San Diego is known for it’s perfect 73-degree weather, its world famous zoo, and the invention of carne asada fries. It has street cred in the tourism, defense and biotech industries — and a rep for being a big city that feels like a small town.
Less well known than these sterling credentials is San Diego’s status as a pioneer of data science.
Our city’s love affair with data began with a University of California, San Diego (UCSD) professor whose groundbreaking research and corporate problem solving has transformed virtually every industry it has touched. It sounds like an exaggeration — but it’s absolutely true.
The invention of data science has made the development of life-saving drugs possible, enabled us to predict and contain forest fires, prevented environmental disasters and expanded access to capital for small businesses. And that is just a summary of the work that members of the Data Science Alliance (DSA) board have spearheaded.
It has also fundamentally changed the way major league sports look at talent — hello “Moneyball” — and is responsible for the predictive models that help you pick out your next pair of stilettos and the movie you Netflix and chill to on Saturday night.
San Diego is the cradle of the data science industry — from the group of renegades who dubbed themselves the “HNC Mafia” to the dozens of entrepreneurs and companies our city has nurtured and grown. And our inventive ecosystem continues to expand with technology and time.
This year, I was proud to help launch the Data Science Alliance here in San Diego. This exciting new venture will advance the practice of data science by democratizing access to information and building public trust through community problem solving. We recognize that this is possible because of the path forged by the historic data science adventurers you’ll read about here. Their love of data and problem solving continues at DSA today.
The HNC Mafia Uses Data Magic to Detect Fraud
We can’t talk about data science without first acknowledging Hecht-Nielsen Neurocomputer Corporation (HNC), or the “HNC Mafia,” as they like to call themselves. It’s ironic that the group that invented credit card fraud detection chose a lawless moniker!
HNC’s groundbreaking work is considered the foundation of countless data science innovations.
Like many tech companies (and rock bands) at the time, HNC was founded in a garage. In 1986 Robert Hecht-Nielsen, an adjunct professor of electrical and computer engineering at UCSD, and Todd Gutschow, his teaching assistant planned to use their groundbreaking work in neural network technology, which enabled computers to recognize patterns like the human brain does — to solve some of the world’s biggest business problems.
HNC made a name for itself in the history of data science when it came up with the Falcon fraud detection algorithm. This program used neural network technology and credit card transaction data to detect fraud. In other words, the next time you receive a text verifying it was you who finally bought a Peloton after your second glass of cabernet — you know who to thank. Falcon’s fraud detection was soon adopted by financial institutions nationwide.
John Mutch, the former CEO and Director of HNC Software told me this was the beginning of the company’s work using predictive analytics to confront business challenges no one else could solve. He said, “The question at that point was if we can accurately predict credit card fraud using these neural network models, what other types of pattern recognition technology could we develop that would add to that? That really led to a strategy to apply those technologies to various vertical industries.”
Predictive Analytics: The Technology that Changed, Literally, Everything
Ever wonder why Instagram seems to know exactly when you need new socks? Or the perfect extendable dog leash for your labradoodle? You have predictive analytics to thank. This term that is now a household name was coined by HNC, and their technology has touched every consumer in the world.
Predictive analytics is the use of statistical techniques from data mining, predictive modeling and machine learning that analyze current and historical facts to make predictions about future behavior.
Thanks to San Diego’s HNC — tens of thousands of data points are analyzed, from purchase history to unstructured text analysis to predict your future needs and spending.
These were transformative endeavors that led to how companies from Amazon to Ebay continue to succeed today.
Not Just for Business Anymore — Data Science, National Security and the World
When HNC formed a research and development group, it chose a young data scientist named Dr. Joseph Sirosh to lead the new venture. Sirosh headed up a team that worked in the Defense Advanced Research Projects Agency (DARPA) related research grants funding. DARPA was interested in understanding the contextual meaning of email and communications in order to detect national security threats.
Through this groundbreaking work, HNC developed innovative technology that was able to be deployed through its commercial products.
After developing his talents in San Diego, Sirosh later went on to trailblazing work as CTO of Artificial Intelligence at Microsoft and a Vice President at Amazon managing global inventory. You’re welcome, world.
In 2002, HNC was acquired by Fair Isaac for $810 million. You probably know Fair Isaac better as its more common name: FICO, as in, the FICO credit score.
One of the biggest influencers in data science to come out of HNC was Krishna Gopinathan. Remember the Falcon fraud detection system that gave HNC its name? Gopinathan was the staff scientist and engineer behind the algorithm.
His first startup, Burning Glass Technologies, was formed along with HNC alumni Ted Crooks and Anu Pathria. Burning Glass developed text mining associated with resume and job posting data. When President Obama wanted to understand why the United States had high unemployment with so many unfilled jobs, Burning Glass used predictive analytics to determine the skill gap in America.
Got Funds? San Diego Changes the Lending Industry
Gopinathan founded Global Analytics (later Gain Credit) in 2003, establishing online lending using data science.
Later, he found another way to deploy the power of data. Too often consumers are unable to access capital when they need it most. Traditional banks use strict measures to make lending decisions, eliminating many consumers from qualifying. Payday lenders don’t, but often have costly interest rates and repayment requirements.
Gopinathan found a powerful third way in 2014. Expanding on his experience in online lending, he founded Applied Data Finance, to use data science to reach people unable to access a bank loan looking for a lower cost alternative to payday lending.
Michael Thieman, another former HNC CEO, also used data science to blow the doors off traditional lending. He spun off Zebit from San Diego’s Global Analytics to provide more than 200 million Americans with access to credit to make online purchases.
San Diego’s Urchin Software Births Google Analytics
The predictive analytics HNC created laid the foundation for other San Diego companies to change the world.
The company’s presence in San Diego and its pioneering work created an ecosystem around data science and led to the formation of several other companies with global impact. One of the most notable is Urchin Software Corporation, which launched in 1995. The company was run by a group of young hotshot scientists in their 20's. Ten years later, the company was acquired by Google and became Google Analytics.
Need I say more?
Data Science Alliance Takes Data Into the Future
DSA’s roots go back to 1992 when Taner Halıcıoğlu walked onto the UCSD campus to study computer science. After graduation, Halıcıoğlu embarked on a career as a software developer and systems engineer — and early data science evangelist — for tech giants such as Cisco, LoudCloud and eBay. He then joined Facebook as the company’s first full time employee. In 2017, he established the Halıcıoğlu Data Science Institute (HDSI)at UCSD to expand the practice of data science to solve problems worldwide.
Halıcıoğlu and a like-minded team of data science and business luminaries came together to found the Data Science Alliance, which will catalyze the power of data and data experts to tackle enduring community and business challenges. With the support of San Diego’s rich tech history, the Data Science Alliance is ready to harness, strengthen and expand data science throughout the globe.
Special thanks to John Mutch for his interview with us, providing background for the article. Additionally, some information in this article was obtained from Fresh Brewed Tech’s “Original Godfathers of San Diego Tech” and “HNC Mafia Part 1: From Senior Scientist to Future Unicorn.”