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Patrick McGuire (00:00)
Hey, it’s Patrick. Before we start, at the time of this recording, we went through a bit of a name rebranding from RIC Centre to Altitude Accelerator. With that in mind, we hope you enjoy the following interview.
Patrick McGuire (00:14)
Welcome to the Startups Transform Podcast.
Patrick McGuire (00:17)
I’m Patrick McGuire, your host, board member and advisor at Altitude Accelerator.
Patrick McGuire (00:23)
Where we help startups scale to new heights. We chat with phenomenal tech business leaders who climbed their way to success within their industry. Our guests delve deep into the lessons they’ve learned along the way so that you can get a head start on your next big idea.
Patrick McGuire (00:44)
This is a great podcast to have with a guy that, well, in a weird way, we’re connected already. We just didn’t know it. And I’m pretty keen to share the knowledge of what’s going on with Daisy Intelligence. I mean, some of you may not know, it may be a household name for the techies in the world that are in retail technology and knowledge power and those that are in the data of insurance. This is probably something that you already know. But I want to talk about what’s happening here, and I’m going to give you the corporate by line right now, which is Daisy is an AI powered platform in retail and insurance. Daisy uses reinforcement learning or a branch of AI, as Gary and the team say. And it’s patent pending theory of retail and theory of risk to truly be unique in the marketplace and cutting edge for the category management of risk management revolution. There’s so much more that we can say about this. There is one that I’m going to call it right now, and that is the mission, the mission. And I’m looking over at their site and I’m loving it. We’re on a mission to empower people to focus on what they do best at work by using machine intelligence to do what machines do best.
Patrick McGuire (01:51)
So with that said, I’ve got to say thank you very much to my friend. Now that I’ve met and been able to figure out who he is, Gary Saarenvitra. He’s a great guy. He is the founder of the intelligence behind Daisy Intelligence. He is the man. Gary, thank you so much for joining us today.
Gary Saarenvirta (02:07)
Hey, thanks very much for having me on, Patrick. I appreciate it.
Patrick McGuire (02:10)
So I gave the corporate story. You tell me what it’s really about, what is Daisy intelligence and what are you guys doing?
Gary Saarenvirta (02:17)
In every business, there are complex decisions that are made by people. And retailers have to decide every week what products they should promote, what prices they should charge, how much inventory to allocate these are very mathematical decisions, if you could imagine getting all the data about what customers are buying. And so our software helps make those decisions. And so we deliver the answer to our retail customers. And in the same way we analyze claims in the insurance business and our system identifies fraud and identifies what claims you should pay or not pay. And so to do it really effectively, it’s beyond human ability because there’s so much data and it’s overwhelmingly complex. So I think that’s where the AI comes in and we differentiate in that our definition of AI. So it has to be autonomous, that there’s no human in the loop. And I think our system delivers the answer and say, pay this claim, don’t pay this claim. This is fraud. This is not fraud. Here’s what you should promote on your flyer. Here’s what you should promote on Ecommerce. Here’s the specific products, here’s the prices. So we get really specific and say, this is exactly what you should do.
Gary Saarenvirta (03:21)
Ultimately, the human is the boss. We’re not replacing people because the AI doesn’t tell you your strategy, what your brand mission should be, doesn’t know what promotional channels you have. But once you set all those ground rules and the AI can take care of the complex math, because you know what? Computers are really good at adding numbers and doing complex math. And they could do that faster than people. They never get tired. They do the same thing day after day after day. So we want to let people flourish and do the stuff that people are great at, which is interacting, being strategic, being creative, servicing customers, coming up with new products, none of which computers do very well. So that’s what our view. Let people do what people are good at, let computers do what computers are good at. That’s what we do. And we’ve been able to deliver incredible results to our customers.
Patrick McGuire (04:06)
Tell me about some of these awards you guys have got, how you got them or what trophies you got on the shelf.
Gary Saarenvirta (04:11)
Yeah, we’ve been recognized a lot, which is really exciting. It’s really a statement testament to our customers who allow us to work with them and then have these successes and stories we can tell. But we’ve been recognized by Gartner in the past couple of years as a cool vendor in AI for retail. We won the AI Company of the Year, presented by the Fintech Awards in Canada. We’ve been the fastest growing companies in Canada, and the Globe and Mail kind of ranking for the last couple of years. So good things happening. We won some elevate AI. It happened a couple of years ago before the Pandemic, we won the pitch competition, and a large funding round came along with that. So, yeah, it’s been great recognition, which I really have to give thanks to the whole Daisy team, our customers who without them, we wouldn’t be doing this. And the many business partners who help us. Like it takes a village to raise a child. You need all parts of society kind of helping you out to succeed.
Patrick McGuire (05:06)
Gary, you’re pretty humble. You’re a good guy that actually cares about the team and the people around you and the people you’re helping down the road through different levels of your tech. But for anyone that’s thinking about it, wondering what’s going on, and elevate AI pitch competition, as Gary mentioned, and he says, we got a little funding that came with it. There’s a $5 million fund raise. Guys, come on. This guy put some work into it. His company put some work into it, and they raised funds because somebody else out there believed in what Daisy intelligence was doing and that it could impact and change all of our lives eventually through different ways. But that’s what great investment companies do. They see these awesome opportunities. Gary, Congratulations on that and all the other awards you’ve done. I know there’s more coming.
Gary Saarenvirta (05:50)
Thanks for that. I appreciate that.
Patrick McGuire (05:52)
One of the things I’m curious on, just tell our audience about what your background is so we understand why you came to this point in your life to create Daisy.
Gary Saarenvirta (06:02)
We immigrated. My family was from Finland. I was born in Finland and came to Canada when I was five years old. Finland is a great country, but they came to seek different life and opportunity for us. And my mother really pushed both my brother and I in education. And so I got an engineering degree from the University of Toronto, and my brother went to an engineering degree from Queens. And I did a Master’s degree in computational fluid dynamics. And my parents both ran small businesses. My mother ran a hairdressing salon, and my dad was a mechanic, and he had his own mechanic repair shop at points in his career. And I always watched them work super hard. And this kind of Scandinavian work ethic is kind of permeated through that hard work pays off. And treating people with dignity and honesty and being transparent as you can is a way to succeed. I have this great education from a great country, Canada, from the University of Toronto. And I feel really fortunate that kind of ended up where I am and have these mad skills that I thought, let’s do something meaningful, change the world. And so that’s what we’ve been working on, trying to do.
Gary Saarenvirta (07:05)
And I think people rally around that. I think it says an entrepreneur, it’s important to have a mission beyond profitability. And I think there’s a study done that before the 1970s, companies were focused on a mission that was beyond profit. And since the 70s, it became very financially motivated. And I think the pendulum is swimming back a little bit now. But companies with a mission have more financial success than companies without a mission and a purpose. And so for me, having a mission and a purpose, it’s not about the money. I’m 55 years old. My Bill Gates dreams and owning mansions and Ferraris is kind of long gone. I think the journey and having a small impact on the world would be a much cooler outcome. You should never focus on the exit. Build a great business contribute to life, pay your bills, employ people. That’s what it’s about.
Patrick McGuire (07:54)
Companies with a mission that actually has a real, true human value statement that changes the world. As Gary said a few times here, that’s going to do a lot better for you than those that are just focused on the bottom line. You have to have something more, those that give back, those that actually care. I think you’re totally right with that, Gary, you said you’re 55 and you’re kind of not young and you’re not old either. But when did you found or when was it founded?
Gary Saarenvirta (08:20)
Yeah. And I founded this company in 2003. Had a career before. I worked at Loyalty Group that runs the Air Miles program. I worked at the University of Toronto and Aerospace for a little bit and did my master’s degree. And then I worked at Air Miles Reward program. And when I was there, I got exposed to retail and data and was one of the first worldwide users of IBM’s data mining products. Data mining was the buzzword for AI back then. I think technology has changed less than the buzzwords about it have. And going to University of Toronto, I met Jeffrey Hinton, who was the founder of Neural Nets and is all excited now about deep learning. And so I attended all his lectures at U of T. And so I’ve been playing with this technology for 25 years. I worked for IBM Canada. I ran their data mining practice for three years. IBM is a great business, Air Miles. The great companies have nothing bad to say about anybody else, but I thought I could do it better by focusing on one thing. And I had these great technical skills and I had learned through experience.
Gary Saarenvirta (09:13)
And so I founded the company in 2003. I spent twelve years writing all the software out of my own profits of the business. So we ran about 30 million in revenue through the business over twelve years. And I spent about 10 million of that writing the software. Not coming from a family background that had VC and investment, I thought I was going to take the technology risk out of the idea first and build it myself, make sure it worked for customers. I built it with customers. I learned that at IBM is never build a product unless you have a customer willing to participate with you and pay you while you’re building it, because that way it’ll be something that actually customers care about at the end of the day. So I did that for twelve years, funded the product, and then I thought 2016, the AI Hype has grown. I’ve proven we have a product that works. And then we went 100% kind of SAS software as a service kind of model and stopped doing professional services and projects. But I didn’t know that I could have raised money in 2003 with a great idea because that’s what most people do.
Gary Saarenvirta (10:13)
But I kind of derisked it. And then really undervalued those early rounds, we did a way too low of evaluation. Having spent $10 million. Nobody gives you credit for that.
Patrick McGuire (10:24)
After you did all risk, they all wanted in on you, right?
Gary Saarenvirta (10:27)
Yeah, they all wanted in. And it was a really low valuation that at the time I didn’t know any better, so I took it. And because the purpose for this wasn’t for me to get rich and make up a billion dollars, it has hardened the company that we could have raised more money faster and gone even faster. But in the grand scheme of things, I think stuff happens for a reason. So it’s all good. You kind of live and learn. And I don’t cry about the past mistakes. You learn more from mistakes than you do from successes.
Patrick McGuire (10:53)
For everybody listening, you don’t have to go out there and generate 30 million in revenue. So you can raise 5 million. You can do it a different way. But Gary, actually, I really, really appreciate that because you put the hustle and you put the hard work in. Whether you raise money or not is irrelevant. The point is you took a risk and you saw the opportunity and the value that you could do on doing it yourself. And there’s a lot of people out there that are just raising cash to raise cash. They almost don’t care whether it’s going to succeed. They just want to be able to say that we did this and pay themselves a pretty pocketbook, if you will. And I really respect the sweat equity workers a lot more than those who just are great at raising money. So Congratulations to you on the team for that one.
Gary Saarenvirta (11:38)
I appreciate that. Just to say, the reason we spent so much money was we didn’t write a little mobile app these technologies that we created is tens of millions of lines of code. Right. So I compete against the IBM’s of the world and really large funded companies. A 5 million raise back in 2003 wouldn’t have paid for the building of the technology. So right now, I think we have close to 100 million lines of code written over because AI is complex. It’s as hard as building a cell phone. Right. It’s very complex. And doing it with no human in the loop, this is not simple stuff. So I think that’s why it took a long time and took a lot of effort and time and money.
Patrick McGuire (12:16)
So just a little bit of code. Not a whole lot. Just a little bit.
Gary Saarenvirta (12:19)
Yeah, a little bit of code. Just a little bit. Exactly.
Patrick McGuire (12:23)
Awesome. Okay. So, I mean, things have gone really well for you guys at Daisy Intelligence and for yourself. Not everything is perfect. Not everything’s easy. Tell me about something challenging. Tell me about a bad decision that you made or who made it and what was it?
Gary Saarenvirta (12:38)
Yeah, I think the first time I fundraised. I think not knowing anything about it really love the people who put money into the company in the early days. And the only thing I didn’t realize that I should have done more. And that looking at their background saying, can they help me? So taking money is great. And I’m Super respectful for those people, for putting money in. And it was a real validation that I hadn’t been wasting my whole life. Right. The first people putting money in there was an outside validation that my ideas weren’t crazy. But I think for all of us having somebody more experienced at the table and investing in our specific type of business, tech and enterprise software, I think we went through a bit of heartache that would have been avoided with more experienced tech, enterprise software, tech investors. And so no Slam on the people at all. I think we probably all look back and say, hey, would have been great if we had another investor in the mix. That would have saved us a couple of years of pain. And already that was my decision to bring money. In hindsight, I don’t know that I would’ve been able at that time to make a different decision.
Gary Saarenvirta (13:35)
It’s not like I had 100 people lined up with big checks ready to hand over to us. They are great people. It was just that we all lacked some experience that could have made this go a little smoother. Right. But as I said, you learn from those mistakes and in the grand scheme of things long past that, and some of those investors are still in the business. And so I hope that someday I can return them a large payout, which is why they invested. And I think that will be the most fun of an exit is if it ever happens for us or we do an IPO or something, that I can walk around to those early investors and give them a big fat check and say, thank you very much. Hopefully it was worth it for you. That would be really cool.
Patrick McGuire (14:12)
It will be. And that day will happen, and they’ll probably give you a big fat hug when you give them that big fat check.
Gary Saarenvirta (14:18)
Yeah, I hope so.
Patrick McGuire (14:21)
Obviously, we start things when we start them. But when you started Daisy Intelligence, what would you have told yourself back in 2003 about starting a business or doing something?
Gary Saarenvirta (14:33)
Business is all about cash management. I didn’t know that engineering background. I think we took one accounting course in engineering.
Patrick McGuire (14:41)
You didn’t have time.
Gary Saarenvirta (14:42)
You’re doing engineering. Exactly. Let me tell all the interpreters out there. The only thing that matters is the cash balance in your bank account, because cash fuels the business revenue numbers. While it’s great to have a nice revenue on a financial report, it’s the cash balance in the bank as cash is the fuel of business. And so focusing on how to manage cash, I didn’t know about that. And I wish I had done that a lot earlier. I think would have saved myself some inefficient financial decisions. And so lately, as the pandemic happened, cash management became a real great experience that I had that we were able to survive and thrive through the pandemic by being focused on making sure we had enough cash to keep our employees paid and make sure we can deliver to customers and get rid of waste and inefficiency. And so definitely that’s something I would have told my younger self.
Patrick McGuire (15:30)
That’s pretty awesome. That’s a great one. So folks, start earlier, be excellent at cash management, and build a great team around you. These are great things, Gary. You’re awesome in that. And it’s easier for everybody to understand this. It’s easier to build a great team when you’ve got great leadership skills. And I don’t mean being the best leader. I mean being someone that others want to sort of magnetize to and be around that have a common goal, in this case, to help change the world with a little bit of technical digital intelligence. So I’m going to take you back a little more in a few moments. But before I do, I’m curious, how did you get connected with RIC Centre? What’s the relationship there and how did this come together?
Gary Saarenvirta (16:14)
Yeah, the RIC Center. I mean, it’s a great community that helps start up businesses. And so we got connected through Mars and looking for help and advisory. And so the RIC Center, we found some advisors there that could really help the business. And they helped us with pitch decks and telling the story and some marketing and different elements of entrepreneurs on that. We didn’t have the resources to go higher or didn’t have the experience to know. I think taking advantage for entrepreneurs of that community that exists either through the RIC Centre or MARS or other things like that was really super helpful for us in the early days and the RIC Center, they used to set up pitch practice, and I did a bajillion pitch practices. And if you look at my pitch deck, the first one I did at Rick years ago and the one we do today, it’s like wildly different. That’s another thing I would tell entrepreneurs, practice your pitch, do it a million times and change it constantly, and you’ll eventually be able to tell the story. You’ve got to be able to tell the story in like less than five minutes to go through a ten page investor deck and hit all the highlights that took years of practice to get there.
Gary Saarenvirta (17:17)
And so I think that was one of the biggest contributions to the RIC Center is really feedback on how to tell the story. At the end of the day, as an entrepreneur, you’re a salesperson. You have to be able to communicate your vision and story and do that effectively. And it’s been a great experience being part of the RIC Center certainly a lot of help they’ve provided. Awesome.
Patrick McGuire (17:35)
Appreciate that very much. Obviously, RIC Center is always proud to be involved with entrepreneurs like yourself that succeed and strive for excellence. Yet RIC Center is always happy to be part of that. There’s some great people out there that help. And like you said, they challenge you to do things maybe a million times on your pitch deck and make it better each time and just give you that opportunity to practice without feeling like you’re going to blow something. Blow a great opportunity. I came across something on your website, and insurance companies can reduce false positive rates to below 50% to make their investigators more successful. Can you help me sort of put that into common terms? And how is that really helping them? I’m really interested in that because that changes the business.
Gary Saarenvirta (18:22)
Yeah. When you’re looking at let’s also give you some round numbers, and I’ll do this math slowly. If you had a million claims a year, like a million claims would be, let’s say a large insurance company. And let’s say 1% of those was fraud. Right. 1% of the million claims is fraud. So that’d be 10,000 claims were fraud. Right. And so if you use traditional predictive models, a really good deep learning model might be 90% accurate. And you’re going, wow, that’s amazing. 90% accurate. Out of those 10,000, I would get 9000 right. And you’re saying I’m killing it. Right. But out of the 990,000 that were not fraud, you get 10% wrong. So you’d get 99,000 wrong. Right. So you got 99,000 wrong and 9000 right. So your false positive rate is like 91%. So you’re giving a oh, my goodness. False positive. So now you’re wasting investigators time. And that’s just the math. And predictive analytics, even if your model was 99% accurate, you would still have a 50% false positive rate. So if you’re wasting more than 50% of your people’s time, you need a different technology approach and we can dramatically reduce the false positive rate.
Gary Saarenvirta (19:36)
I think our website is very conservative and humble. We’ve been able to get it down to 10% to 20%, which means that you build more trust in your employees when they’re not going on wild goose chases driven by predictive analytics. Right. Predictive analytics is a great technology. You just need to know some of these facts and use it properly. And if you look at medicine, the reason your doctor tells you to get a second opinion is because of this fact. If you have a rare disease that you got a 1% chance of having with a medical test at 90% accurate, there’s only an 8% chance that you actually have that disease. That’s why your doctor says, go get a second opinion. Right. So medicine knows this fact. Nobody talks about it in machine learning. They don’t like out this. They just talk about this accuracy number, but they don’t talk about false positives and false positives matter when there’s a cost. Like if I’m doing a false positive and email marketing, if I send the email to the wrong person, that’s not so bad. I might annoy you, but there’s no cost of that. It’s micropennies to send an email.
Gary Saarenvirta (20:39)
But if I tell you you have cancer and I send you for treatment and I get that wrong, that’s a problem. If I waste 2 hours of expensive insurance investigators time that cost me money. So if I have a false positive braking event on a Tesla and I say hit the brakes now when I actually don’t have to, if I use predictive analytics to do that, that’s a problem, right?
Patrick McGuire (21:01)
Yeah, there could be something going wrong there. Yeah.
Gary Saarenvirta (21:06)
When people say AI, for the most part they mean predictive analytics, which my view is really just statistical analysis been rebranded. That’s 99% plus percent of what people call AI today. It’s been a marketing rebranding.
Patrick McGuire (21:20)
Well, it sounds like the idea of AI is another version of a false positive on an old story.
Gary Saarenvirta (21:27)
Yeah. I think if you’re predicting rare events and I think anything is a rare event, like if you live in the UK and you want to decide, should I carry an umbrella or not? You know, it rains a lot there, and if it’s raining 30, 40% of the time, you might as well just carry the umbrella every day. And if you live in the desert and it rains 1% of the time and you want a predictive model that says, should I waste my time carrying an umbrella or not? But if you have a high false positive rate, anything worth predicting is a rare event, right?
Patrick McGuire (21:54)
Gary Saarenvirta (21:54)
Are you sick? Is it fraud? Is this my best customer? You have this false positive issue which really wastes energy and efficiency we’re trying to address with these technologies. So I think you need to be careful and understand these technologies to get the maximum value out of it.
Patrick McGuire (22:11)
Going back to changing the world, and you probably will change the world with this knowledge once people really grab onto it. Thinking about that, I mean, pretty cool, amazing stuff you’re doing. What is the future of Daisy Intelligence?
Gary Saarenvirta (22:26)
Our goal is to be the largest AI company in the world and focus on building a great business. And then if you do that and we deliver to our customers, we believe in a future where computing machines can improve people’s lives. Right. And we tell our customers we want to empower your employees, help you service your customers better. And if we focus on that mission, then why not dream for the biggest thing possible? Because if you don’t dream big, you’ll certainly never get there. Whether we get there or not, I don’t know. But we’re going to try our hardest and focus on just build a great business, deliver value to your customers, hold yourself strictly accountable to that, and then good things will happen, opportunities will present themselves. And so I can’t predict exactly what will happen. But I got nothing better to do with my life. I can’t see myself sitting around and playing golf every day. And I did that once summer, and I was exhausted at the end of the summer, getting up every morning and playing around a golf. I said, okay, well, that was the pipe dream. So, yeah, I can play a bit of golf, but I want to have a purpose.
Gary Saarenvirta (23:24)
And Daisy gives me a purpose. So I see myself being that 80, 90 year old guy going to the office for half days. I had a lawyer once who was next door to us in one of our offices, 95 years old. He was coming in for half a day. And I loved his pricing, man. His pricing was like from the 1950s. It was great. He was an awesome guy, and I just loving him, watching him come to work, and I said, I want to be that guy, have a bit of fun, do the things you like, work a little bit. We need purpose. And so for me, I take this as far as it goes and as far as people are willing to tolerate me and what we do, that will be a blessing, right?
Patrick McGuire (24:00)
Yeah. I love the humility, the humbleness and the fun life attitude. I think that’s the right thing to have. That could be a little bit of the Scandinavian background in you, too, right? Just enjoy life to the fullest.
Gary Saarenvirta (24:11)
Patrick McGuire (24:12)
So, Gary, obviously, we’re very excited. We’re happy to have this, and we’re just really appreciative of your time. Here one thing I’ll say, that if anyone’s looking for startup transformations, opportunities to excel, to do a lot more with what you’ve got the tools, or maybe you just have a crazy idea like Gary did back in 2003 and said, I’m going to start a business in this really obscure category that is going to change the world. You can always check out altitudeaccelerator.ca, you can always visit us and learn more. Just Google, search Altitude Accelerator. And you can learn more and maybe you’ll be the next Daisy Intelligence. Now, Gary, before we sign off on this one, I got one question I always ask, and I’m going to have to ask you again. I think I already know the answer. If you were back from scratch before you did this and you got the chance to be an entrepreneur all over again, would you do it again?
Gary Saarenvirta (25:15)
I absolutely would. This has been an incredible journey. The roller coaster, highs and lows are crazy. But to be able to self determine and pursue a career doing what I love, which is the tech, I think I wouldn’t choose any other path. Absolutely. Wow.
Patrick McGuire (25:33)
Well, Gary, that’s exciting. And that’s kind of the answer I thought was going to come from you. Gary, huge. Thanks. I’m really excited to hear what you guys are doing and where you’re going. I can’t wait to hear the outcomes and if I could just take a random entrepreneur’s spirit and prediction, I think you guys are going to crush it. I may not be as accurate as Daisy intelligence but I think you’re going to do a damn good job.
Gary Saarenvirta (25:57)
Thanks, Patrick. I appreciate the vote of confidence and it’s going to be a fun ride regardless of what happens and for Startups Transform podcast.
Patrick McGuire (26:06)
I’m Patrick McGuire saying thank you to Gary and Daisy intelligence, saying thank you to all the audience. Have a great day. Thank you, Gary. Take care.
Gary Saarenvirta (26:14)
Peace. Thanks so much. Appreciate it.
Patrick McGuire (26:17)
Thank you for joining us on Startups transform podcast.
Speaker 2 (26:21)
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Patrick McGuire (26:25)
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