Transforming Data Into Demand with Nova by Power Digital

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And welcome back to the Tacos and Tech Podcast. I'm your host, Neil Bloom, and I'm joined today by the team at Power Digital Marketing, the makers of Nova. With us, we got Grayson and Pierre. Welcome to the show, guys.

Thanks, Neil. Great to be here with you.

Thanks for having us.

Yeah, it's good to have you guys here too as well. We've been watching the extreme success of Power Digital and now we're here to talk about some other products you guys have been building, which is pretty exciting to see the product side of an agency. So why don't we have, Pierre, you want to give us a quick overview of what Nova is?

Sure. And if you don't mind, introduce myself too. So thank you for having me. Pierre Levow. I've been at Power Digital for I guess a little bit to a year now. By way of background I was a banker at Goldman Sachs in New York City for 10 years. So I come to the firm with a banking background. The way I think about Power Digital and Nova is really, it's a fine mix between digital marketing, of course, technology and finance. And that's really the group that I send in. I run our venture capital private equity efforts and we're just use the tech, which I'll describe in a bit to really evaluate companies, whether it's potential portfolio companies for investors and or pre sponsored companies, standalone companies that want to get a better idea in terms of their growth potential. So what Nova does, to answer your question, is that it'll latch onto a company's analytics set. So Google Analytics, Google Ads, Shopify, email, any data that exists. In addition to that, it'll take into consideration qualitative inputs as well. The technology by itself is, excuse me, the technology in itself is machine AI. It's been around for about seven years and what it does is it'll digest all those data points and then over a span of we'll say five to seven days, it'll produce a report concurrently. What's happening is that we have a full analyst team that's also digesting that data and it's a checks and balances process where we're looking at the pure data in terms of numbers. We're also making sure that we understand from a human element the impact as well. So it spits out this 120 page report that really identifies product market fit. There's some indications of competitive landscape analysis allows a company to have a better understanding of their CAC or ltv which many companies don't have coming prior to working with us. And then what it does are the two more what I think are more promising elements of the tech and I'm sure that Grayson will add to this is twofold. One is that it has the ability to forecast revenue growth or growth potential, but really revenue. So for an investment community they're saying hey, by company A or invest in company A versus company B, I understand what the capital requirement would be, I understand what the growth potential looks like from a dollar basis. So that resonates really well with the investment community. In addition to that what it enables, whether it be the company itself or the investors to focus from a priority perspective. So it'll identify which channels give you the biggest bang for your buck from an impact perspective. So those are my two favorite slides there Are plenty of other slides in there from a technical component that speak very well to like the marketing community. When I think about numbers and how we're positioned as a performance agency and a growth agency, those are the two kind of key components.

That's awesome. It sounds incredibly powerful, super unique for an agency to be building products around here. So I'm really excited to dive in, hear kind of the, the ideation of this and how it's come to fruition. But let's hear a little bit of kind of the background you kind of what brought us here today. Grace, you want to give us a little background on yourself and how you built up Power Digital to get to this point.

Yeah, for sure. So I consider myself an entrepreneur before digital marketer or anything of that nature. And I had founded, I founded I think 11 companies now at this point. And when started Power Digital with my two partners in 2012, was coming off a SaaS company that we had kind of pivoted and were looking to move on from. And then a manufacturing business that had really taken off and was very heavily driven through E commerce. But we'd gotten into a big lawsuit with a billionaire and we were the little guy. And so had fought it for a year and ended up I guess theoretically winning the lawsuit. But it made it very difficult for us to do business. And so while we were in this holding pattern, my partners and I started to do performance Internet marketing for some different entrepreneurs that we knew. And it just really took off and we saw a big gap. Having hired agencies. I'd never worked at an agency, nothing like that. But having hired agencies for these other ventures was very frustrated by fluff and ideas without execution. And especially at that time, I felt like most entrepreneurs have a ton of ideas and know how they definitely need to be polished and as you scale, that changes. But execution, especially on performance marketing and customer acquisition is what really was missing. And that's what we wanted to bring to the table. So that's how we started. We've had a lot of growth since we've really grown to where we do full funnel performance marketing. So traffic conversion, lifetime value. So however we can best prospect to consumers on the Internet, bringing them to the web property or Amazon or whatever and driving conversion rate to drive that ROI formula and then taking those first party data sets, email lists, et cetera, and monetizing those customers and selling more product. And so the way that Nova came to be was really from the start and it was very bootstrapped at the start. The initial vision that we had for it was I got to a point where I was doing a lot of these manual, we call them audits of businesses and I could start to really pick winners and I could identify these factors and elements that enabled these E commerce brands to rapidly scale and grow. When that happened, we would win in a big way. And so we had brands, for example, we had a pet brand that came to us, was doing 250k in the early days. We scaled them to 10 million plus and our fees and what we made as their partner grew by like 20 times. And so we wanted to pick more winners and we were a founder led sales organization and that wasn't going to scale. And so what we did with NOVA originally was really focused around how do we take these factors that we know drives E commerce growth and success and take them from my brain or my mind or my partner's minds and put them into a technology that can scale and be that process, that system that can get smarter and grow and really find these brands that are poised for explosive growth. And then secondarily on the strategy side, the part the module that we call blueprints, what is the right strategies to take advantage of those opportunities. And so that was the original part of Nova was finding businesses that are poised to blow up and grow and then identifying how and what is the tactical roadmap and strategic roadmap for them to do so. And that was really what we built. And then in 2018 ran a process, ended up doing a transaction with a private equity firm that's been an incredible partner to us called Periscope Equity. We did that in January of 2019 and really wanted to take some chips off the table, but also wanted a partner that really saw the billion dollar business opportunity that we saw in Nova and was ready to take some risk there and really pump resources and so been very successful. Our Nova team now has, I believe about 30 full time team members that are strictly working on that product. And we really believe that it's got a billion dollar market potential in the future and are really excited about what it's done for us and how it's enabled us to scale, but what it can do on a much bigger level as we continue to grow.

That's awesome. That's quite some foresight to one think of something that's working for you, great, grow your own business. But then realize we could productize this and turn this into a whole, not just business line, but whole company potentially. What's it been like building an actual kind of product internally within the business that you're now selling?

Yeah, I think we have a massive competitive advantage and it's funny because I built some bad software products early in my entrepreneurial career where I was kind of guessing and the feedback loops weren't super rapid. The advantage that we have with the service side of our business is we have about 400 of the largest, most successful E commerce brands that are full of incredible business people and marketers and we have about 350 digital marketers that work within the power digital walls. So we get a very rapid feedback loop, we get to do data driven development on the software front where we can see what features, what elements are getting traction within a day or two of putting them out. And it allows us to really be dynamic in the roadmap. And so I think that's a really big advantage that we have from a product development side. We've got built in distribution, we've got a really healthy testing ground, we've got clients that are very motivated and driven to give us feedback on the product, what they like, what they don't like, what they like to have. And that kind of ecosystem gives us a big advantage. Got it.

So can you take us through maybe this is for peer. What was some of the early feedback you were having with some of the PPE private equity groups that were hearing about this as a product? Was there something else that they were already using or is this kind of revolutionary for them?

Yeah, I'll speak to it directly from a PE VC perspective and it's because it's very nuanced.

Right.

And so I want to make sure that Gracie can come back and speak to it more broadly. But in my seat it's a whole lot of education.

Right.

So like there's always an inside joke between one of me and my, one of my business partners named Bill Wilkinson. And we always say like we're effectively teachers. I was a high school math teacher for a year and it feels that way because what I'm doing is I, I'm communicating the value proposition of digital marketing, of digital marketing to a finance community.

Right.

And I'm trying to have my digital marketing colleagues really understand the benefits of finance.

Right.

In terms of like the operators and investors are thinking like what's the bottom line? What's the impact bottom line.

Right.

So for us, the feedback we received is that most of the shops are a bit slow to warm up because there's nothing out there in the market like this that exists today. A private equity firm or a venture capital firm when they're looking at A potential port code. They're looking at balance sheet logistics, headcount operations, and they'll make some assumptions for digital marketing. And then more importantly, and this is one of the bigger challenges, is that they typically think of marketing as an expense item. That's the world that I was groomed in as a banker. And now coming at Power Digital, I purely have, you know, I'm drinking the Kool Aid, I'm eating the sauce and everything else. I think of it as a revenue driver. So really conveying that to them, the investor community, like, look, we can track this data. We really do minimize risk. I think of it as a risk management tool. And that's kind of the language that I use with them. We really do take the guesswork out of investing. So it really is just getting, getting out in front of them, educating them, walking them through scenarios, showing them best use cases in terms of how we use the data. One other. So we talk about it from a growth perspective. But another benefit before I hand it back to Grayson is that when companies are thinking about purchasing or investing in a company, when investors or P firms are thinking about purchasing or investing in a company, the seller has a price in mind and they have assumptions about their business model, how it's performed historically.

Right.

We come in, we literally kick the tires and we validate that thesis. We want to make sure that performance can continue to occur post transaction.

Right.

And so there are some instances. We'll run Nova and we'll say, you know what, there's a misstep or two in terms of their assumptions based on what we see from our machine AI when you purchase this company, we don't expect for this performance to continue and allows the buyer to adjust their pricing. So there's so many different elements that we're able to incorporate Nova and the Insights. But it really does is take the guesswork out of investing. It really does reduce risk. We want to make sure that nobody's overpaying for an asset and for assets that are underperforming, we're trying to find a way to, to enhance growth for them as well. So that's my world is purely our mostly, I would say venture capital, private equity. So I'll always speak from that lens. But I'm sure that Grayson has some learnings in terms of like the broader community.

Yeah, And Pierre said it really well. I mean, when we originally created Nova, it was not focused on private equity or vc. And that's why Pierre has only been with us for a year or whatever. We opportunistically found that this was a massive need in that space. So when we originally created it was to help us pick winning brands that we can blow up in a great way and scale their revenue and blow their goals out of the water and win together. But what we found is opportunistically some of the companies we were doing this for their private equity firm or VC got wind of it and came to us and we're like, wow, can you do this on our other port coasts? And so it just started to happen. And then additionally for me, having gone through diligence, we've acquired four different companies and I went through the process on my own. The most critical part to the investment thesis oftentimes for a private equity firm or VC is can they get the growth that they need. So for private equity, if they can get 30% year over year growth, they're going to be very successful, very likely. And they do very minimal diligence there. They spend a lot of money on legal diligence, they spend a lot of money on accounting diligence, a lot of money on technology diligence. There was barely any money spent on growth diligence. And so our technology was really able to do so. And we realized that and we started to opportunistically have some amazing firms come to us. And that's when we realized we need somebody like Pierre that can really teach them about this opportunity and how this can be their secret weapon and help them pick winners and de risk that process. But also that gets digital and can help translate that to this universe that's just simply not used to this type of diligence. And so it's been very successful and Pierre's done a great job and it's put us in a really strong position with a lot of these firms where we're their trusted partner is they're going through, should I buy this company as a platform company, Is this a good add on or whatever those things are. And we're able to really tell them what the growth potential is in a data driven way that's not just someone's opinion, but is through quantitative data as well as qualitative data super powerful.

The way you say it, that you use it for your own acquisitions.

Right?

I mean the fact that you can show, hey, we did this four times already on ourselves, that's gotta be super helpful. In the education piece. Is it currently like a platform? Like is it kind of like a pitchbook where people are going in and plugging in some data? Or is it more of like A kind of collaborative consultative. Let's enter in some data together and give you and spit out like kind of answers and stuff like that.

Yeah, so it's a one click connect to their first party data. They hook that up themselves. Currently we don't give them full access into the appraisal or blueprints unit. However it's all presented through there, which gives us great data as we scale our new business organization. We've got about 25 people on that team and so we can see what, what drives the highest retention rates and gets clients through the sales cycle and where we're falling off. But every single one of our clients, all of our 400 clients are logging in there multiple times a week typically. And that's where all the reporting happens for them too. So it's not just okay, can we get big results and when and how and then what's the strategy to do? So then once a client hires us to execute on parts of this plan, sometimes they execute on all of it. They just pay us for the appraisal but most of the time they need our help in executing on parts of this. So that's where they go to then see the progress against also creates that feedback loop for us to where our system gets smarter. Because the system's making assumptions obviously based on data as to what the right strategies and initiatives are to realize this result. But then the system will actually track those assumptions and they get smarter and smarter. So the forecasting of the results get smarter and that margin of accuracy gets better and better as well as what really moves the needle and what doesn't and what's the best return on time from a marketing perspective. So they are in the platform. We have some groups that were part of their diligence process and were embedded within their system and so they are API ing into our platform but we're not letting any of the competitors use it at this point within our space. It's an opportunity. We think that currently it's a lot bigger asset to us as our secret weapon as opposed to letting others in our space use this. But we're opening it up to the private equity universe and to the VC universe to use it more on a self serve basis.

Got it. So is that kind of what's over the horizon kind of looking forward and from the iterations you're hearing on the product is just more self service and being able to use it or what other kind of feedback are you hearing that's iterating the product now?

Yeah, I would say that it's how Grayson decided. But I also think that many of our clients, especially on the PE VC side, they appreciate the insights that our team is able to provide as well. Like the numbers are the numbers. Right. And people that are numbers oriented, they get it. But being able to manage the art and science aspect behind it. So by virtue of having a team of 350 experts.

Right.

Somebody that can really interpret the data.

Right.

That helps a lot. So we'll get plenty of instances where a PE firm will call us and say, hey, I'm thinking about making an investment in company xyz. Can you look under the hood for us, let us know what Nova says in terms of forecasting numbers and which channels to focus on and so forth. But also want to make sure that we talk to your SEO expert who can really either, you know, continue to validate what Nova said or give us, you know, some kind of human element insights to it as well. So the system and the data by itself is powerful, but I also do appreciate, you know, one's ability to interpret the data as well.

Yeah, Nova does a lot more for us. It's at the core of everything we do and it's why we've been able to have a compounding annual growth rate that I don't think is matched at scale within our industry. And it really streamlines the way that we onboard clients. It controls pricing and it scores pricing based on profitability and other metrics. When a deal is closed, it will automatically give proper P and L attribution to every service line and department, both on the revenue and expense side. It will assign all of those strategies out to the right team. It helps us determine who the right team is for that client, what the right match is. It's got all of our real time dashboards for all of our leading indicators. So it really ties together in a lot of ways. It also has a suite of tactical marketing tools that actually allow our team to do better work faster. And so we've got SEO tools within their influencer first party data analysis tools like DataQ that we acquired at the end of last year. So it's got a big suite of tools and so it just continues to grow. But this year we're really focused on the machine learning element, specifically around our forecasting unit and around our strategy recommendation engine. So assuring that the platform is recommending the right strategies and it's getting smarter and smarter and smarter because typically what we find is there's a lot of opportunity within these brands as we do these appraisals. But there's not unlimited dollars and there's ROI equation that goes into it. What is the most valuable thing to focus on right away and what impacts what? And so that engine and that question within the machine learning module is really a huge part of our focus this year. Because if it enables us to really forecast on an incredibly accurate level, and we keep getting that more and more accurate as we put more and more people through this and capture more data in our data warehouse, and it also gets more and more accurate on what the right strategy is. It allows us to get better results quicker and do it in a far more profitable way, both for the customer and for ourselves. And so that's really our biggest core focus. But we're continuing to iterate and build out all these features across every part of our business.

That's awesome. Super powerful. And I know that you guys, yes, you're global, but having a root in San Diego, you help a lot of San Diego companies. So selfishly. I know, and I hope that that continues to help a lot of our companies here to grow and to get funding from some of these big players in the space. Because San Diego is on a tear in venture capital lately. So I'm sure it's finding its way to fund the right deals as well too.

Now, to that point, I know that's a focus of yours and we've seen a lot of that. So we've been talking primarily about, I've been talking vc, private equity. But for the startup community, this technology is valuable because when you think about a pitchbook, I know you've seen hundreds of them. I've seen hundreds of them as well. They're typically, we'll say 10 to 20 slides. We'll say 10. I like, like even number, I mean easy numbers, 10 slides. And then when you kind of work the first couple slides like mission people, product, solution, and then you get to slide 8 of 10, right? And slide 8 of 10 is that use of proceed slide and in very simplistic form is like, hey, we're early. See, we want to raise a million dollars. And you see a pie chart. It's like, you know, 40% is going to go towards headcount, 50% is going to go towards marketing, and then 10% is going to go to some other like ancillary calls or whatever the case may to be. Right? That 50 towards marketing is as broad as that. It may have like a sub point that says digital marketing and may have a subset point that says social.

Right.

What Nova enables for a startup company enables them to really have insights in terms of specifically exactly which channels they're going to run, which dollar amount they're going to allocate, and the return that can be attributed to that to that particular channel. So as the operator, I know that I'm going to raise a million dollars, I'm going to put $500,000 towards marketing across these digital marketing channels over this time period and so forth. I have better visibility and I'm able to be more prudent in terms of how I allocate capital. And then when that same operator goes to market and they're trying to raise capital, they come to us and they say, hey, you know, Neil Grayson Pierre, we're raising a million dollars. Can you cut us $100,000 a piece? And we're doing that. So you, so Neil, you cut him $100,000. He or she $100,000. And you know that you're going to cut that check for 150,000 is going to go towards marketing under these channels under, you know, this particular time period with that dollar amount.

Right.

So it gives you a bit of confidence as opposed to just betting on the entrepreneur.

Right.

You literally get to see where your money's going to work. So once again, it really is a risk management tool across the spectrum for companies that are allocating capital and for companies that are using capital as well. So we've seen it in many of instances for startups and it really does bolster up their use of proceeds or the use of proceeds. Slide in their pitch deck for sure.

Sounds like I need to get a demo and recommend it to some startups. The other product we got to ask you is a smart database of tacos, because we are the tacos in tech podcast. And if you're building data analytics for performance, then you surely can build it for tacos too. I got to ask each of you, you guys have a favorite taco spot?

Sure. Yeah. So as I mentioned, I'm from la. I'm based here, but I cover the firm nationally. And my favorite taco place, place I grew up on as a kid in Long Beach, California is called Casa Sanchez and it's on the west side of Long Beach. There's something special about a west coast taco. I don't know if it's like the cheese, the sauce, whatever the case may be, or maybe it's like the nostalgia for me, who knows? But Casa Sanchez on the west side of Long beaches off of Santa Fe and like I think the 405 exit, but it's one of my One of my go to spots in la.

Love it.

Yeah. And so it's funny because it's kind of the joke in my household. My wife Jen will be like, what do you want for dinner? I'm like Mexican. Like that's. I could eat Mexican every single meal. And I'm born and raised in San Diego, so I've got a lot of favorites, but my favorite seafood spot in general and for tacos is definitely El Pescador in La Jolla. They've got a lot of amazing things beyond tacos, but it's just incredible. The freshest seafood you'll get in town. Bunch of great tacos there. And then I also like some of the hole in the wall places like Oscars is really good. I don't think the new ownership's as good as the past, personally, but still really good. And a lot of great places down that way too.

Solid. Well, thanks guys. Really appreciate it. Excited for what you're building. You know, really can tell it's not just to the next level but a whole leaps and boundaries to grow and change the way that agencies do business and companies get funded. So really excited for it and thanks for being on the podcast.

Thanks for having us.

Cool. Thanks, Neil. Appreciate it.

Thanks for joining us on the Tacos and Tech podcast with Neil Blum. Thanks again to Cox Business for helping make this possible by expanding the reach of the San Diego tech ecosystem. Big shout out to School of Rap for our rad intro music. And thanks as well to Nest Podcast Network where we are recording live inside their studio at Nest coworking in Bankers Hill. You can find Neil Bloom on Twitter eelbloom as well as fresh brewed tech and tacos in tech Pod on Twitter too.

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