In short, Thematic analyses customer feedback to tell companies how to increase customer satisfaction and reduce churn.
“As CEO and co-founder Dr Alyona Medelyan explains, Thematic is disruptive because it just needs raw data to find specific actionable insights. “When you collect customer feedback, it’s typically stored in a spreadsheet,” she explains. “It’s not easy to make sense of. Algorithms are much better-suited for providing deeper understanding. The market gap is the need for easily making sense of customer comments. There are a lot of competing services out there, but they typically use outdated technology. Companies pay hundreds of thousands of dollars a year for something we can do much more efficiently.”
Almost totally bootstrapped except for a small grant from Callaghan Innovation, Thematic is only the second New Zealand company accepted into Y Combinator – which has an acceptance rate of less than two percent. “It’s a lot of learning for us,” Medelyan says. “Y Combinator only accepts companies that they believe can become billion-dollar businesses.”
Medelyan says Thematic applied for Y Combinator’s online course Startup School in March 2017. “Out of 50,000 applicants, they chose a few thousand, including us. This experience was valuable. We loved the accountability, the focus on metrics, as well as the problem-solving. Towards the end, our mentor encouraged us to apply for the real thing: the summer batch of Y Combinator in California. Only around 100 companies are selected to take part in this program. While the chances were slim, we placed our bets, and here we are!”
Thematic has now been in Silicon Valley for about two months. “The experience has been incredible: every aspect of our business has visibly improved and we’ve learned a huge amount from the best of the best,” says Medelyan. “Thematic grew three times and has now customers such as ManpowerGroup, Stripe, Air New Zealand, Vodafone, and Ableton. And, we are the only company in the batch that signed up Y Combinator itself as a customer.”
Thematic has also been accepted into the Vodafone xone programme. Medelyan says the Y Combinator gig is all the more surprising considering Thematic’s background. “This is special because Thematic is not a classic Silicon Valley start-up,” she explains. “Our story does not fit the usual pattern of two Stanford grads coming up with an idea, getting angel investment, assembling a team, then racing to product-market-fit before the money runs out. First, the founders are 30 plus parents with two young kids (one and four) and a sizeable mortgage who live on the other side of the world, in New Zealand. Second, we did not raise any money. We’ve bootstrapped into significant profitability by having a highly-efficient tiny team of just the two full-time founders, with some part-time contractors. And third, we are two engineers who sell to large enterprises – typically a recipe for disaster, but our sales cycle is counted in weeks, instead of months.”
Despite their international success – and being on the cusp of even further success – Medelyan is quick to point out they have not forgotten their roots.
“We are very proud of our achievements and are also grateful for the supportive ecosystem in our home country,” she says. “New Zealand is the easiest place in the world to start and run a business. The government fosters innovation through R&D grants, of which we received two since the initial idea, resulting in technology recognized by others as world-class. Being so far away from everywhere else means that we needed to compete internationally from day one, rather than relying on personal networks. The kiwi lifestyle of beaches and barbecues made the start-up grind easy to bear. Last but not least, our friends and family also have been a huge support.”
Y Combinator continues for another couple of weeks, when it will culminate in a Demo Day. And after that? As Medelyan says: “We have got great things to show and are excited about what’s coming next.”
She also has some lessons she has learned that she believes other entrepreneurs could benefit from hearing. “Find a problem that’s worthwhile solving,” she says. “Technology on its own doesn’t build a business. But you have to let the problem come to you.”
And also, she says: it’s a good idea to think globally. “In New Zealand, as compared to Australia, we’re more likely to achieve success because the market is so small. You can’t get comfortable, especially with tech, you have to sell internationally from day one.”