Quaero Reinvents Itself Again After Buyout

Everything old is new again at Quaero. Fifteen years after it was founded, the data analytics company is a start-up again — now that it bought itself back from the parent company, CSG, that had acquired it in 2008.

The deal closed in January, and now Quaero, a firm that wants to connect data management and analysis to advertising, is using it as an opportunity for innovation. It's shifting its strategy from hosted data services to a data analytics platform, an iteration the CEO calls "Quaero 3.0."

A Brief Recap

It's another chapter in a story with plenty of twists and turns. The company has shifted gears, downsized and upsized several times.  Founded in 1999, it survived the dot-com implosion of 2000-2001 and the financial crisis of 2008, and was ultimately rewarded with a buyout.

But now the management and employees own the entire company again. CSG holds some stock warrants, which are similar to stock options and allow it to participate in the upside of the company. Financial details have not been disclosed.

Quaero, based in Charlotte, N.C., with offices in Burlington, Mass. and Bangalore, India, was founded in the era of technology froth. It shows some start-up stories aren't as cut and dry as funding, growth, acquisition (or IPO).

"Informally we call it Quaero 3.0," says Quaero CEO Naras Eechambadi, "though this is really the fourth incarnation of the company."

The company analyzes the data of a target market and then matches that to advertising programs to find out which are most effective. It's got some big marquis media customers, including Disney's ESPN division.

Eechambadi says the company grew to 40 people during the dot-com period, when Priceline was its largest customer. But then had to cut back to half that size in just months as the technology markets declined. It then started building a data management and hosting business in the hospitality and financial services business before the 2008 financial crisis hit. It was bought by the billion-dollar CSG for $15 million in 2008

Steady Evolution

In the past few years, under CSG, the company morphed its data analysis platform to help media companies become smarter advertising players. Gradually, the integration with CSG didn't make as much sense, Eechambadi said.

"The nice being part of a billion dollar company was that it allowed us to pivot from being a hosted services to being a custom data management platform," he continued.

Eechambadi said the company's value is to manage a process that many of its clients find messy: Building an infrastructure to collect, manage and analyze vast amounts of data. It is now growing again and is bigger than its ever been, with 80 people.

"The central problem for a lot of clients is the volume and velocity of data they get from umpteen channels," he said. "They have very limited ability to deal with it -- capture it, manage it, and then act on it. We can very quickly get a client up and running."

Quaero's technology is based on Hadoop, and it's a partner with Cloudera, the big cloud-data analytics firm. It's biggest public success story is ESPN, which it has worked with for years.

"We manage all of their digital data about their fans, checking scores, coming to the devices," said Eechambadi. "We manage the data, we analyze those visitors. Identify their patterns of behavior, and then we evaluate how much advertising [ESPN clients] are able to do. It allows us to understand what type of advertising to do, and have it targeted. It allows them to get multiples of CPMs. They were already every successful, but we were able to turbocharge them."

Eechambadi said the infrastructure for the ESPN project took many years to build up and required "tons of traffic" to get a reasonable analysis of the data.

The Marketing Landscape

With Quaero covering several emerging areas of digital marketing -- data management, analytics, and media -- I asked what Eechambadi what he thought of the explosion of digital marketing technology companies -- now approaching a thousand. Have too many marketing technology companies been funded?

"Oh, yeah," he said. "But that's a loaded question. At any given time, you can ask that question and the answer will be yes. The venture capitalists are always funding too many companies to survive."

While Eechambadi is aware of the threat of so many startups, he said the company straddles several areas so it's sometimes hard to define who is the biggest threat.  "We remain very aware of what's going on. These people do knock on our client's doors. Instead of treating it as a threat, we ask how they might fit in. Our platform is quite agnostic."

Given Quaero's history of reinventing itself, you can probably trust it to figure it out.