Tyler Ryan - Founder & CEO, Data Driven

Welcome to another Founder Wisdom Pod. We have Tyler Ryan with us today. He's the founder and CEO at DataDriven, $3 billion plus in customer data analyzed. That is dollars. He's building a data-driven operating system for online DTC businesses. Ex-Nasif, my memory is well. And yeah, Special guy altogether. Tyler, welcome to the podcast. Tell us a bit more about yourself.

Hey, thank you so much. Yeah, I got my, got my start as a very hardcore engineer, software engineering out of college, and went to NASA to work on Mars rover projects. So I had the opportunity to build a lot of really cool technology. And man, I'll tell you the thing that I learned is, you know how well you have to know your numbers to get a spacecraft to land on Mars? When I saw that firsthand, it just broke my frame of reference about what it means to be detail-oriented, to know your numbers and all of that. So when I went on this long and winding road of trying to start companies and building software, once I saw that businesses were struggling to understand something so fundamental, which 8 years ago, this was customer lifetime value, I just thought, that's a problem that I can solve. And compared to landing a rover on Mars, Business analytics is pretty easy.

So you took a weird turn. I guess most of your colleagues were like, hey, what are you doing, right? Like, why not continue in the space of research, science, and physics? And, uh, yeah, propulsion. Uh, your first company was, uh, Quantum Reference. Was that your, your first official company?

Yeah, that was the company I started while I was working nights and weekends while I was still at, uh, the Jet Propulsion Laboratory. And that was really the company that I just jumped into to throw myself into the fire of entrepreneurship, even though I had no experience, right? It was like, just start, just go. I moved into an apartment with my buddy. It was both of our first companies. We had no idea what we were doing. And so we just tried to build that company for 2 years. And the main thing that we realized, we built a lot of really, really cool technology, that nobody wanted to buy. And so that was the thing that really allowed me to realize the difference between just building things that you think are cool and actually building things that people will pay for. And so that was really my wake-up call on if you're serious about being an entrepreneur and building a real business, you need to go learn the business and the sales side and the marketing side and the customer acquisition side. So that moment, being 2 years in, having made maybe $1,000 total in those 2 years, burning through my savings, that really led me to that fork in the road moment of, okay, are you serious about this? Or was this just like a cool experiment that you wanted to try? And so for me, I was serious about it. So I took the rest of the money I had saved up from my retirement and investment accounts, drained all that. Joined a mastermind, joined a coaching program, got around other entrepreneurs instead of being isolated by myself. Then that is what led me to the companies that started making me money before I got into the company that I'm doing today.

So, business is rocket science.

Can be.

Mastermind, was that like your tip to get early traction, like to get Mentors to get advice, books, I guess, as well, podcasts? Were you into it? Was it mostly a learning game? And then how did you take that information and A/B tested it in the market?

So for me, 100%, it was a learning game because I had all these engineering skills with no business skills, right? So I had to solve that gap. But the way that I used the masterminds was, It got me in a room with a bunch of other people who weren't like me. Because when you go to a lot of these business masterminds, they're not technical people. They're not numbers people. A lot of the time they're more creative, they're more marketer, they're more on the sales side. So I'd be in these rooms when anyone would have a tech problem. No one else was a tech person. I was the only one who was able to answer a lot of their questions.

Hmm.

So I naturally found myself in these rooms where there was a lot of demand for what I did. because no one else in that room was like me. So I, I tried to do that as much as I could of, okay, where are all the business people hanging out where there's probably not any engineers? Let me go be in those rooms, even if I don't know, like, what am I going to sell? What am I going to do? Just get in those rooms because then I could find out what their pain points were, right? What are the things that they're struggling with or complaining about in one of these mastermind settings? So the first company that actually made me money was me just doing website build-out, sales funnel builds, custom integrations for online fitness businesses because I was in a mastermind with a bunch of online fitness businesses. And I just kept following those threads and that's what really got me to start building momentum. And those early customers that I had, those are the customers that led me to what became my first real company, which was LTV Numbers. And that's what's turned into Data Driven that I'm running today.

And why the fit niche? Fit Funnel Guy is quite interesting. Uh, sort of dig it, right? Not because it's the most, uh, profitable niche, but a bunch of these fitness gurus have cash, right? And need marketing help. Uh, why did you pick that niche?

I picked that, honestly, it was because I liked fitness and there was a mastermind that I knew about run by a guy that I had done fitness programs from and he was teaching business stuff. And I'm like, it's not like I knew where all these masterminds and mentors were, right? To me, it was like, just start. So, I said, hey, at least I understand fitness. So, I got in those rooms and that was just kind of where it took off from there. From that point on, I went to a lot of events and masterminds that were outside of fitness. But I kind of found my home there because that was where a lot of my early relationships were in the industry.

So generally, the fitter you are physically, the fitter you are mentally, hence in business, right?

Oh, I would definitely say that what those guys have is they have the discipline to take business really, really seriously. And that to me was really fantastic because Being in those rooms, you could see a bunch of really, really high-level driven people, but also they're just like totally not worried about like the tech side of anything at all, right? They're just sales, marketing, sales, marketing, which was the opposite of me. So I really, really gravitated towards those people. I was able to help them a lot, they were able to help me a lot, and everybody came out of that really well.

Interesting. Well, tell me about your current one, Data Driven, right? And, uh, I guess there was another one before that. What was the LTV one, right?

Yeah, LTV Numbers. That was what I've been running for the last 8 years. That was, that was the company when you mentioned $3.1 billion in data analyzed, that's all through LTV Numbers. That's what I started about 8 years ago after I was doing the Fit Funnel Guys stuff. And so LTV Numbers was built around the premise of answering the question, how much can I actually afford to spend to acquire a customer? Because what you find is most businesses can't truly answer that question. They might have a rough idea, but when you dig in, you say, how much can you spend for every product, every funnel, every traffic source, every affiliate? That's where the questions start breaking down. And so the answer to those questions is lifetime value, right? It's what's my lifetime value at every day of the journey for every product, every funnel, every traffic source. Every affiliate. So that business I've been running for the last 8 years, and that business is now evolving into data-driven. And where this whole evolution has come from is recognizing that these days people don't need more dashboards. They don't need another report to look at. They don't need another thing for their team to have to onboard onto for 6 months. What people need right now is they need proactive answers. to the question, hey data, what do I need to know? Right? They just want to know what is inside of their data and what matters right now for decision-making. So the whole premise around data-driven is to take the same fundamentals of LTV numbers, but now bring it into this new experience where you can essentially have an autonomous data analyst join your team who knows what questions you should be asking and proactively answer those for you. And that's Otto. That's a new service that we're building, OTTO. And Otto— picture this cute little otter— Otto is your autonomous data analyst that joins your team. He understands your lifetime value, figures out what matters most right now, and then proactively answers those questions for you.

Interesting. And why the obsession on LTV?

To me, it's simple. A business is defined by the relationship between lifetime value and customer acquisition cost. Everything boils back down to that because the money that a business makes, the profit, right, is what's left over when you take how much is a customer worth over their lifetime. You subtract out all the expenses like your, uh, your fulfillment costs, your product costs, all the gross expenses. Then you take out your customer acquisition cost. What's left over? Right? That's the profit to build the business, to hire from, to run the business. And that to me is the, the heart and soul of the business itself, because your lifetime value is a reflection of the customer journey that you have, the quality of your product, the quality of your customer experience. There's so many things that LTV captures. It's a metric that represents so much about the art of business. So I became very fascinated with it because it captures so much, but also almost no businesses actually know it. And so it was really that gap, right, of its fundamental unit of the business. It represents so much in a single metric, and also the vast majority of businesses don't have visibility into it. So that to me was where the real opportunity was. Everybody needs this, almost nobody has it. It's a problem that I can solve. And so that to me is where a lot of these conversations start. You got to see your LTV curve to know what's actually going on in the business. Let's start there, then everything can build on top of that, right?

I'm not sure if you have examples of dashboard of yours or other auto, um, so that we can see, but A lot of businesses, they don't have a clue of what LTV is, right? Like the word. Then you ask them to calculate long-term value. I guess the main challenge is that this may change, right? Especially newer business. Older business with an established moat may be able to calculate that accurately and linearly, but the market changes so quick nowadays with AI that guessing it's almost impossible to know. And then if you have a problem sort of calculating it, how can you take it seriously, right? If that number is never gonna really be accurate, I guess it's like going to the gym and making the reps in, right? And practicing and eventually building your data muscle so that you can get value out of it. How do you view all of that?

Yeah, I mean, you nailed it really. Ultimately what it comes down to is If you can't actually see it, and I'll— you mentioned sharing my screen, I'll do that for you real quick. So when I say see your customer lifetime value visually, this is exactly what I mean, right? It's being able to see what is a customer worth at every single day of the journey. And then once you have this, which most don't, It's about being able to break it down. Can you see it for your Facebook customers? Can you see it for your YouTube customers, your Google search customers? And then same idea, one line for every product, every funnel, every traffic source, every affiliate. So to your point, it's like, imagine if every time you went to the gym, you couldn't actually see how much weight you were lifting. Imagine if every time you went to the gym, couldn't weigh yourself. Imagine every time you ate, couldn't see how many calories you had. It's one of these things where if you can't see these things, yes, you can do your best of, I think I need to eat more or eat less or lift more or eat less, but your ability to make good decisions is so limited, right? And when you can't see it in this level of detail, for example, many businesses, they know their average order value, like, hey, my average order value is $267. Great. So they make their decisions for how How much they can afford to spend to acquire a customer for every single one of their funnels, every single one of their traffic sources based off that single number. But the reality is you're gonna be wrong on every single one. There's Facebook, there are the AOVs lower. There's YouTube, there are the AOVs higher. And you can see these LTV curves, they're up in the 300s by the time you get a few months into the customer journey. So it really comes down to if you could see the data like this, If you knew what was actually going on after a customer was acquired, you would make different decisions. And it just starts with solving the visibility constraint that most businesses have that prevent them from being able to make those good decisions. It's not a lack of skill. They just can't see this, so they can't make good decisions from it. And that to me is a real shame because it makes very high-level business people operate far below their potential. just because they have a visibility problem. And so I wanted to solve that visibility problem.

Let's say I have an agency, right? And I get monthly payments. How do I figure out in real time what's going to be the LTV of this new client that bought my cold email services, right? And are paying me monthly.

I mean, the way that we would answer that question, right, is we would look at, let's find every client you've ever had that looks like them and see what their LTV was. Right? Then use that as a baseline to create some expectation for the future.

And how do I increase the LTV of my clients? I mean, an easy one is increasing my price. Another obvious one is retention, right? If it's monthly, what's your favorite tips to increase LTV?

Man, there's so many ways. Here's what I would say first. First, the most important thing is to treat it from the perspective of where's the leverage? Right? Because there's a million things you could do to increase your LTV, but it's a question of, is it— I have a huge spike in refunds over the first 48 hours. There's a lot of supplement companies where that's the case. You'll see if you look at their LTV curve, there's actually a big drop in the first 48 hours and kind of extends over the first 7 days. If you have a big drop right there, we could talk about retention all we want, but the biggest thing that you could do is Get rid of those refunds, right? What— why are they happening? What's going on? What visibility are we lacking there? Let's start there because that's just profit that's leaking out the door that you can also solve very quickly, right? So number one usually comes down to around the ordering experience for your customers. How can we eliminate confusion? How can we set better expectations? How can we make promises and keep promises really, really early on in the journey? Because a huge part of retention, not having refunds and all of that, how many promises can we make right at the beginning when someone becomes a customer and then immediately keep them or exceed them? Right? So a lot of my favorite tips come down to set really clear expectations, set a lot of expectations very, very early, and then meet or exceed all those expectations. So if you're a product company, that means Don't say that it's going to be 3 to 5 day shipping and then have it show up in 10 days, right? If you're a services company, don't say that we'll be having our onboarding call within the next 3 days and then not reach out to them for a week. A lot of those things, which are real business fundamental type stuff, not like super ninja tactics, those are really where the breakdowns happen because a customer decides if they're going to buy from you again within the first 24 hours. So if you're gonna Load up those 24 hours with failures or successes. That's what's going to determine how that relationship goes in many cases.

Got it. And how do you— first, who do you target with DataDriven? Who's your ICP and how do you increase your own LTV?

Oh man, great question. So we really have 2 distinct ICPs at DataDriven. The first is an online D2C physical products company, like a supplement company. Perfect one. Imagine a supplement company that's doing somewhere between $25 and $100 million a year, and they're advertising on Meta, YouTube, Google Search. You know, maybe they have a Shopify store, they're running marketing funnels on a Checkout Champ or a Sticky, something like that. So that's ICP number 1. ICP number 2 is online info and creators. So they're selling courses, They're in school communities, they have subscription membership sites. So those 2 physical products and digital info, those are our 2 core ICPs. The way that we increase our LTV, relentless focus on the onboarding experience because it kind of comes back to that same premise, right? If you're coming on board with us and it's clunky and it's slow and you're confused, you don't really know how to build your first report. You're not really sure where to start. If you don't get a ton of value right out of the gate, then it's going to be very difficult for us to convince you to stay, right? No matter how great the software actually is. So we've done a lot on the onboarding experience to try and get you to the activation point, we call it, right? Which is when you have your first LTV report in front of you and being able to walk through that with an expert. Right? So someone from our team who can help you know exactly what you're looking at and strategically what it means. So for us, it's, can we get you to that point in the shortest period of time possible? For a long time, like early on, it was, could we do it in 3 weeks? Then could we do it in 2 weeks? Could we do it in 7 days? Because some of these businesses are really complicated. They've got 5 different CRMs and shopping carts. They're on ClickBank, they're on BuyGoods, they're on Digistore. They got a backend call center.

Yeah.

There's a lot of complexity. So it's not just like click a button and all your data is synced, right? So for us, we keep trying to drive that time down. We keep trying to find what's the slowest part in the onboarding process and what would be the thing that we could do to minimize it. And so ultimately driving the onboarding time to a minimum number with the best possible activation experience, that's been our single biggest driver of retention. And it all happens in the first like week. That's what determines, is this a 3-month-long relationship or a multi-year relationship? It's often that first week. So that's the first thing. The second thing is actually the big motivator for the move from LTV numbers to data-driven and auto, which is even with a really great onboarding experience, when people just have to keep building out their own reports, they have to know what to build and what matters. It's on their team to log in and get value from the platform. There was too much friction and ongoing value that didn't rely on us jumping in and helping them. And hey, what do you need right now? So we realized that the ultimate experience for our users would be if we could just use the platform for them and then tell them what they needed to know. And we already have all of our own best practices around doing that. So Otto was meant to be the, the actual character. that would play out our best practices, use LTV numbers on their behalf, and then tell them what they needed to know. That was where the whole idea came from in the first place.

And you charge $2.5K, right? Like for the basic one. So there's a human component. It's not just software. And then $10 grand a month. You've A/B tested these pricings against some of your ICPs. What feedback are you getting so far? Is it larger enterprises making, what, $5, $10 mil a year that are intrigued in that? Like, I would guess, uh, starters wouldn't have that budget, right?

Yeah, there's no doubt about it. So right now, at least, we're, we're primarily focused on the higher end of the market, starting more like around $25 to $30 million a year, because those are the businesses where there's enough, enough operational complexity Where we can provide a ton of value really, really fast. And so the, the $2,500 a month one that you referenced, that's more of auto just running, uh, proactively and autonomously managed more by them and their team. We're still here for support, but we're helping them set up the analyses, answer any questions. And that one is working really, really well in getting One quick win after another because Otto can just do more and more and more. And you start to stack up all these different processes and workflows, right? Where now Otto's looking for creative fatigue and refunds spiking and, um, all these different signals that can generate a lot of value and find areas where money is being lost. On the $10,000 a month one, that's where it's more like we're a part of the team as consultants. So we're on a weekly call with them, we're managing auto for them, we're setting up and building new custom capabilities for that business. So that's where it's almost like we're their data-driven department, right? And we're helping them get the most value from their data on an ongoing basis.

What are your favorite channels to acquire these clients?

For us?

Yeah.

Favorite channel, I mean, especially when we're still operating in this premium segment, favorite channels are still going to events. It's definitely something where a lot of in-person networking does really well. It's more of me speaking. It's me doing podcasts and things like this to build more relationships because these are some pretty big engagements with some pretty big companies. So in-person networking and speaking. is my favorite channel for it right now. But we're also starting to test out paid ads and building out a new strategy around that as well. But to your point about this being a pretty premium pricing, I think what's going to happen is over time, we're gonna have the premium pricing that you see now, but that will then create the way for a more entry-level pricing. Because as Otto matures and evolves over time by working with these really big companies, eventually you get to the point where it's so good that it really can stand alone. Right. And anyone can onboard and use it because they can self-onboard. They can get started with a really low barrier to entry, kind of like you see these tools like a Claude Code, for example. You know, you can start basically for free, but then pretty soon you can be on a $200 a month plan, right? And go up from there. So I think that's probably what's going to happen over time is we'll have this split into premium and entry level.

What are your top goals this year as a CEO? There's like 3 months remaining. What do you want to achieve with that one?

Number one thing is really bringing Otto to the market because right now, we're very much in like a private launch of it, right? We're coming to our existing LTV numbers clients first, bringing them onto Otto. It would be bringing Otto to market and then me being able to really speak about it. Right? Like we talked about launching our own podcasts and creating a lot more content on that front because I think building a data-driven operating system is such a huge opportunity right now for businesses. So I really want to get out there and talk about it.

Where can people find out more about you, Tyler?

So datadrivenos.com, that's where you can find out about what we're building now, Otto and the company. And then you can find me on Instagram, Tyler_DataDriven. Always posting content there day to day, week to week.

All right, so it's Tyler and Charles for another