A $800M Exit Take Away *

I had a meeting yesterday with two bright and experienced, yet first-time-founders. One was a top back-end engineer, and the other has extensive product management and marketing experience in several good companies.

Since, I had just finished a meeting with a UX expert a few minutes earlier, I entered this meeting and said “User Experience is crucial in B2B applications as well”. The back-end guy replied immediately, “Not necessarily…”. That was my first red flag. We started our meeting and they described their product and startup. When I asked to see a demo or a mock-up of the proposed product, they told me that they have none. When I asked them to describe the workflow of the proposed users/customers of their service, they improvised poorly, and the process they described sounded cumbersome. I asked, “how long are you working on this?”, “Six months” they replied. That was the second red flag. They planned on raising few million dollars in seed funding. Would you invest?

A Painful Lesson

In 2008, I visited a well-funded startup that was selling a ‘mobile advertising management software’ to large organizations. Their PowerPoint presentation was comprehensive and detailed. The CTO described the architecture of his product in length and it sounded impressive. When I asked them to demo the product, I was shocked. The UX and design looked as if it was 1994 all over again. They explained that the UX/UI was not important, as the product is only a back-end management system and the users are Telco folks that are used to ugly and outdated screens. Millions of dollars were invested in this company. Obviously, this company failed.

A Rewarding Experience 

On January 2013, I visited a small seed stage startup in an old building somewhere in Tel Aviv. They described their product offering. A system that will integrate data from multiple sources and will provide CMOs and agencies with a single source-of-truth of the performance of all their marketing campaigns in all channels. They received an Angel investment a few months earlier, had hired 3 engineers, and decided not to draw salaries.

I asked for a demonstration of the system, and what I saw completely blew my mind. The CTO demonstrated how he can connect to multiple sources, using a wonderful UX, easily exposing the data and the metadata of this sources, and automatically mapping these sources of data into a unified data model, which then was available for a cross channel analysis and visualization in a beautiful dashboard. I asked about the software architecture, and the reply was a coherent state-of-the-art architecture that could come only from someone that has a deep knowledge of the newest tech around. I was sold. At the end of that first meeting I already decided to invest.

That company was Datorama.

The elegant and efficient UX (coupled with superb tech, product/market fit and execution) was a major selling point and fundamental the success of Datorama. The ease of use, the rapid integration, the unified data model and the ability to view cross-channel data unified into one-single-source-of-truth, allowed them to become a leader in their domain and to get on the radar screen of Salesforce who reached out to meet them and acquired the company in the largest transaction of an enterprise SaaS company in Israel ever.

A UX anecdote

An anecdote from that first meeting. I’m an enterprise software integration expert. So, when the CTO was demonstrating how he connects a certain data source, I expected that he will have to manually map the different fields to the universal data tree, but I was surprised to see that they completely automated the process and used AI to understand that metadata and predict the preferred mapping of the new source to the universal data model, saving a lot of manual and tedious work. For me, this little magic-trick created the Wow effect and exemplified the superiority of the product team.

Make it right, it pays off

UX is not about pretty graphics or just a look-and-feel; the look and feel it is an outcome, it is about usability architecture. It is about putting the end-user in the front and asking how do I architect a seamless user experience that decouple the user from the needs-to-know or understand the underline system. There are many ways to solve a problem, but if you get it right the experience is right. Right in this context it is intuitive, elegant and efficient. To do it right the UX architect needs a deep understanding of the domain problem and its underline complexities and he/she must continuously challenge the existing assumptions.

In my mind your UX should be coherent journey among all your digital assets from the initial interaction with the lead, through your landing pages, website, demo, forms and up to the application and support mechanisms afterwards.

There is still a room for innovation and improvement in UX in almost everything we do. With the consumerization of IT, even the “boring” enterprise users are expecting an Apple-like experience… and they are right!

Now, it’s your startup. Make sure that your backend UX is as brilliant as you are. It will pay-off.

And BTW, I actually liked the team that I met yesterday. They were smart and responsive. Still thinking about them.

* As reported by the press

* Ariel, Yoav, many thanks for your feedback and edits.

Thank You, We got $1M investment!

and How do you really sell an Audi A5….

It’s not everyday event that I’m getting a “thank you” call from founders, but when it happens, it fills my heart with joy. This one was truly unique.

A couple of months ago I met with an eccentric business Founder and his introvert yet talented co-founder and CTO. They were looking for seed investment with no success for a long period of time. The team pitched me on a their enterprise technology, a highly sophisticated platform with many modules and capabilities. They described every module to the detail until I completely forgot what they were selling. It looked like every module is a company on its own.

When they finished the pitch. I was quite blunt. “Guys, you will not be able to raise money this way!”. “You are all over the place!”. “You need to focus on the main solution and stop selling me every component on its own”. I described how I would have positioned their product and company, and went on my way, assuming that they will think that I’m just another “smart-ass” VC that does not understand them… ;-)

A couple of weeks later I got a phone call, “Motti?”. “Yes” I replied.

“I just called to say thank you. We’ve been in the market for a long time and nobody gave us such a direct feedback. Because of you, we are going to completely change our focus and the way we pitch our company. We were like a rookie car salesmen trying to sell an Audi A5 by opening the hood and describing every part and piston. We realized that we need to sell a Car; look, this is and Audi A5, it’s a wonderful car, sit in it, feel it enjoy it”.

I was so happy to receive this call. He got it right.

The other day these guys received a $1M investment. That night I received a message from the founder and this is a direct quote:

“I just want you to know, that our victory today happened a lot because you showed us the way. Thank you. Please write down on a small piece of paper, when I will be exiting $1B I will mention you”

My reply was short “You deserve it!”

So, if you are a founder trying to raise money, remember to focus on the main message. Investors are not “buying” car parts, they buy into you and your laser-sharp-vision.

OK, my job here is done.

Dropping the mic ;-)

The Unsung Heroes

They walk among us unnoticed. “Morning” you mumble their way while sipping your coffee, expecting no answer. They are just Account Managers after all… They are not sales who get the office bell ringing when closing new deals. They are not R&D who get the overwhelming “kudos” emails-thread when releasing a new product version.They are just Account Managers responsible for… managing accounts, not more. But recently I realized that they are the unsung heroes of the modern age of the Enterprise SaaS and Managed Services companies, and I decided to say a word about it.

In a SaaS company your customer is relying on your ability to deliver your service continuously – up time, response time, features, capabilities, enhancements, value. Unlike the old enterprise software, where the customers bought a software product after a limited trial for sometimes seven figures in advance, in SaaS a customer is paying on a monthly basis based on the actual use of your service. The reality changed – you are as good as your ongoing delivery, and you get paid only based on that.

In a Managed Service Company your responsibility is even higher. You customers are not only expecting you to make your technology available to them, but also to deliver on a business value that is the essence of your software. Here, your organization need to “live” the business of your customers and to use your people and platform to continuously deliver value to them.

For example, if you are a SaaS Analytics company, you will provide a platform to allow your customer to run their analytics, but if you are an Analytics Managed Services company your customer will expect you to actually monitor and analyze the data for them, and to provide ongoing valuable insights to their business. Different responsibilities.

The decision whether you are a SaaS company or Managed Service company is critical for the way you are building your organization and account management specifically as it has a big impact on your product and talent you hire.

Here or there, Account Manager are critical for your success. Every morning they sit down to their desks and start their long list of daily tasks including onboarding customers, integrating systems, monitoring use of your service, listening to customer needs, addressing additional requirements, assembling resources, solving problems, mitigating risk, identifying opportunities, and many more. A good Account Manager needs to be a “Jack of many trades”, and end of the day deliver one thing – the success of your customer.

But your Account Manager will be only as good as good as the infrastructure that supports her – the product (service) should be good, the R&D and Product Support should be responsive, and there should be a good match between what was promised to the customer and what you can actually provide. Above all, you as her CEO should back her and ensure that your organization is aligned to make her successful in her end goal – Customer Success.

A successful sales person might sign a customer and get the first payment, but a good Account Manager will keep these monthly payments coming and increase them over time.

Remember that without a strong Account Management and without your support, Service Cancellation is just around the corner, and in today’s “mobile” economy your service can be easily replaced by other vendors who are eager to take your business. And everybody knows that CHURN kills.

So respect and support the heroes of the day – the mighty Account Managers.

Peace out.

A Sweet Killer: Positive Feedback

I believe that “positive feedback” accounts for the death of many startups. “Positive Feedback” is when a Prospect (potential customer) tell you that they likes your product, and that they really enjoy meeting you. But you leave that meeting with no hard action item or intend to order a product from you. Sometimes they will take more meetings with you and your team, but no business is generated.

Sure, it’s easy if a customer pukes all over your product. You clearly get it. You need to change the product. However, it is much more difficult to understand whether you are on a good track when customers meets you and tells you “good things” about your offering.

We have a saying “if the customer tells you that your product is VERY interesting, kill the product and search for a new one”. A lot of times entrepreneurs are shocked with this approach.

I have seen too many startups that are encouraged by good words of analysts, journalists, consultants, business partners, potential customers and judges in pitch contests. They get compliments for their visionary offerings, and nice presentations. They are all getting “positive” feedback and people “like” or “love” their ideas. The “vibe” is good. But when it comes to actual business transaction or to actually buy your service or product, suddenly things start moving slow.

When talking to these entrepreneurs in the early days of realization, they have many reasons for the slow pace in deal closing:

• “We are in ‘enterprise-sales’ and it takes 9-12 months to close a deal”
• “It’s a sales process, and we scheduled a meeting for the end of next month…”
• “Our marketing material is not good enough”
• “Our prospects have many projects in the pipeline and they don’t have time for our implementation just yet”
• “The market is not there yet”
• “They told us that their current fiscal year is all planned out already, and they will put us in the plan for next fiscal year”
• ….

All these are just ways for the customer to tell you that your product is not important enough for them, and in the ongoing balance of “must” and “nice to have”, your product is on the “nice-to-have” section. Your prospects and advisors are simply polite, but you simply can’t afford that, since your burn rate kills your cash and the competition kills your market.

Add to that “False Positives” and you are really in the swamp of oblivion. False Positive is when 1-3 customers actually order your product, but it happened not because of the product, but because of excellent relationship with the account or a well-connected sales executive. Usually, you identify “false positive” when a customer buy the product, but is not using that. “We don’t have time to put it in production”, “We are waiting for resource allocation…”.

Usually it takes over a year to fully understand that the Positive Feedback we got was absolutely wrong and caused us to spend so much time, resources and money. Since most of the startups are at cash status of 18-24 months, this put them in a horrible position where they need to “pivot”, with limited to no cash to finance it, leading with most of them to the “spiral of death”.

Therefore, I recommend you, listen carefully! Be very attentive! Be true to yourself and clear the noise of the good words. Look for clear indicators that you are reaching a good product/market fit, and act upon them. Don’t try to force fake reality. Update your investors, talk to your customers. Don’t stop asking questions. Change your product or offering until you start getting these purchase orders in a predictable and consistent manner.

May the force be with you.

next week. “Sugar kills”…

Zoom in, Zoom out

I sat down with two different founders for a talk about their business. Completely opposite personalities. One is master of details and the other is the ultimate visionary. Both are true entrepreneurs and leaders, but different styles.
I realized I had a different role with each of them. With the strategist, I had to help in reviewing the details of operations, while with the Operator, I needed to help in setting the big picture and strategy.
Funny, but I felt that I’m playing a game I called “zoom in, zoom out”, where my role was to take the discussion to the opposite direction with each one of them. Like playing with a the zoom of a DSLR camera.
Feeling innovative and unique, I decided I will write about it. So, I sat down and googled for “zoom in zoom out”. Surprise, surprise. The first article in the search results was this very thoughtful article by Prof. Rosabeth Moss Kanter of Harvard Business School titled “Managing Yourself: Zoom In, Zoom Out”. Prof. Kanter, a world expert in business management, provides a detailed analysis of the need for dynamic use of the zooming options for effective leadership and management. I highly recommend reading it. Some abstract thinking… Enjoy.

Don’t “Sell”, Build Trust.

Novice sales people think that their main goal when meeting prospects is to make them buy, and they usually start “selling” by blasting them with a presentation and product features, citing the company pre-made scripts. Always surprised to find out that the prospect did not “bite”.

I believe that the first goal is to build (or start building) trust. Trust in you as someone that the prospect should listen to. Trust in the company you represent, and Trust in the product/solution that you are trying to promote.

Here are quick 9 points that come to my mind. I’m sure you guys have more. I’m ready to discuss.

1. Ask yourself “why this prospect should trust me, my company and our product?”. Once you have the answers, weave them into your talk.

2. Listen Carefully – before pitching. It does not matter if you are in a face-to-face meeting or a web conference call. Ask questions and understand the person you are talking to, their concerns and context.

3. Be Professional – be on time, be accurate, talk to the point, respect your prospect, respect other companies (allies and competitors alike), don’t try to make friends too fast.

4. Don’t “Convince” – prospects don’t want you to convince them. They want to make their mind on their own. I know it’s easy said then done.

5. Don’t “Sell” – customers don’t trust on sales guys. So don’t be one.

6. Be serious about your pricing – if you are asking for a certain price, mean it. Prospect won’t trust a company that rushes to provide 90% discount.

7. Don’t rush to promise – even if you know that you can deliver. Your prospect will respect you more, if you check and get back to them with a solid answer.

8. Deliver! – shall I say more? yes, Deliver Continuously in every interaction.

9. Never, but never say “Trust me” ;-)

Hope this helps.

10 Points on Business Development

I’m sure this list does not require explanation… put your business development to work, because –

1. It’s not sales
2. It’s not marketing
3. It’s not fluff
4. It has specific Business goals
5. It takes time to develop
6. It requires strategic thinking
7. Expertise, Connections, Deep knowledge are a must
8. Can create big (huge) opportunities
9. Can be risky
10. Should be addressed early on

2015 Tech Wishes List is Open

Let’s start our 2015 tech wish list. Here are few that are on my personal list. Would love to hear yours.

Make a Great Wearable (at last)

They are all big promises and fancy demos, but when it comes to reality, all wearables fall short. Either too many promises with bulky devices and cluttered Ux, or too little that we don’t find real use for it. Battery is still a major challenge. I was excited for a short minute with the features and capabilities of the Microsoft Band, but when testing it in New York, I was completed turned off by its bulkiness. The Ux had great ideas, but lagged in performance and screen is too small. I believe a true redo is due for this product, next version should be awesome. I hope the Apple Watch will make it right off the gate. What do I ask for: durability, water resistance, elegant design, battery that lasts a week on single charge, elegant design, all health monitors, social interactions, great ux, simple to use.

“Hey Mobile Phone, please anticipate me”

I’m using Android, the latest version. It’s still asking me to work for it. When I get into my car, the phone stays the same. In the office as well. Home, and nothing changes. Same applications, asking me to operate them, configure them, and use them. Why won’t they arrange to work for me. Getting into my car, it does not make sense to see the same little tiles with small prints, and dozens of options. Make data simply available to me.

Advertisements, Stop annoying us

Advertisements are still annoying and mostly not relevant at all. Specifically Mobile is still a green field. There are so many opportunities to make it right, but it require precision and thought rather than blanket bombing. Don’t show me hundreds of irrelevant ads, show me few and get my attention because they will be relevant and right.

Make my Digital Home Integrated

I still have 4 remotes in my living room and in order to get my Apple TV working and listen to radio I need to click each one of them. I know, I know that I can buy a universal remote, but it’s still way away from what I need.

I have many more, but let’s hear you guys, what’s your big technology wishes for next year?

I’m the Sensor. I’m the Controller.

I have a brain, so they say. I wake up 6AM every day (excluding weekends). I charge. Check the weather. Equip myself and drive to work. I meet with others. I sense the environment. I interact. I gather data. I record. I analyze. I make decisions. I upload pictures, thoughts, impressions, statuses. I respond. I get back from work. I reset my system and go to hibernate. I wake up at 6AM.

a Sensor: a device that detects or measures a physical property and records, indicates, or otherwise responds to it.

a Controller: a person or thing that directs or regulates something.

But, I have a brain.

“Internet of Things” they call it. Billions of sensors and controllers connected to the network. They will measure and act on everything from temperature, humidity and accelerations to wind speed, materials composition and density. Controllers will control machines or computers based on commands provided by either pre-defined algorithms or by simple verbal commands. Cars will be driving themselves avoiding traffic, roadblocks and crazy drivers. Homes will welcome us with the right temperature, lightening, music and such. Shops will target us. Websites will adjust to our tastes. All accommodating us, Humans.

About 40% of the world’s population is connected to the Internet today. That’s about 3 billion people that are feeding the net (the cloud) every day with data and knowledge about themselves and their environment. Every interaction we make, every post with write, every pic we upload, every friendship request or ecommerce transaction, or every health data we upload, are all codifying us, individuals and communities into a highly distributed data stores with immense processing powers.

We think about IoT, and our mind pictures miniature silicon based sensors connected to the Internet.  But without even noticing it, we the people are becoming sensors and controllers for a future bigger networked brain.

We talk about singularity, the day computers will develop their own consciousness. Usually we think super-computers specifically designed to mimic the way we think. But have a look at the network, the internet. More and more it starts looking like a big a neural representation of our brain.

We are the sensors, we are the controllers, but are we still the brain? For how long? Who will control this Brain? Will it be controllable at all?

I wake up. I’m still human.

That was just a dream.

Waves

My son Itai is a very energetic young boy. He just turned 11 and all day long he is out with friends – Soccer, Handball, Tennis, Ping Pong, Pool, Skateboard and whatever means out and free.

He just finished two weeks of surfing camp which were not easy at all. He came back home tired, with red hands, and with blue signs of surfboard unintended collisions. Immediately after finishing the camp, he ask me to take him to the beach to show me what he learned.

We went to the beach. It was afternoon. The sea was rough. My kid entered the water with a huge board. The waves were vicious and broke on him again and again. He held the surf board in one hand by its leash and stepped forward against the waves. Every wave took him back for a meter or two, and in between the waves he was trying to move forward fast and far enough so he would be able to catch a wave and ride it. It was not easy, but he did not give up, and eventually he was able to catch few ones. I was so proud of him.

I was looking at my son braving his way through the waves and I thought about us all. Trying to manage our way in the sea, against the waves. Trying to move forward against the tide, and sometimes with persistence, perseverance and a bit of luck we catch the right wave for a wonderful, fulfilling and joyful ride. Keep on going my friend, more waves are coming for those who won’t give up. 

Above is a picture of the fighter.