Kahuna Catches $45M to Make Marketing Smarter and More Automated

Wall Street Jounral
This article appeared on The Wall Street Journal.

Kahuna Inc. has raised another $45 million as efforts to help companies get the right marketing message at the right time to millions of people continue to evolve.

Tenaya Capital led the Series B round, which follows a series of executive hires at Kahuna. The company has attracted people from Salesforce.com Inc., Cisco Systems Inc. and Zendesk Inc., among others, despite being a little over three years old.

The application of big data to marketing is still new, and Chief Executive Adam Marchick, a former venture capitalist who grew up in Silicon Valley and also worked briefly at Facebook, said Kahuna is productizing some of what Facebook has done with its growth marketing team.

“This is about understanding the person on both the Web and mobile [devices],” Mr. Marchick told VentureWire. “Facebook … saw that.”

Kahuna’s software uses machine learning to help companies engage and communicate with people–whether they are on email, social networks or mobile apps–by focusing on their behavior regardless of where they are. It reads digital signals that can help marketers decide, for instance, when someone is most receptive to receiving a message; when is the best time to follow up if an action, such as a purchase, isn’t completed; and which variants of messages and marketing campaigns are most effective.

For instance, at One Kings Lane Inc., a Kahuna customer, if someone showed interest in a new couch, which is a considered and expensive purchase, Kahuna’s software would deduce that it should follow up 2½ days later with an “inspiration message of how it would fit into the grand scheme of their home,” Mr. Marchick said. But if they were looking at napkins, “the right answer is to send a message 15 minutes later (with an urge to) capture it on whimsy,” he said.

This requires technology that is capable of ingesting billions of records a day on users’ mobile and Web usage and analyzing them in real time. Older systems were designed for processing messages in batches, Mr. Marchick said, “but when the Weather Channel [also a Kahuna customer] needs to send a severe weather alert to get it out, it’s an architectural break from existing systems. [It’s not] sending a million messages at a time, it’s sending one message at a time a million times.”

The new money is for growth. Competitors include Salesforce.com and Oracle Corp., which have both acquired marketing software companies, and HubSpot Inc., which went public last year.

Current investors Sequoia Capital and SoftTechVC also participated in the new round, which takes total funding in Kahuna to about $58 million. Tenaya Managing Director Ben Boyer joins the board.

Mr. Marchick said one of his goals is for his employees to do well enough financially at Kahuna that they are glad they joined. At the mobile advertising company AdMob, which was considered an IPO candidate before Google Inc. acquired it in 2010 for $750 million, “100 people bought houses. Those are our metrics,” he said.