The birth of Lexer’s CDP: Shaping the next generation of retail technology
The Birth of Lexer’s CDP: Shaping the Next Generation of Retail Technology
How Lexer grew from a side project to a multinational trailblazer in customer insights
The retail industry experiences its fair share of challenges, but one problem affects all of us: Waste.
Wasted money, wasted time, and wasted experiences affect both companies and consumers. Every martech solution attempts to solve this problem in its own way, be it by tightening up timelines, strengthening confidence in decisions, or reinforcing the exchange of value between company and consumer with enhanced customer experiences.
Lexer, an Australian-born Customer Data Platform provider, does the latter: Built for retailers, the platform provides insight into every customer touchpoint—from marketing to sales to service—so that no experience is wasted.
“If you ask anybody on their deathbed what they wish they had more of, everybody says time,” says David Whittle, CEO of Lexer. “If we can save our clients and their customers time and improve the customer experience across every stage of their journey with a brand or retailer, that makes the world a better place.”
By stitching together all of its clients’ data, enriching that data to form a single customer view, and visualizing customer intelligence based on proven predictive models, Lexer helps brands provide their customers with the experiences they deserve.
Because when data is kept in silos, insight is wasted.
“Lexer started as this requirement to gain great human insight so you could make better decisions,” says Whittle. “Our promise to our clients is that we help brands and retailers genuinely understand and engage their customers. The how of that is: Enriched and unified data, simple tools, and a talented team that’s well-priced and delivered in an exceptional timeframe.”
That’s where Lexer stands today—but the journey to get there has been long and demanding.
2007: The first Lexer prototype is born
Aaron Wallis—known by friends and coworkers as simply Az—was a young, sharp developer working under Whittle at M&C Saatchi, a global independent Advertising Services Group. Under the M&C Saatchi Group, Whittle had founded an advertising agency called Mark, as well as a digital production business, Make. He hired Az to be the Technical Director and ultimately lead the digital production team there.
“I met Aaron at the first Australian Twitter Meet-Up in Sydney,” says Whittle. “I went there by myself, because I was into this thing called Twitter. Az and I got to chatting through the night, and he was a rockstar.”
As prevalent as social media is today, it was only just emerging as a powerful tool and data source when Az and Whittle met. Up to that point, internet data had been expensive and difficult to acquire, but social media content enabled businesses to consume a significant amount of information about their customers at scale.
“If you looked at someone’s Twitter feed or Facebook feed, back then, you could access that data without restriction,” says Az. “The privacy and compliance was very different than it was today, so we could just slurp down all of that data about people and understand, for example, Aaron likes lego, Aaron likes horror films, Aaron has a dog, etc.”
It was clear that social media monitoring would someday become a genuine need for businesses. However, there were very few social media monitoring players in the world—especially in Australia—and no analytics for social media, either, which made campaign reporting a challenge for Az and Whittle’s agency clients.
“The ‘utopia’ for us at the ad agency was to be able to change the campaign as it was in play based off whether or not it moved,” explains Az. “But 10 years ago, you didn’t have tools like Google Analytics or Facebook Ads, which showed you real-time insights on your creative. It would take us months before we’d get a report back from the media agency or a research panel telling us whether or not we’d had the impact that the brand was expecting.”
Self-described tech geeks, Az and Whittle knew that the ability to access fast, real-time insights and to alter the course of a campaign based on those insights—effectively reducing wasteful ad spend and expediting results—would make them the best agency in Australia. They could also see that social media would only continue to grow. At that point, many of the brand managers they worked with had been manually combing through sites like Twitter and MySpace to try to draw campaign insights as feedback for the creative team.
But that was an incredibly time-consuming process. Automating that process would be a win for the agency, its clients, and ultimately its clients’ customers.
“Over many long nights at home, I built the early prototype that pulled all of the social content and mentions of the brands we worked with,” says Az. “I could go on it and say, ‘show me everything people are saying about Westfield Shopping Centers,’ and it would serve up all the content that mentioned Westfield Shopping Centers. It was very crudely built.”
Despite its crude appearance, Whittle was convinced of its value and began presenting it to agency clients. Then-client Westfield Shopping Centers agreed to invest in a year-long subscription to the software if Az could deliver a dashboard and login within six month’s time.
2008: From social monitoring to customer insights
From the get-go, Lexer has done things a little bit backwards, but always with the client in mind—a fitting history for a company that today helps brands make the transition from channel-led to customer-centric business models.
“We’ve always been a business that has had clients leading the thinking behind our product and our innovation, because we’ve always had revenue before we’ve had the full picture,” explains Az. “Westfield took a pretty big gamble on us to deliver them something that we didn’t really fully understand or exactly know how to build—but it really solved a business problem for them, which was fast response time to know what people were saying about the brand.”
This focus on solving clients’ challenges through product development still holds true today. The first prototype, now known as Listen, was built for Westfield Shopping Centers, and every product release since—including Engage, Outbox, Identity, and Activate—was built in response to questions and obstacles that have arisen in serving specific client needs.
“When people ask us how much money we’ve raised, I say as little as possible,” says Whittle. “So how have we grown? Our clients have funded our business. Not only have they shaped the evolution of our product, but they’ve also funded the salaries that have enabled us to survive.”
But despite this focus on servicing client demands, the Lexer team has always acted more as a consultant than a production house. Instead of building whatever it is the client thinks they need, Az’s approach to product development has been to first help clients understand their problems better and then build new features in alignment with where the market is headed.
After Westfield first started using the product, questions began to come up about the data it was serving.
“What we were finding was, the brand managers at Westfield would look at the data, see all the negative comments coming in, and react really aggressively,” says Az. “They’d see someone complain about a smelly toilet or parking and think, we gotta fix it.”
But no brand—especially a large, multinational company like Westfield—is safe from complaints like these. The real challenge was understanding who was making these complaints and whether or not they were actually important to Westfield’s business.
“So we set out to unify that data into customer insights,” says Az. “We wanted to be able to say, ‘the person who complained about the toilets actually shops every week at Versace, so it’s probably really important to fix that, because you want them to keep coming back to shop from you.’ The journey to get there was so difficult… but we found our strength there in data unification, cleansing, storage, and searching.”
2010: The Lexer “side project” is let go by the ad agency
At this point, Az and Whittle were both working full-time at the ad agency. Whittle had successfully sold the product to a few clients and used the profit from Mark to subsidize the development of a new business unit called Lexer.
“We ended up with Lexer,” says Whittle, “because a lexerchonogropher writes the dictionary. We knew that this was about human and communication and words, so that was the brand. A guy called Lee Roberts who worked for the agency designed the brand and the identity.”
Az hired two new developers to work with him on the product, but ultimately, the agency decided that they were no longer interested in investing in the new technology. Although they offered Az his old job back, his team—and his product—would have to be let go.
“My boss, the worldwide chairman at M&C Saatchi, got really upset with me,” says Whittle. “He said, look, you’re spending $300,000–$400,000/year on developers, but the revenue from the product is only about $20,000–$40,000/year. You’re going to have to get rid of this side project of yours.”
“When that happened, I was pretty pissed off with the world,” says Az. “But Dave pulls me aside and says, hey Az, don’t worry about it, I think you’re onto something here. Let’s go find investors to acquire all of the intellectual property off of the ad agency, so you can just keep going. That’s when we were introduced to Chris Brewer, who’s now our CFO.”
Chris had been working as CFO at Experian Hitwise, an insights business that took behavioral data from ISPs and patched it up as competitive intelligence. Like Az and Whittle, he knew early on that the social media monitoring space was ripe with opportunity.
“When the social media juggernaut began to take off, I remember walking around Albert Park Lake in Melbourne with a mate and we agreed that we should start a social media monitoring business with this new set of data that was emerging in the world,” says Chris. “But of course, having an idea is cheap. You have to actually get off your ass and do something—and with home and work commitments, we did nothing about it.”
With much time, effort, and love already invested into the Lexer product, Az was completely committed to making Lexer work. He met with Chris and two other Angel investors and together, they agreed to buy the Lexer assets out of M&C Saatchi.
2010–2014: Az puts in his “sweat equity” to keep Lexer afloat
Az moved to Melbourne, received capital from Chris and others, and for the next few years, continued to work as Lexer.
“I was working out of the lounge room at home, which was a really big culture shock for me because I came from this 300+ person business where I interacted with so many people every day,” says Az. “I just kinda chipped away at the social monitoring thing, building a better product, and trying to win some clients.”
Alone at work, Az had taken on pretty much everything. He was the business development manager, account manager, data analyst, and lead developer for Lexer. The only thing he didn’t do was finance, which Chris was taking care of in the evenings.
“One of the reasons Lexer has been so successful is that Aaron is such a multi-talented person,” says Chris. “Often, in a tech company, you have the tech founder who can’t do much else—they don’t have the personality or the commercial acumen to do the sales and client service work. But Az could do all of that, so we were able to reduce the initial cost base of the business by leveraging Az’s multiple talents.”
However, even with years of hard work behind him and a product he genuinely believed in, Az still struggled with sales.
“It was one of the first times in my career or my life that I learned there were things I couldn’t do,” says Az. “I was pretty unstoppable up to that point—anything I wanted to do, I could learn. But I couldn’t sell… so when I woke up every morning and had to make a decision as to whether I would be the product guy or the salesperson or the marketer or the strategy person—because it was just me—I always ended up deciding to build product, because that was easy and natural.”
After working like this for a few years, Lexer had a well-developed product and a few loyal clients, but it just wasn’t growing as a business. With about $200,000/year in revenue, the business wasn’t making enough to pay the wages, and the money that Chris and others had invested had already been spent.
“You wouldn’t say that the business was flying,” says Chris. “On a couple of occasions, when we didn’t have enough cash for payroll, I would dip into my mortgage account and reimburse myself after we received our annual R&D tax credit. When it came time to recapitalize the business, two of the original investors questioned whether or not it was a sensible investment.”
“That got me pretty depressed,” says Az, “because it was lonely and it was hard. I wasn’t winning deals and pushing the business forward. I didn’t feel good about myself. I went to Chris and the Angel Investors, and said, something has to change here. I’m not happy. I’m not making much progress. We either have to do something or I need to find a proper job somewhere.”
Luckily, this conversation happened to coincide with Chris and Whittle leaving their corporate jobs.
“By that time, I was the Managing Director of the M&C Saatchi Group, which was nine different agencies, but after 10 years of Advertising life it was time and I decided to retire from the industry,” says Whittle. “I went on a sabbatical and was working out what I was going to do. I reconnected and reunited with Aaron. Although the product had improved, the revenue had not.”
Meanwhile, Chris had left Experian Hitwise and was also taking a sabbatical.
“The four investors—me, Az, and two others—met with Dave and agreed to change the ownership structure,” says Chris. “The two Angel investors sold their shares and Dave bought into Lexer. I personally agreed to transfer one-third of my shares to Dave because I was that confident in his abilities…. He was one of the most respected marketers and well-connected people in Australia, so to bring someone of his caliber into a micro business would be quite the coup.”
Originally, Whittle only intended to join as an investor and spend up to 100 hours a month, but within the next six months, he and Chris had both entered Lexer as full-time employees. They agreed to “work at risk”—not draw a salary—for eighteen months, so Lexer could use the extra cash to hire more people.
2015: With a real team formed, Lexer wins a number of cornerstone clients
“All of a sudden, we had Dave Whittle, who has such strong relationships with business people in Australia and around the world—and he’s a very gifted salesperson,” says Az. “And then we had Chris Brewer, who has good business relationships as well and comes from a data background, focusing on our books and the revenue and the numbers… That allowed me to focus on the product.”
The Lexer team now had the capacity to push for real business growth, and they quickly started hiring new people.
“We hired a developer, a customer service person, and an intern,” says Az. “That intern is Matt Molloy, who’s been with us for five years now. He’s still my right hand man on all things product. With all of us together, we started to make serious progress.”
Whittle was able to focus on sales, and the business began to bring in key clients, including telecommunications company Optus and airline Qantas.
“I knew that Qantas would be a fantastic client for us, and I’d been trying so hard to break into that business,” says Az. “I was getting nowhere. Dave just grabs his phone, calls a guy named Paul Smitton who worked there at the time, and says, ‘I’m starting at Lexer, it’s this social monitoring stuff, and I reckon it’s really up your alley—oh, Monday? Ok, we’ll come in on Monday!’ I was so livid at how easy it was for Dave to open this door that I’d been trying so many months to open myself, but equally so thrilled that the door was finally open. That was such a critical gear change, because Quantas went on to being our largest client and forced us to build new features that really have revolutionized our business.”
One of those features include Lexer’s customer service tool, now known as Engage.
“We grew off the back of those enterprise clients,” says Whittle. “We built an enterprise-grade solution from day one, which means you can sell it to smaller businesses. That’s the opposite of what most startups do. Most startups build one product and sell it to one market. They generally start with SMBs and move up, but we’ve done the opposite of that. Everybody told me that was dumb, but I think it was the right thing to do.”
As the Lexer team continued to grow, Az experienced culture shock once more. But unlike the shock of moving from a giant agency setting to a one-man operation from his lounge room, this time, he was struck by how rapidly the business was evolving outside of his control.
“I remember being really sad when the company was too big for us to all have lunch together anymore,” says Az. “When there are four people, you all walk down the street to the same sandwich bar. All of a sudden, when you hire the fifth or sixth person, one of them goes, you know, I don’t feel like sandwiches, I’m going to the thai place. You’re not hanging out together as much, and little groups or cliques start forming. I was really sad, but also excited that we were reaching that kind of scale. It was a conflicting period. It was such a small family for so long, and having a meal together is something that’s really important to me, personally. I knew at that point that this is a really big step, and it’s always going to be different from here on.”
Throughout the journey, the Lexer team remained focused on one vision: Unified customer insights. To do this properly, they would need to consume all of their clients’ customer data and combine and process it with social data as well. That’s when the Identify product was built.
“Identify was originally launched to allow clients to explore social data,” says Az. “As we progressed that product, clients wanted to know which celebrities were influencing customers by attributes like product type, or by lifetime value, or by home location. Through that, we sort of exploded into this area, which is now known as customer data platforms, because we had to do all this rich customer analytics. Because we were used to doing insanely high-volume social analytics, it was a task that actually came really easily to us.”
The business had become pretty much cash neutral. After raising $5 million from venture capitalist Blue Sky Capital, Lexer’s staff grew to about 25 people.
“Bringing together our people has been vital to Lexer’s success,” says Whittle. “Unlike most software businesses, we’re a combination of data people, Experian people, advertising people, and new people—people who are straight out of university or have never had a job before. That combination has had a big impact on who we are. Across our business, there are very few people who have been involved in software, so we’ve thought about it in a different way.”
“At this point, we went really hard,” says Az. “We thought we knew what we were doing. We thought we knew what we were selling and who was buying it.”
2016: Privacy concerns throw a wrench in Lexer’s original product offering
In 2016, privacy concerns flooded the market, rendering Lexer’s social enrichment product inviable.
“That was a really difficult time for our business,” says Az. “We had all this revenue from really big clients that weren’t renewing. We needed to come up with new products to keep us alive and convince the industry that [identity analytics] were where the world was heading.”
“We had a very purposeful approach to growing the solutions that we offer clients,” says Whittle. “Rather than being the very best at one thing and just doing that one thing—so, for example, just media monitoring—we believe that having a portfolio approach and offering a suite of services that provide businesses with greater simplicity and ease of use was the right strategy. And rather than acquire those solutions, which companies like Adobe and Salesforce and Adobe have done, we chose to build them.”
The Lexer product evolved into the CDP as it’s known today, but it wouldn’t be identified as such until Chief Marketing Officer David Chinn joined the team and was tasked with introducing Lexer to the United States market.
2018: Lexer breaks into the CDP market with a deeper understanding of its ideal customer
“When Chinny moved to the U.S. and identified this new martech segment of CDPs, we realized that that’s what Lexer was—a CDP,” says Chris. “Although we’ve pivoted our core offering a few times, throughout the journey, we have continued to build on a platform that helps B2C businesses better understand and engage with their customers using data.”
Additionally, Chinny’s experience in the U.S. market led the Lexer team to better understand their ideal customer: Retailers.
“Australia is a market of duopolies, so it’s very hard to focus on one vertical or category,” explains Whittle. “When Chinny went into the U.S. and availed ourselves to lots more clients, it became clear that retail was a very good category for us due to our previous experience.”
Over his long career in advertising, Whittle had worked with a great deal of retailers. Chinny, too, had been involved in retail-based businesses prior to joining the Lexer team. Their intimate knowledge of the retail industry, along with the retail experience of their growing team, meant that Lexer could offer solutions and strategic guidance tailored to the unique challenges that retailers face.
“It was such an obvious decision,” says Whittle, “and probably one of the most important pieces of our evolution.”
2020: Lexer continues to grow its CDP and services
Today, Lexer’s clients are attracted to the platform for its capabilities in identity analytics, data enrichment, and unification. Lexer’s platform remains one of the only CDPs in the market built specifically for retail, and Lexer is also one of the few CDP providers that give clients onboarding and implementation support, strategic consulting, and expert guidance as part of its core offering.
“That human touch is really important,” says Whittle. “When you distill our company down to one word, it is human. We’re not really a software business or a security business or a tech business. Above all, we’re a people business.”
As many clients can testify, the people who make up Lexer’s success team are part of what makes the business a truly remarkable CDP provider and partner.
“The commitment and relationship and the culture we have with our clients… is rare in the SaaS and martech industries,” says Az. “We’re competing against some of the largest organizations and tech startups in the world—yet, we’re a small business and we’ve won against them! The only reason we can do that is we do what they don’t do, which is guarantee our customer success. And by guarantee, I don’t mean, 30 days or you get your money back. We won’t let a client be disappointed. We all have such pride in our work and our relationships that we refuse to let them down.”
That care and dedication extends to Lexer’s internal team, as well. With a flexible, family-like culture, mutual respect and trust, and a bias for innovation and proactivity, Lexer has grown into an exceptional place to work.
“At Lexer, everyone’s doing things that haven’t been done before,” says Az. “There’s a pretty high level of innovation every day. That’s an uncommon opportunity, especially in places like Melbourne, Australia.”
“That’s one thing about working in big businesses, and particularly big enterprises, is there’s always a few bad eggs in an organization,” says Chris. “They’re assessed not on their ‘good bloke credentials’ but on their ability to drive a team of people forward to achieve a financial outcome. I think both of those are important, but I’m very strong on running a ‘no dickhead’ policy at Lexer…. Everyone we’ve hired are good people.”
“Underneath it all, we’re here to build a business that we all enjoy being in,” says Az. “We could’ve started this business as a bunch of ball-breaking managers who have a really rigid 9-5 structure and push our team really hard to deliver, but we decided to not do that and to bring on people we enjoy spending time with, people who inspire us, who get along well together. Hopefully we can find enough people on the journey who have the same aspirations as we do.”
Onwards and upwards
The martech industry will continue to evolve. Mergers and acquisitions are likely to increase as the CDP hype fades to equilibrium. Retail CDPs are expected to become an integral part of an ecommerce position. In-store solutions like Lexer’s recently-debuted Clienteling product will help close the loop on digital and brick-and-mortar customer experiences.
Although nobody can know the future for sure, one thing remains certain: As a business, Lexer knows not to waste an opportunity.
From the “side project” that engendered the original prototype to landing and growing the business in the U.S., Lexer has taken the opportunities it was given and developed those opportunities into significant, sustainable value for its clients.
Proudly headquartered in Australia and serving clients from around the world, Lexer’s holistic, full-stack retail CDP continues to drive profit, save time, and improve experiences for both companies and consumers—because seamless, genuine shopping experiences are the experiences we all deserve.