“I’ve always wanted to be an entrepreneur, even at an early age. Entrepreneurism and fund raising has always been a part of my life. By accident, it came together the way that it did,” Michael Peterman said.
It all began when Peterman was in college working for circulation for a magazine publisher.
“I had to buy data from all the companies that where providing consumer information, and when we did this, the tolerances for error were very high, it was very difficult to get dependable information,” he said.
Peterman found an organization in his hometown that specialized in data, which piqued his interest, eventually moving back to Naples and starting at this similar company.
“I worked my way into a leadership role and into an equity partner in the company. We created the first web-based count and order entry system for lists and data. All the compilers of information licensed our technology including the USPS ADVO database, Equifax, Polk, and Dun & Bradsteet. This gave us unique visibility into the strengths and weaknesses and compilation methodologies of data sources.”
After selling the company in 2003, although his other three business partners decided to leave, Peterman stayed onboard for a buy and build with a big venture firm in Chicago.
“One of the companies we bought was an analytic company, another was a database management company, and another was a digital marketing company. We put them together and I spent the next 3 years getting into the analytic side of the business. The team who had acquired us sold the company again to another venture firm in 2006,” he said. “At that time, the early adaptations of machine learning were starting to emerge from companies like Amazon and their book recommendation engine using collaborative filtering.”
Peterman knew adopting the same types of processes would be hard, but it was an opportunity he didn’t want to miss.
“The group who bought our business did not share my enthusiasm for analytics, it was not what they envisioned in their acquisition,” he said. “We ended up parting ways and I subsequently started VeraData.”
Beginning in 2007, VeraData provided marketers and fundraisers with breakthrough results by leveraging big data, cutting edge technology in the form of machine learning and advanced analytic techniques. Unlike a traditional business model, VeraData serves organizations on a performance basis, meaning they are only compensated when they improve results.
“When we started, nobody really knew what machine learning, support vector machines and deep learning was, everything I talked about was foreign to most everyone. It was a time when budgets were thin and people we’re cutting back due to the economy,” he said. “We were so confident that what we built would work, that we changed our pitch to, ‘we’ll do everything for free and you can pay us based on our ability to move the needle.’”
This unique selling proposition allowed VeraData to gain some traction in the industry. Relying on referrals and word of mouth, they have yet to spend a single dollar on marketing. Ultimately VeraData landed in the non-profit arena, which makes up 75% of their total business today.
“One of the great things about the nonprofit space is unlike a lot of the commercial space, the nonprofits and the people that run them are genuinely good people. They love to help other nonprofits, and of course, people in general. As such, they will sit on stage or go to conferences and share all the great stuff that we were doing together,” Peterman said. “That was a blessing.”
Keeping a Competitive Edge
“Being at the forefront of this industry, it’s very difficult to catch up once you fall behind. You need to be at the leading edge,” Peterman said. “We have team devoted to research and development trying to stay ahead from a product and technology standpoint.”
VeraData innovated the use of machine learning in the non-profit space and brought it to market on a performance basis. This means they did the work for free and allowed charities to pay only after they had proven their value.
“The technology, the process and the business model are transforming the way non-profits conduct fundraising and work together as teams across silos and across chapters. At the onset of our company, instead of following the traditional path, we hired the evolution of this position – neuroscientists, physicists and mathematicians and built our infrastructure from the ground up,” he said. We purposely built an environment and filled it with volumes of data specifically to improve fundraising results for non-profits.”
They also encourage independent data scientists to use their tools and data, resulting in methodological breakthroughs and technological advancements in their technology stack.
Overcoming Challenges
Since starting his company, Peterman says the two biggest challenges he’s found were finding great people to hire, expanding their office into Ukraine and bridging the complex communications with this new team.
“How do you find data scientists when there are none? This was a very new position that required hard to find skillsets. There were people who fit the bill, but they were living in New York or San Francisco, working for Google and companies in Silicon Valley,” he said. “I couldn’t pay them the same rate, we were nothing at the time.”
Instead, Peterman decided to look elsewhere to find talent, eventually settling on eastern Europe. There, VeraData hired a double PhD mathematician who led a university in the Ukraine, capable of building a team of data scientists.
“We slowly but surely built that team up and at that time, we were in a part of the Ukraine that Russia decided to annex. As everyone knows, Russia took control of the Crimean peninsula and we were faced with a serious problem – American companies were going to struggle there, we had a tight timeline to overcome this roadblock” he said.
“Our incredible team, during the week of Christmas, loaded all of our things into a moving truck and moved our office 500 miles away, back into Ukrainian territory where we could rebuild. It was a herculean effort on their part and was executed flawlessly,” he said. “The commitment to getting that done and the people moving their families, it was such an unbelievable event…it’s difficult to fathom what they had to go through.”
What’s Next?
Despite the challenges they’ve faced, Peterman and the team at VeraData doesn’t plan on slowing down anytime soon and have their eyes set on continuing to make the world a better place.
“Our goal is to take on more and help nonprofits grow. When you’re serving charities, our team is essentially helping people who help others. When you win, you’re feeding a child, saving an animal, helping a Veteran, curing a disease, helping a homeless person find shelter and food,” he said. “It changes the dynamics of the business. You end up with a caring team willing to go the extra mile to achieve an outcome that is meaningful. That has been the most rewarding and unexpected piece of this journey”
What it Means to be an Honoree
VeraData was one of the top 50 second-stage companies selected throughout the state of Florida based on innovation, growth and more. After two rounds of judging, they will now be celebrated next month at the 9th annual GrowFL Florida Companies to Watch.
For Peterman, being an honoree has leveraged his company when it comes to hiring new employees and gave him the validation to continue moving forward.
“One of the challenges we faced as a company when we were posting positions and hiring was that we didn’t have any exposure. This was a great way to show potential candidates that we’re trying to hire that we are worthy of them making the move,” he said.
“It legitimizes the things we are doing. It lets our employee’s, candidates and clients know that we are winning! We are a good company, there is really something to this and this is the future. This recognition gives everyone a comfort level, including me,” Peterman said. “We’ve really done something cool here.”
Advice for Future Entrepreneurs
For future enterprisers, Peterman’s advice is to take utilize the people and resources around you to help guide you through the ups and downs of owning a business.
“Nobody is right all of the time; everyone makes mistakes, so what can you do to limit the number of mistakes? I was fortunate enough to assemble a board and a team of advisors, consisting of some amazing entrepreneurs and CEO’s. They’re all more experienced and smarter than me, they’ve all been through a whole lot of situations that I’m going through in different ways,” he said.
“It saves you from yourself. If you have a team of people that you trust who are capable with complimentary skill sets and a diverse set of experiences that are willing to give you some of their time,” Peterman continued. “Southwest Florida is awesome. You can reach out to former CEO’s who have retired in the area and who want to help the community.”
Notable Philanthropic Involvement
Since 75% of VeraData is serving non-profits, they are committed to donating time, money and services to various organizations in Florida, New Jersey, Missouri and California. Specifically, the Children’s Health Charity, Animal Welfare Charities and an Educational Charity supporting the underserved.
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