from a 16th century English saying to indicate impossibility. In those days, people thought that black swans (like flying pigs) did not exist. However, it turned out that black swans actually do exist – in Australia. “The name reflects what we do with data,” says Hugo, “we take established expectations and challenge them using our prediction techniques.”
It took more than a year before the pair had honed their idea and Hugo plucked up enough courage to walk away from salaried employment. “We visited the pub together quite a lot more before taking the leap,” laughs Steve. But once they’d made the decision, they sought private investment, which came rapidly.
“We had no more than a demo plus a couple of big-budget customers,” says Steve. “But we were growing quickly and winning work, so we were confident.” Private investors found the concept irresistible, with Blackstone investing more than £2m in 2014. More followed, including £3m from Japanese conglomerate Mitsui. Steve says: “Talking to one investor recently, he said: ‘It just looked like you guys knew where you were going. I didn’t want to say no and then find out later that you’d got really big’.”
For other businesses contemplating venture capital, Hugo has some advice: “From our experience, it’s been massively positive. However, the biggest challenge has been around reporting to our investors in the appropriate manner. We were new to that world and it was a big learning curve. Our revenue declined because it absorbed so much management time. If we had to do it again, we would outsource more to get on top of that process.”
Here’s an amazing story that will give you a better idea of the power of Black Swan’s tech platform. Around a decade ago, Steve’s sister was suffering from what doctors had diagnosed as ME. However, she soon found herself in a wheelchair, unable to make it through the day without significant help. Steve took matters into his own hands, using the Black Swan technology to sift through information left by others who had reported similar symptoms online. After crunching all the data, the final report conclusively pointed to a treatable condition called Parkinson’s Dystonia. This turned out to be the correct diagnosis, meaning Steve’s sister could be treated. She has since returned to a normal life. In fact, the siblings are set to run a marathon together in 2018.
And the story doesn’t end there. The successful use of Black Swan’s technology in this medical scenario led to the creation of White Swan, the company’s not-for-profit arm. White Swan has access to all of Black Swan’s models, data, IP and technology but is offered free of charge to appropriate organisations such as charities and the NHS.
So what’s the best advice these tech entrepreneurs have been given? For Steve, it’s easy – roll with the punches and remember there’s always a next time. He says: “When I was 21 I was a DJ and ran a music studio. For many reasons it went bankrupt, and the awful thing was that it was all powered by my parents’ pension fund. I remember the night I went home to tell them that there was nothing left. I was in tears as I sat down with mum and dad. They just knew and I didn’t actually have to say anything. We just sat there for a while and dad said, ‘You’ll be right next time’. We never spoke about it again. But later I made sure that I paid them back!”
Hugo has different advice: “Someone once told me that the ‘cliff edge’ isn’t really a cliff edge. For anyone starting to look at leaving the safety of a corporate career and running a business, that’s great advice. Once you’ve made that jump, you realise it’s a curb, not a cliff. Employers are very good at making you feel like the world will end if you leave, which makes the idea very hard to process when you’re sat in a corporate job.”
The Black Swan story began with a chat over a beer in a pub, gathered pace slowly, and then its co-founders pressed the turbo-boost button by winning Disney and securing venture capital. The pace has gathered and Black Swan has ridden the inevitable bumps to fly forward faster than almost any other UK tech start-up. Their plan now is to conquer America and to be listed on NASDAQ. Based on current trajectory, they’re well on the way.