Start-Up GutCheck Blows Up and Rebuilds the Old Model of Consumer Research
When a company wants to bring a product to market, it usually doesn’t just bring it to market and hope for the best. Well, sometimes, it does, but more often than not it doesn’t. And those that don’t usually do a lot of research first. Lots of time-consuming, expensive research that’s meant to help build the case that there’s a market need for the product in the first place.
Within this sphere there are basically two kinds of research: Quantitative and qualitative. The first is basically numbers: How many people between the ages of 25 and 65 say they like to put non-dairy creamer in their coffee? You get this from large-scale surveys of consumers, usually done by phone or online.
The second is more subjective: Why do you, as a college-educated female under 40 who lives in the Midwest, like this or that non-dairy creamer and how do you feel about it? This is a little trickier to get. Ad agencies and research companies spend $7 billion a year rounding up focus groups and asking roomfuls of consumers a bunch of questions and paying them for their time. In truth, the practice hasn’t changed all that much from the days portrayed in “Mad Men.” Well, maybe a little. But if you’re looking for a part of the advertising ecosystem that’s ripe for disruption, this looks like it.
Enter GutCheck, a curious little Denver-based start-up that I encountered last week. Why go to the time and effort of assembling a bunch of consumers in a room to say things they may or may not actually believe, all at a cost of thousands of dollars, when the power of the Internet gives you the means to reach them directly in the unguarded comfort of their own homes for 40 bucks a head for every half hour? Its faster than a focus group–you get results right away versus waiting for weeks–cheaper, and the results are arguably better.
I had breakfast with CEO Matt Warta last week, and he demonstrated the product for me. It’s a cloud-based service where subscribers, usually ad agencies, search out pre-screened people who fit a given profile. Since we were having breakfast and he asked me to come up with a question to ask a consumer, naturally my thoughts turned to the cup of coffee I had just ordered but didn’t yet have. Quickly sorting through a database of five million potential interview candidates in about two minutes, he found a college-educated woman online and conducted what amounted to a brief chat session about non-dairy coffee creamers.
She got a small incentive for her time, Gutcheck would have gotten $40, and Warta, had he been an ad exec with a client making non-dairy coffee creamers, would have come away with some anecdotal data to help inform the thinking behind a forthcoming ad campaign. (He does bear a bit of a resemblance to Roger Sterling, though minus the cigarette.)
Yesterday GutCheck announced a subscription version of the service aimed at larger agencies. Rather than pay on a per-interview basis, as has been the practice so far, agencies can pay for an annual subscription on a per-user basis. Warta said that when compared with traditional research methods, it’s still “freakishly affordable.” The new offering lets teams at ad agencies pick and choose who they want to interview, what factors they want to focus on and so on.
Warta, a former venture capitalist himself, raised $2 million in funding from Highway 12 Ventures, a Boise, Idaho-based venture capital fund. GutCheck also won a $1 million prize at the DEMO conference last month (not cash, ironically, but that much worth of free advertising). Not bad for a shop with five employees.