Segment’s San Francisco office. Photo: Courtesy of Segment

In April, Segment raised US$175 million in Series D funding led by investors Google Ventures and Accel. Now, this Silicon Valley-based start-up has been given a total valuation of $1.5 billion and become a new unicorn.

However, as Calvin French-Owen, Chief Technology Officer and co-founder of Segment, wrote on a blog: “The reality is that it’s hard to build a business from scratch.”

In 2011 when the four co-founders, three of whom dropped out from MIT, decided to build a competitor to Google Analytics, the idea was a failure. From December 2012 on, they switched to developing one single API which businesses can use to work across multiple analytics tools including Google Analytics.

Today, more than 19,000 companies in 71 countries use Segment.

CDI: the core of Segment

“Decades ago, the relationships between merchants and consumers were primarily in person. But now people are digitalizing their relationships. We are interacting online in a new age of the internet,” said French-Owen in an exclusive interview with Asia Times. “What I mean is nowadays businesses need new pieces of infrastructure to be able to know customers and build great products.”

Calvin French-Owen (Left), Chief Technology Officer and co-founder of Segment at Rise Technology Conference, on July 2019 in Hong Kong. Photo: Supplied

Previously, companies typically used CRM (Customer Relationship Management) to manage customer information. Segment is instead providing Customer Data Infrastructure (CDI) for enterprises to better know about their customers and achieve higher customer satisfaction.

CDI, new software introduced by Segment, may revolutionize the business world as it’s reshaping enterprises’ interaction with customers.

Through Segment’s data infrastructure, enterprises can gather customer data from multi-channels such as mobile apps and websites into one place where they send data to one single API and then decide what they want to collect. With Segment, enterprises can collect, unify and connect their customer data over hundreds of marketing, analytics and data warehousing tools, explained French-Owen.

Put simply, before Segment, customer data collection and analysis were heavy workloads for enterprises as their customer data was spread all over the place and the had to use different analytics tools separately for different purposes. However, with Segment, enterprises can do it all in one single API.

Potential market

Some big names like IBM, Levi’s and GAP have been served by Segment for years. But what makes Segment such a big success is its commitment to serving hundreds of thousands of small and medium-sized enterprises.

“Google and Amazon have invested millions of dollars and teams of hundreds of engineers into developing data infrastructure. But for those enterprises and start-ups which cannot hire hundreds of engineers, we want to enable them to use their own customer’s data to build the best products as well,” French-Owen told Asia Times.

It does not make sense for small companies to spend time and money building a special data analystics tool, but they also have demands to adjust their business operations by knowing their customers better. These companies can pay Segment to build one for them and they can turn it on within a few minutes.

In French-Owen’s opinion, customer data analytics markets have huge potential as more people are building and operating businesses.

According to a Customer Analytics Market Research report released by Market Research Future, the customer analytics market is expected to grow at approximately $7.3 billion by 2030, at 15% of CAGR between 2017 and 2030.

First-party data

As far as user privacy and data breaches are concerned, Segment is confident with its business model as it only collects so-called first-party data.

“Generally there are three different types of data classification on the internet, namely first-party data, second-party data and third party data. It all has to do with your relationship as a user with companies,” said French-Owen. “Segment is all about first-party data and we only want to collect data which customers send us. Segment does not do third party data which are taking from some other sources.”

In addition to a key focus on first-party data, Segment is building a lot of tools into its products to maker user privacy better. “Segment launches compliance supports for our customers. For example, we built a feature similar to GDPR regulation to delete data that customers don’t want to be kept anymore,” said French-Owen.

The EU’s GDPR (General Data Protection Regulation), which came into force in May 2018, is allegedly the world’s strictest data protection law. GDPR gives data subjects the right to ask companies to erase their personal data.

Upcoming global expansion

Segment opened its EMEA headquarters in Dublin, Ireland, in May 2018. In the near future, Segment is also looking into Asian markets and has a Sydney office for the Asia Pacific region.

“Asia is definitely a big market for Segment. For example, we have some customers from India where we see a quite high volume of data there. We see more new start-ups and new companies rising here. These companies are also going through the same problems of how to know customers better and provide better products.” said French-Owen.

This article was written by Huang Wanyi in Chinese on Huang also wrote the English version.

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