In May of 2013, Enigma joined 30 start-ups vying for attention from venture capitalists at TechCrunch’s Disrupt NY. By winning that contest (and $50,000 in seed funding), Enigma’s visibility exploded, gaining the site 10,000 opt-ins for its free trial without any SEO whatsoever. In this exclusive Case Study, CEO Jeremy Bronfman spoke to us about how the site is on track to garner 7-figure revenues entirely from subscriptions, the hidden market for APIs, and the downside of massive publicity and broad appeal when it comes to conversion.
Company Profile
Founded: April 2011
No. of Data Products: 2
Employees: 15 full-time (and hiring), plus a small number of contractors
Business Model: 100% subscriptions
Paying Subscribers: Less than 100
Location: New York, NY
Website:http://enigma.io/
Target Market
Enigma’s Web-based application primarily serves professional service firms or analysts, investment banks, private equity firms, and also some news media and political action organizations.
Enigma’s API — a software-to-software interface that allows another website to interact with the Enigma databases — is primarily used by underwriters, i.e., insurance companies, credit card companies or banks, looking for new clients or to make better underwriting decisions. It’s also used by software developers with a sophisticated understanding of how to use data.
Content
Enigma is a subscription database that aims to make searching government and other (mostly) public domain databases easier. It combines and streamlines data from more than 100,000 sources, such as SEC filings, patent application, state and federal records, lists of frozen assets, and even CrunchBase. To get a real sense of Enigma’s offering, check out their friendly video.
While most of the data is public, not all of it is free; Enigma will pay for some data sets. “Our definition of public is that we don’t have an exclusive license and we’re allowed to re-publish it,” Bronfman says.
The service is pay-worthy because it provides two key advantages to users:
- Discovery: Enigma makes it possible to not only search different data sets simultaneously, it identifies connections between them.. For example, if you search for Google, you can get a list of the H-1 visas the company has sponsored, which helps you understand how much of their talent is recruited from overseas.
- Ease of use: The data is entered in a very structured way in Enigma, which is what makes search and discovery easier. The company may receive CDs with data, which they then upload clean and normalize to foster ease-of-use.
The company’s APIs lets other company’s use their data effectively. For example, while Enigma gets data from Crunchbase, it also provides them with an API, which makes it easier for Crunchbase to add external data points to their database.
Bronfman says the site and APIs are updated constantly, and that the company aims to integrate at least 3 new data sets a day.
Enigma has 11 engineers split into three teams: data procurement, information architecture, and front-end product design. The company built its own parsing tool that helps the engineers bring in a new data set and link back to it, making data origins transparent to users.
The site does some data matching and merging, but if there’s an error in the data set, Enigma prefers to go back to the source and get them to correct it. The site also uses a number of consultant and freelancers for their metadata and data descriptions. The site is currently writing style guides for metadata and trying to automate it more.
Revenue Streams
Enigma is already garnering close to 7-figure revenues, which is impressive given the site wasn’t commercial until May of 2012.
100% of revenues come from subscriptions, either to the Web-based service or to the APIs.
Enigma has three levels of pricing:
- Individual user accounts cost 195$/month and have very limited API access.
- Analyst accounts cost 395$/month and offer expanded levels of API access and user support.
- Site licenses begin at 1000$/month and offer an expanded range of API and support services.
In addition, users can get custom API access and pricing. The range is between free (for product developers or niche users using just one random data set ) to an expected $1 million price point for some users in the future.
Marketing Tactics
Enigma is an interesting Case Study because it demonstrates how entering contests, especially those backed by venture capitalists, can help a start-up launch and acquire new subscribers. However, there are also some downsides to this approach, as we’ll see in the Conversion Tactics section.
Pitch Contest
Enigma won the TechCrunch Disrupt NY contest soon after its launch, which awarded them $50,000. That brought the site some phenomenal press coverage and high visibility in the tech community.
The site went on to be a Models of Excellence winner at DataContent 2013, and most recently, was named a finalist for Take the Helm.
PR
Despite the site’s impressive press coverage, Enigma only has one person who “helps a bit” with PR, says Bronfman, who prefers to deal with inquiries himself.
Social Media
Enigma also has active Twitter, LinkedIn and Facebook accounts. Bronfman says they don’t have enough followers, but they do have a lot of interaction, augmented by their own Meet Up group, which allows the company to stay hooked into the tech community in New York.
Trade Shows
Bronfman and the head of business development at Enigma will often attend one to two trade shows a month, where Bronfman will also be a speaker. They’re looking to expand their trade show attendance in the future.
Surprisingly, Bronfman told me that Enigma, despite being a tech company, does not do any SEO or PPC marketing nor any postal direct mail or affiliate marketing. Given the publicity from Disrupt NY, it doesn’t really need to at this point, especially since Enigma is having trouble keeping up with its request for trials (see Conversion Tactics below).
Conversion Tactics
Bronfman says Enigma has received 10,000 requests for a free trial since launching, mainly a result of the company’s press coverage. However, their trial-to-paid conversion rate is a low 5% because the TechCrunch crowd is really outside their target market.
The site also has a video. The two-week free trial can include a live demo, depending on the client. Enigma does not require a credit card. Enigma sends a reminder email three days before the trial ends.
In terms of payment processing, the site is willing to take credit cards, ACH payments or invoice a client, depending on their preferences.
Group Subscriptions
Most of Enigma’s leads for site license sales come through email prospecting; emails are acquired either through direct requests through the site or person-to-person referalls. The company does not buy lists and does very little cold calling.
Small client sales are usually sold through the site, where the client gives a credit card. Larger clients usually receive a live workshop and a custom proposal from Enigma. Enigma will then allow the client to create an internal procurement system to add seats when desired.
Retention Marketing
Because Enigma launched its paid subscriptions less than a year ago (last May), they have no real, reportable retention rates. But the site uses an online chat to help engage and retain customers.
However, the site does have all of its subscriptions on auto-renew, one of the most effective retention tactics to implement.
Cross-sells and Upsells
Enigma’s main cross-sell is its customized APIs because the Web app opens them up to the site’s data set and incredible usability.
Cross-sell prospects are usually identified by account managers. “All the language makes it clear that Web apps subscribers can request an API trial as well, so there’s a lot of self-selection there,” says Bronfman.
About Jeremy Bronfman
Jeremy Bronfman came to Enigma because of his long-standing relationship with the founders, Hicham Oudghiri and Marc DaCosta. “Hicham was a currency trader and Marc was building climate models for Intel, and they found there was no easy way to identify what data sources existed and then no easy way to bring it into their business. Enigma really came from solving their own pain points.”
His biggest surprise has been the popularity and potential profitability of the APIs. “That wasn’t even part of the business when I joined. Then it quickly became clear to us that selling the data to underwriters and empowering them to do more interesting things with the data than we could ever do on our own became a huge selling point and revenue generator.”
His best advice for other in the data business is to go niche: “Our biggest mistake is that sometimes we’re a little too broad, so I would advise people to pick a particular niche and build products with it.” However, he also admits that advice is a bit self-serving since they can do build those products with Enigma’s API.
Vendors & Technology
Hosting — Amazon Web
http://aws.amazon.com/
Payment processing –Braintree
https://www.braintreepayments.com/
Email management — MailChimp
http://mailchimp.com/
Consultants/Freelancers –Mturk
https://www.mturk.com/mturk/welcome
Analytics — Intercom, Google Analytics
https://www.intercom.io/
http://www.google.com/analytics/
Workflow management – Jira
https://www.atlassian.com/software/jira
Insider Analysis
First, we love that a trendy, award-winning technology company is relying solely on subscriptions; too often, the tech world dismissed paid content of any kind as “old-fashioned” instead of a viable path to profitability.
Second, we also like how Enigma has been able to garner trial-takers and subscribers without any SEO whatsoever and still win awards and seed funding. That’s an impressive feat. And the company’s awards are well deserved given their ability to make connections between disparate data sets and provide an easy-to-use platform for consumers. We also like the site’s friendly video; this is a great acquisition and conversion tactic for B2B sites offering more abstract data services.
Of course, the downside of their incredible publicity is a less qualified prospect pool — there’s a lot of people curious about Enigma, but not all of them are the best prospects for subscription sales. Therefore, Enigma may want to consider getting a PR expert to advise them on how to use their awards to attract the attention of the right prospects. And this may be the one time when MORE friction in the conversion funnel could be a good thing — a longer form with questions about a prospect’s work and need for Enigma could deter curious but inappropriate leads. We also see a need for some basic SEO in the future — just to augment discovery.
Lastly, the site should start tracking retention metrics now and look to have a solid retention program in place as soon as possible. That can include onboarding tactics, on-site reminders for renewal, email marketing, and perhaps some telemarketing and account management for larger clients.
