9 Lessons In Business By The Brain Behind One Of The World’s Most Exciting Startups

Boasting north of 120m users and with high-profile investors including Leonardo DiCaprio, Qloo is a piece of artificial intelligence on the verge of something very special. Its founder Alex Elias tells RISING what he’s learned so far…

Making Siri seem about as switched-on as that dusty Tamagotchi in your attic, Qloo is a piece of AI algorithm software capable of mapping trillions of cultural correlations from the data of its 120m users.

Operating across a range of fields, including books, restaurants, film, podcasts, music and more, it’s a game-changer, and a bit baffling if we’re totally honest. ‘If you like Arctic Monkeys, or a specific score of a Wes Anderson film, we can instantly tell you what local restaurants are most correlated to what you’ll enjoy,’ says founder Alex Elias, 35, the man helping to curate the world’s cultural tastes.

Little wonder then, that entertainment polymaths including Leonardo DiCaprio and Elton John count themselves among investors. Taking time out of his hectic schedule, Elias tells RISING the lessons he’s learned from helping launch one of the world’s most exciting startups.

1. A Cold Start Is The Biggest Challenge In Starting A Business While hundreds of millions of users allow Qloo to make countless correlations today, it was a lot more difficult when the number was zilch: ‘That’s what we call a cold start and overcoming this is one of the most challenging aspects of starting any business, because we couldn’t convince developers to use our API [application program interface] if we didn’t feel we had enough scale to service it. In late 2011, we started off as a mysterious website, Qloo.com, and literally made thousands of black cards which we distributed promoting it at the Sundance Film Festival. From there we quickly developed an app, which soon had half a million people, and required users to tell us two of two things they love in every category. This gave us a great base, but it wasn’t easy.’

There are always little ways to make money, little ways to get attention – they’re often just distractions from the bigger problems

2. If You Need To Know Something You’ll Hear About It Browsing the broadsheets over a bowl of cereal? Risking life and limb crossing the city thoroughfare while scrolling through a blog on your smartphone? Perhaps it’s time to let go, advises Elias: ‘One of the ways I’ve stayed sane is that I don’t plug into daily tech news. I let it play out. Often for entrepreneurs starting out, if there’s something you need to hear about then you’re going to hear about it, either from your employees, your members or your investors, and that article you need to know about is going to get forwarded to you. Between 2012 and 2013 I would wake up and read everything, and this was unequivocally detrimental to the company – it makes you more agitated, less perceptive, less confident, and people do it out of fear they’ll miss something. I stopped and now I get a better picture.’

3. Find A Niche And Make It Work For You By trying to build an AI model that predicted cultural tastes and what links them, Qloo’s algorithm started off in an academic way. But over time Elias and co-founder Jay Alger spotted a gap in the market, realising that data science for culture tended to exist in very narrow realms – i.e. Spotify mapping your music likes, Netflix knowing what you want to watch next – but that no algorithm went across all domains.

‘We found there was an enormous business opportunity in making this intelligence available to developers and enterprises in a very easy plug-in way. It’s also complimentary that a few of those players [Netflix, Spotify] have been in touch to work with us going ahead,’ says Elias. ‘They realise they’re the market leaders in their categories but that Qloo can help them connect dots to totally different categories. In Netflix’s case, if they’re packaging a TV show based on a novel, they don’t have the data science to go across from literature to film, and Qloo does. The same goes for when they’re scoring a film or a TV show.’

4. Once You Sell Out You Risk Losing Your Vision ‘The only company I’d say is similar to ours is Echo Nest, which started out at MIT’s media lab in the early 2000s and focused on music,’ says Elias. ‘It was recently acquired by Spotify. In fact, if there’s a domain specific player they’ve generally been swallowed up. Once they’re within a business to consumer company their own business becomes even more linear, or simply about trying to get people to subscribe to listen to music or watch movies, whereas we get to work across media. We’ve had major interest in the last year because corporate development guys are sniffing around for AI like it’s the hot new thing, but this hasn’t been a focus for Qloo, as we’re at a point where we’re starting to find out what we can deliver to the world, so we want to realise that.’

We don’t run ads – people will whisper in our ears about it but we turn them away

5. Put Your Audience First And Learn To Say No Saying ‘no’ can be a powerful thing in business. Not least in the case of Elias, who’s habitually turned down easy commercial dollars in favour of building trust with his users. ‘We function very differently to a lot of other data companies,’ he says. ‘We don’t run any ads and, for the large proportion of users, we don’t give out personally identifiable information. Of course, when you do make a name for yourself you will get a lot of folks who’ll call up or whisper in your ear at a meeting about charging for ads, but we’ve turned them away categorically. We get more from your audience by not swamping them with emails and ads.’

6. Try Not To Be Too In Control Elias, who meditates by the river closest to his New York City office before work each morning, believes there’s a lot to be said for not sweating the small stuff: ‘In 2011, there’s no way we could have predicted the world would shift in our favour. You’ve just got to hold on, stay alive, and make sure that you’re always ready when the right opportunities align themselves. Along the way there are always little distractions – little ways to make money, little ways to get attention – and they’re often just distractions from the bigger problems you have to solve. If you don’t have a certain laissez faire attitude towards it, if you’re too controlling, it can be hard to do, because when you start a business you inherently want to be in control of every detail. Sometimes you just need to step back.’

7. Make Partnerships As Beneficial As You Can Much like the ball-playing habits of Barcelona’s former midfield duo Xavi and Iniesta, Elias has always made a habit of making Qloo’s AI work in a ‘give-and-get’ way: ‘We ask potential partners that in order to learn more about their audiences they also share what they already know, so there’s a virtuous cycle for our data growth. So then we’re always learning – it’s a hell of a lot of fun too. Right now, we’re working with one household name in consumer electronics to inject our AI into its personal assistant.’

8. Choose Investors With Genuine Passion Qloo’s stock may be high right now, but not at the cost of the ethos. Elias claims it’s all about choosing investors who share similar views: ‘We’ve had plenty of traditional venture capitalists and pure financial investors, but the best approach for us was bringing in passionate people who are interested in the problem we’re solving. Hence our eclectic group of investors, including Leonardo DiCaprio, who has his own production company, as well as Elton John, who owns his own entertainment firm.

‘Unlike the old studio systems with very little overlap, walls are breaking down, there’s increasingly an interchange between cultural domains now. Elton’s company does everything from film production to representing music artists, so they’re excited by the possibilities of knowing the tastes of a 18-24 year old female Elton fan in California compared to, say, a 50 year old British female fan in the UK.’

9. Big Companies Aren’t As Pencil-Pushing As You’d Expect Six years ago, Elias and co-founder Alger had no idea how quickly the AI landscape would evolve, and now huge companies are knocking on the door to work alongside Qloo: ‘When we first spoke to automakers about inserting the AI in its in-car entertainment systems, we got nowhere. But now that’s all changed and we’re already working with a huge car-maker on implementing our software inside its vehicles. Imagine driving to a restaurant you’ve been recommended because of books and films you like. There’s a belief out there that big companies are incredibly slow-moving ships, behemoths enveloped in bureaucracy, but we’ve found that’s not true – three years ago there were hurdles, now they’ve gone and we can’t go fast enough for them. Once your road maps are aligned there’s no stopping you.’

WHAT NEXT? ‘Attempting to launch a startup may be the hardest thing you ever do,’ admits Elias, so make sure you always focus on the bigger picture. ‘There’s no easy way of attracting investment but if you are passionate about your product and don’t bend your beliefs you will do great things. And as I found, patience can be key.’