How to Raise $20 Million for Your SaaS Startup
Hear the story of how Optimove’s founder bootstrapped his company until it was ripe for growth funding – and gain some important insights from the journey.
– [Intro] Welcome to the ConversionAid podcast, where we help software entrepreneurs to take their business to the next level. Each week we interview proven industry experts who share their strategies and insights to help you create software that sells. Here’s your host, Omer Khan.
– [Omer] Welcome to the ConversionAid podcast. This week’s interview is a story of two university students who wanted to use their knowledge of machine learning to build a start-up, but they had a few major challenges. They didn’t have a business idea, they didn’t know how to code, and they didn’t have the money to hire a developer. In this interview you’ll learn how they came up with the right business idea, how they were able to self-fund the business, why they walked away from $1.5 million in VC funding, and how they grew their idea into a business with over 100 employees. Before we get started I’d love to send you my free productivity toolkit, which will teach you the habits, hacks, and tools used by successful founders and entrepreneurs. If you’d like to get a copy, just head over to conversionaid.com/vip.
Also, a special announcement. I am currently developing a plan to launch a premium version of ConversionAid. This would be a membership-only site with access to more in-depth interviews and tactics, training courses, and detail roadmaps to help you build and grow your software business. I’m looking for a small number of people interested in becoming founding members. As a founding member you would provide feedback and help me shape the offering for the membership site. My goal is to launch it as a minimum viable product, and then quickly grow it into a resource that provides massive value for its members. As a founding member you’ll get access at a ridiculously low price and you’ll be grandfathered into that plan even when new members are paying 10 times what you are. So if you’re interested in becoming a founding member, just go to conversionaid.com/membership to get on the wait list. There’s nothing to buy right now and there’s no commitment. I just want to know how many people are interested in participating in this early program. And then if you sign up, I’ll let you know when we’re ready to start. And at that point you can join the program if you’re still interested or just ignore it if you’re not. So again, that’s conversionaid.com/membership. Okay, let’s get on with the interview.
All right, today’s guest is the cofounder and CEO of Optimove, a SaaS product that uses its predictive customer modeling technology to help marketers understand customers and create personalized marketing campaigns. The company was founded in 2009, it initially started out as a consulting business. And the cofounders used the revenue from the consulting site to fund the SaaS business. In 2012 they were offered $1.5 million in VC funding and decided to turn it down. And they continued self-funding the business until this year, when they raised $20 million in their first round. The company has over 100 employees and is based in Tel Aviv, with offices in New York and London. So today I’d like to welcome Pini Yakuel. Pini, welcome to the show.
– [Pini] Thank you for having me, Omer, it’s a pleasure being here.
– Now let’s start by talking about Optimove. I kind of explained to the audience a little bit about the product or the business, but in your own words what does Optimove do?
– For sure. So Optimove’s mission is essentially to help brands to communicate with their customers in an emotionally intelligent manner. So we want a company or a brand to talk to its customers and let those customers feel as if they’re being seen, as if the brand gets them, understands them, like mimicking the the same experience you would have when you talk to a very intelligent human. So essentially that’s the overarching concept of what we’re trying to achieve.
– So let’s go back to kind of 2009. How did you come up with the idea for this business?
– I was doing my master’s in operations research and I met my partner at the time, he was doing his Ph.D. in machine learning. And we were like, “Yeah, there’s some problems we could solve together,” we had a good chemistry, and we kind of wanted to take this journey together. We knew that we were going to do a tech business. And from our department, which was the Industrial Engineering and Management Department at the Tel Aviv University, we knew that the only thing that’s computer science-related was machine learning and data mining. So that was the obvious kind of route we took. And from that point we knew we don’t want to solve problems in the realm of inventory management, supply chain management, because these worlds are pretty gray in terms of the way they’re perceived.
There’s some interesting problems and difficult problems in these worlds, but they’re pretty gray. And we wanted to go to the place which is more kind of sassy and hyping and that has some more celebration in it. And I think once we understood that we can do what we do in the world of marketing and customers and customer analytics. I think this whole customer-centric revolution was also going on at the time, kind of like it was already going on. So this kind of geared us in that direction, but we started only with that that. So we only had this kind of direction we want to be in, “We want to utilize machine learning because this is what we know, we don’t know anything else.” We have some major skills there, so we want to utilize that in the field of customers and customer analytics and to cater for the customer-centric revolution. That was the only thing at the beginning
– And how long did you guys kind of play around with the ideas before you kind of came up with a solid problem that you were going to go and tackle?
– Right. So absolutely. I think it was like four to six months. At the beginning what we did was we started working together and we started meeting with businesses, we started meeting with companies. We met with a telco company, we met with big retailers, and were asking them kind of like, “Which types of problems are you guys having? How do you use data to solve these problems? Do you utilize kind of advanced machine learning and things like that?” And this one cellular company, they said, “We have this thing that we call the churn lab, so this is kind of like a laboratory which we analyze data to predict churn.” And so we met with the guys from that lab and they told us what they did and we said, “Hey, guess what, there’s another way to do that.” And we obviously, we both studied in our thesis and that was how the original concept for the product, the original concept for the Optimove model was born at that point. And then we went back home, we started to sketch it, and we started to kind of formulate the basic concept. And this is when the concept was born, it was perfected, reality-proven, during our work with customers and with actual data.
– Okay, so the idea basically kind of boiled down to, “Let’s use this predictive technology to figure out which existing customer is likely to cancel their account or is about to do that or is not engaged. And then how can we help to identify those people as early as possible so that the business can do something about it?”
– So yeah. So it was born from this notion because that place was the churn lab, but this technology, and it’s called the MDP, Markov decision process, this technology is kind of like metaheuristics that is applied in many, many different fields, but nobody did it in the field of customer marketing or customer analytics. And this is our secret sauce, this is the innovative thing that we bring to the table. And it’s not only predicting churn, it’s essentially predicting everything that happens along the customer life.
So, if a customer has just registered, what’s the probability of them essentially becoming paying customers? If customers are active, what’s the probability of them churning? If somebody churns, what’s the probability of them coming back? If somebody is active, what’s the probability of them becoming VIPs? So there’s all these kind of, we call these, customer migrations. And the prediction is around all types of customer migrations under one type of technology. So that was essentially the overarching concept that we started to toy around with at the beginning. And this is what the Optimove model essentially does today after many years of refinement and iterating and optimizing and tweaking it.
– But you guys didn’t build the product at that point, did you?
– We don’t know how. We can’t code. When I watched the movie about Facebook, I think it’s called The Social Network. Right?
– So I was so envious of the actor who played Mark Zuckerberg. But Zuckerberg, essentially he was able to build his own product. Maybe it turned out to be good because it built other types of skills that we’ve acquired as entrepreneurs and that I’ve personally acquired. So maybe it was even better, I don’t know. But at that point I was very much envious because I needed to have money to pay developers to build the product. So you’re right, we had no product at that point, it was just kind of equations and formulations and pseudocode and things like that.
– And so you decided to start consulting? Was that just a means of figuring out a way to raise some revenue?
– Yes, absolutely. So we met a couple of VCs and we immediately figured out that it’s not for us, we’re not ready yet. And we felt like we had time, we felt very kind of freed, and we just said, “Hey.” And meeting with people was what got us through the initial idea. We said, “Hey, let’s meet the companies, let’s see what’s our challenges, let’s try to help them.” And then when we would meet companies, we would pitch our model. It would should the very same algorithmic concepts and people would say, “You know what? This seems very smart. I don’t know, but I like these guys, I like the fact that they thought about this very thoroughly. I’ll just give them my data and let’s see what they can do with it.” So that was the beginning. Kind of got data from companies, we promised to deliver some results, show them interesting segments, show them interesting patterns and insights into their data, find those nuggets that could help them make better decisions or even could help them run interesting customer marketing campaigns for the customers. And that was the beginning. And then we started meeting these companies and offering them to work with us on a retainer basis. So they would send us their data, we’d get the data, we’d get it into our office, we would start crunching and working it, meeting them on a weekly or biweekly basis. And essentially I think we kind of became the house data scientists for these companies, but it was outsourced. So instead of them having their own data scientists, we would fill that function.
– Got it. Okay. So I’m curious because you said your cofounder had been learning about machine learning.
– But was that purely kind of from an academic perspective, there was no kind of hands-on?
– Yes, yes. That was something that I discovered really quickly, so yes.
– Yeah. I worked a little bit part-time in the consulting company, but we both didn’t have a lot of experience. And essentially we had a lot of passion and academic know-how, and then we started our journey. Essentially it’s journey. We started our journey to become what we are today.
– So how long did it take you to build the product then?
– So what happened was at the beginning, so we never raised money until recently, but we did get a few grants from the Chief Scientist in Israel. And that essential enabled us to kind of outsource the first development project. So we got, I think it was at the beginning, something like, it wasn’t that much, $30,000. And we used that to pay to this development house to do the first markup version. Essentially they did the skeleton of model. And what we did was just show them the pseudocode and just what we wanted this thing to do, and they built it for us. So this was the first thing. But it took time, it took time. I think after maybe like a year and a half or two years we started having the first versions, but at the begging we just kind of mirrored the model itself and the outputs of the model in just kind of a website. It wasn’t yet a product, we were still trying to understand ourselves what are the outputs and the benefits that you can get from this model. And we used their people to help us mirror that out, that was the beginning. However, the experience from working with all of these businesses and customers and getting the data and seeing the data and applying a model on it also tremendously helped us to forge our identity and understand what we want to do and how we want to do it. So when we productized our product, it wasn’t like there were two coders in a room trying to imagine what would people want. We had real-life experience from the consulting arm of the business.
– Yeah. Because basically those people were your potential customers for this SaaS product when it was going to be ready.
– Exactly, exactly.
– Okay. All right, so let’s fast-forward to the point where you’ve got kind of the first version of the product built. What did you guys do to start selling it?
– Right. So I think that was around 2012, that I feel that the product was mature. And I would say that that’s the point when we had product market fit and that’s the point where we started to pivot away from services completely. So you’re asking how did we sell it?
– Yeah. Did you start going to your consulting clients and get them to start using the SaaS product instead?
– Absolutely, that happened. But that’s kind of like a catch-22 because in many ways these clients are already accustomed for providing consulting and holding their hands. So they’re not going to be your power users of the product, but it’s a very good start. Same way we sold consulting, I think selling about engaging with people, listening to them, dazzling them, wowing them with your fresh ideas and concepts and your passion and you kind of try to spread your enthusiasm to them and hopefully they become the champions and they start to sell it internally. Essentially, yes, this is what happened. And I realized about myself that I’m pretty good at selling.
I think that this is something that’s super powerful for a start-up. I think that a lot of the start-ups that fail, you would find that nobody on the founding team is a strong salesman. And that’s a huge problem because they’re going to use hired guns, and hired guns are not good at the beginning. They’re only good once the company is proven and you have a substantial brand, and then they can help you grow your business. But the builders should be the founders. And a big portion of the building is selling. And if one of the founders cannot sell, it’s a big problem. I see it in many cases. You see start-ups with like three founders, one is techie, the other one is also techie, and, guess what, the third one is also techie. So you’ve got three CTOs sitting in a room. One CTO can speak a bit better than the two others, he becomes the CEO. And I don’t know, but it’s a problem.
– So being effective at sales also means anticipating the kind of objections that your potential customers are going to have about buying your product and being able to address those. As you went out and you started having these sales conversations with people, and particularly those that weren’t already consulting clients, what was some of the objections that you were getting to them buying your product?
– Yeah, I think any good people in sales know this and you can find it in any book on kind sales 101, there’s common objections. There’s kind of a few things that happened in order for sales to be successful. So I think one of the earliest things that I realized myself… And I was in almost everything. So one of the first things you realize is it’s a different discussion when the company has decided they want to do something around your field of expertise or when they haven’t. And you get completely different feedbacks when it’s situation A versus situation B. When they have decided they want to do what you are doing or something similar to what you’re doing, they would be asking very specific questions. They’re going to ask more about the practicality of how things work, they want to gauge your ability to be a partner and to be a partner in their success. So the whole philosophy in the way they come, like feel you out, is completely different. As when you march in and kind of knock on their door and you’re saying, “Hey, I do X, Y, Z,” and they’re like, “What is X, Y, Z?” Then you start the education process from the beginning, you get a whole different set of objections. Does this make sense?
– It does, yeah. So on the one hand you’ve got a group of people or prospects who you have to basically convince that they have a problem that this type of technology will solve. Whereas the other group are already experiencing the problem, they’ve already probably thought about potential solutions, and identified what you guys are doing as one possible way to solve that. So they’re already convinced that they need to do something.
– Let’s call it kind of the education curve of the prospect, right? So you meet many companies. And when you meet that company, the company, they’re at a certain stage of that education curve. They could be very advanced, maybe they’re already doing what you do internally with kind of an internal solution and a homegrown solution. And now they understand that there’s a lot of problems with their homegrown solution, and then you talk to peers, you talk to practitioners like you. So they’ll always be kind of either digging what you do or they would either be saying, “Hey, it’s not so impressive,” and then that’s a whole other problem. So this will be a discussion with practitioners, this is kind of the top level of education, and then maybe you can show them that you are the next kind of evolutionary step in that field. And that’s obviously amazing because you’re perceived as even more innovative than what they do today.
And then there’s the beginning of when people would say, I’ll give you an example, “Why should I do segmentation? What’s the difference? I just blast one e-mail to all of my customer base. It’s super efficient, it doesn’t matter. And what you’re saying is so expensive and I need to build a whole team and I need to start to create different versions of my content.” And you’re still kind of pitching the story of why CRM works, why being customer-centric is important, why personalization works. If you’re still pitching that story, it’s a different conversation. So I think that summarizes that. But in terms of objections, I would say there’s the typical objections people sometimes feel with change, feel with technology. You have these objections that have to do with job security. You have a ton of different objections.
But the way you handle these is I think that you just iterate and get better at every meeting. So you’ll get chances because, guess what, people are pretty predictive. If you talk about the same topic and you do the same conversation with company X, then company Z, then company Y, the same questions will start to pop up. And then you get to practice, right? So you answer ones like this and you see the response. You answer another time, you see the response. And you see what makes them, and then you perfect it. Right? So you perfect it so you know how to handle different types of objections.
– Were there other competitive products around at that time when you were having these conversations back in, I guess, 2012?
– Yes. I think that there’s always competition, there’s always competitive products. Also, the perception of who’s competitive also has to do with the prospect’s education, right? So if they’re highly educated, they can understand, for example, we are not competing with an e-mail company. If they’re less educated, they will say, “Hey, I can build some segments with my e-mail. What’s the difference?”
– Right? So for them the world is shallow and it seems kind of like more flat. Right? So imagine if you’re somebody with a very sensitive palate and you’re a foodie and you can appreciate the finer things in life. So I can take you to this boutique pizza place and I’ll tell you that the dough is organic and they’ve been kind of fermenting the dough for this and that, and they use special flour imported from blah, blah, blah. And the tomatoes are this and that, and the cheese is this and that. And then you’re going to eat that pizza and you’re like, “Oh my god, it’s crazy.” But somebody else that eats everything and he doesn’t care, he’s like, “Hey, man, it’s just some tomato sauce and cheese, what’s the big idea? I can do it at home with a piece of bread and tomato sauce from a can and it tastes the same.” Because everything in life could be very similar, but could also be extremely different. It depends on your perception and mindset and level of education, I would say.
– I’m curious whether kind of the predictive technology was kind of baked into the product by then and that’s what you were using to differentiate your product.
– Absolutely. Sorry, go ahead.
– Yeah. And that was part of the $30,000 that you’d invested in hiring somebody or outsourcing that development work to do this, or did that happen with further development over a kind of subsequent year or two?
– Yeah, yeah, yeah. So by the time we released the first version of the product I think it was like 2012. And then by then we’ve taken the code from the system or company and we’ve hired a VP of R&D and he had a bunch of coders. So we were able to get some money from the consulting business and invest it and build a team of like three or four developers who worked for like a year to perfect the product and get it to that stage. So that definitely happened, but you’re absolutely right. And still today, by the way, some of the reasons that we’re able to be more successful than other companies is I think that people understand that what we do is more unique and it puts us in more of the blue ocean. It allows us to get better pricing.
We do have competitors, but we’re not a commodity. So if somebody mentions a competitor, I would say, “You know what? It’s close, it’s in the same field. But go see their product, see our product, and then you tell me what the difference it.” Because then the system speaks for itself when you see the depth of the science and the scientific approach. Especially in today’s world, right? Because you go to websites of companies, it all feels the same. Everybody, especially marketing people, they’re very quick to adjust their message. And if they understand the word “predictive” or the word “multichannel” or art versus science, or combining art and science, the second that they get it they’re all going to put it on their websites. But then the question is, “Why use science?” If I multiple two numbers, one against the other, is that science or is that second grade algebra? So anyone can say whatever they want – nobody is going to penalize them, it’s not in court. It’s marketing and it’s a capitalistic market, you can say what you want.
But yes, I think we need identity around the predictive model. And later we’ve added the automation piece that runs marketing communications on top of that based on the insights that the model generates. That collection, the predictive model and the marketing automation piece, is what made us very, very unique. And even our approach to running marketing campaigns is highly scientific, it’s very much influenced by the model. So it all comes together as the character of a product.
– And then there was some interesting things that happened. From what I understand, around 2012 you had an offer from a VC for $1.5 million, but you turned that down. So let’s kind of start by there and I want to kind of understand how did that come about. Because I think you still were fairly early stage, you had a minimum viable product at the time. So how did you get to the point where a VC was interested in investing that kind of money with you?
– Yeah. So listen, generally speaking I don’t live in a bubble. And despite the fact that we were bootstrapping, we were constantly kind of meeting with VCs from time to time. Sometimes it’s kind of a mutually beneficial way both for VCs to get kind of on top of what’s going on in the market. So if they want to meet me as somebody that’s kind of innovating in the space of CRM and marketing automation. And I want to meet them, also, to learn about the market trends. I have to say that because this is my first job, still is my first job, so I was fortunate enough to also learn from them. They would say, “Hey, listen, everybody is doing SaaS now, that’s a trend. This is why.” Or they say something else. So they’ll give you the standard recipes of how people are building companies. Now the question is whether these recipes fit you or not, it’s a question for you as an entrepreneur to take. So I would take the basics sometimes from them. I think a lot of their recipes are wrong and it’s a problem for people to use these recipes because it doesn’t work for any company and it’s just kind of like a raw average of what companies are doing and that’s dangerous to use these recipes as is. So I’ve been always meeting with VCs and I saw some value in it.
– Were you meeting with them to pitch the business for funding or were you meeting with them to get feedback?
– So it’s kind of a meeting where you’re being more distant, you’re saying, “Hey, listen guys. I’m bootstrapping the business, I’m profitable. I don’t need the money right now, but I’m happy to explore opportunities.” So that’s kind of the way you start. Because it was true, it was also true. I never met a VC where I’m like, “Oh, guys, I’m dying. There’s six months left, please save me.” It was never the case like that. So I was always ahead.
I had the privilege of meeting them and talking as a grownup from a point of strength. And they would be asking some questions like, “How would you know that people would give you their data? Right? Because you take so much data, and it’s sensitive data, and you want to put it in the cloud. How do we have certainty in the fact that people are going to give you their data?” And I was like, “I don’t know. The cloud revolution, I guess everybody is doing that, it’s going to go there.” And it did go there. When they’re not excited enough, the analytic side of their brain would start to work overtime and they’re going to make all these questions. But when they’re excited about the story, the analytic part of the brain shuts down and they’re just excited and they explain to themselves why it’s amazing. And some people get it wrong and they think that they would be very analytical all the way through, and I don’t think that’s always the case.
So this was the situation, we always met with VCs. And I think the more mature you get, and because I never needed the money before, so if they said, “Hey, we’re not sure this and that will happen.” I was like, “Okay, it’s all good. I’m just here for a meeting. No need, everything is great.” But when we got more and more mature and they’re like, “How would we know?,” and I said, “Because I have 10 clients doing that.” “How would we know that people are going to buy from you remotely, right? Over the phone, over the web.” “Because I have a few people doing that. Here, it’s proven, talk to them.” So once you kind of overcome all these hurdles and it’s no longer a hypothetical question, it’s a proven thing, you get over these hurdles, and then they get more and more excited. And of course there’s a lot of people selling dreams, and that’s fine and it’s a part of the VC job to buy dreams and to invest in something that could be great but it’s not proven yet. I was never in that situation because also I wasn’t sure I wanted it, so I was kind of being standoffish in these types of conversations.
– So that was a great place to be because not only did it probably put you in a better mindset to have those conversations with these people, but if potentially you did want to start negotiating it put you in a stronger position to negotiate with them.
– Absolutely. And even when I closed the last round, I was always in a strong position, I was always fortunate enough to say, “Listen, guys, if it doesn’t work, we don’t have to do this.” And I did it from a place of strength. So yeah. Listen, not every business can do it, right? If you need to build a new storage device and you need to buy equipment or if you’re developing a drug or a revolutionary medicine, you’re not going to be able to do it without funding because you have to get it from day one, you’re not able to sell services. But since our business is a SaaS business, you need laptops and people to pay them salaries and that’s it, it’s more nimble in that sense and you can generate revenue and progress like that.
– So why did you turn down the $1.5 million-dollar offer?
– So I’ve always been kind of going through this love-hate relationship with VCs, okay? On one side, the planet tells you that this is what you need to do. Because the minute you start doing well, every week you get two or three e-mails from these junior analysts and VCs. They start the e-mail by saying, “Hey, I’m Chris from this and that fund and we are a $7.5 billion fund. We’re super excited about your story, we’re impressed by your growth. Let’s talk.” And you get these e-mails every week and you hear stories because the media loves it, right? The media loves to cover stories about funding and money because you can say, “This company just raised this and that.” So it’s always more yellow in a sense and it’s easier to report about.
However, I think this is kind of the pressure. The planet tells you that this is how you should build a company. You’re being pressured by everybody around you to get the funding. And you’re also being pressured by yourself because at the end of the day running a business is a very lonely exercise. You’re there on your own and, not only that you’re there on your own, you’re not sure if that thing is even real. Right? So you have a real kind of identity crisis and issues because you have some customers, but you might not be profitable or you may be working with a sub-segment of customers and maybe that’s not going to work with other people. And you’re always kind of feeling on the edge and you’re aching for validation, you’re aching for somebody to tell you. The way to get validation, obviously you can wait a few years and mature and forge your identity and become a successful company and say, “That’s it, we are the thing, we are for real. It’s a real business. We’re no longer a start-up, it’s an actual business that generates money and it’s profitable.”
But that’s a very agonizing journey and I think most entrepreneurs, especially younger ones, you just want a VC to save you. You want, “Hey, can somebody please give me some money and tell me that I’m real or at least that they think that I might be real? And I can show my mother and my grandmother and I can send the article of the press release of me raising money and they can say, “Hey, you’re a good boy, I always knew something was going to turn out of you.”
So I think that is so true and this is essentially the innate fear of every entrepreneur. And the VCs, they can cater for that because they give you validation and legitimacy. They pat your shoulder and they say, “Listen, you’re not hallucinating. What you’re doing could be good.” And you would love to get it. However, I think if your company is not born with VCs, and this was my case because I was bootstrapping from day one, at a certain point you have a real thing. And let’s say, we talked about the company kind of forging its identity and growing up, just like a teenager, let’s say at a certain point your company is like a 10-year-old child. It has a personality, it has its characteristics, it talks, it’s funny, it’s cute. Well, maybe he’s going to be the President of the United States and maybe he’s going to be a nice plumber. Right? But you don’t know at that point.
And at this point you’re already emotionally attached to your company, the company is your baby. Just like a lot of people say, right? “It’s my baby.” That’s very much true. Emotionally speaking, that’s the way you feel. And you’re the parent of that company and you know that VCs, they don’t care. They see it as a very cold, calculated business. What they want to do is to take this 10-year-old child and inject money or, let’s say, steroids into that child and they want to see muscle tone being built up, but they want to see it quickly. If that doesn’t work and it dies off, they don’t care, they move on to the next one. That’s the way the mechanics of the business work.
– They expect most of their investments to fail anyway.
– Right, right. Exactly. We’ll infuse steroids into a bunch of 10-year-old kids and one of them will have the DNA to become a giant and that’s amazing. And then we’re going to talk about this giant all over the press and everybody is happy because that’s the model. Whereas for the entrepreneurs of the other nine companies where their baby has just been killed, it’s a problem. Maybe it’s too early, maybe it’s not the right time. And I always felt that I would be in a situation of constant conflict in terms of velocity, they would kind of pressure me to do things sooner, to do pre-hires, to do “pre” things. I was very much scared about what it’s going to do to the culture of the company, what it’s going to do to me. Maybe I was not ready as an entrepreneur, I was not savvy enough, I was not skillful enough.
Today I’m battle-trained. I know the market better than my VC. I’ve been there, done that, I’ve seen a lot of things. I’m older now and the company is older now, the company is mature, all the pieces are in the right places, we’ve proven a lot of things. And you know what? We’re not working with a VC now, we’re working with a growth fund. So we have kind of skipped the VC stage and now we work with a growth fund. And a growth fund, they’re looking for a real business, they’re looking for good multipliers, but the company is real, they’re not investing in the crazy dreams. They’re investing in real businesses that have a strong growth potential, which is something that I think we have. And all of a sudden I found myself aligned with these growth partners and they have the same philosophy. And I say, “Yeah, this is something that I could do. The company is ready, now is a good time.” But it’s only seven years after, almost eight years after we started.
– It’s funny you say “only” seven or eight years after. I think for a lot of people they’d be feeling like, “Why didn’t I do that in year one? And if I didn’t achieve that in the first year, I must be doing something wrong.” Right?
– Achieve what?
– I mean in terms of raising money or getting to the point where you can have those types of conversations. And you talked a little bit more about that earlier when you talked about the velocity of the business. That you guys, I think you’d spent probably, what, two or three years from the point where you decided you wanted to build something until you actually had a working product that you could go out and sell to customers? So you kind of never struck me as the kind of guys that were kind of like, “We’re going to build this product. We’re going to go in, IPO, and we’re going to kind of sell and become kind of successful in the next 19 months.” You seem to always be thinking about the long-term view of this.
– Yeah. Statistically speaking, that would be a foolish notion, right? It happens to some companies. Listen, I think entrepreneurs that happen to stumble upon something very big or aim to go to something very big and it doesn’t work, they feel it, and then it makes perfect sense for them to accelerate and to press the gas pedal as hard as they can. However, I just think that every company has its own story and you need to adapt your parenting or your leadership of that company accordingly. And yes, I do think that patience is the name of the game, right? It’s not just a cliché, it’s true. Even hunters in nature, I’m a big nature buff by the way. So a lion, she would get ahead one in every five tries, so it’s 20%. And this is one of the best hunters in nature. So 80% of the time she fails and sometimes she sits and waits four for hours in the bushes or something.
– So patience, stamina. However, I would say that what I did take from the VCs and from the discussions with them, I did grow as hard as I could organically. So I’ll give you an example. I never took out dividends, I always underpaid myself and I’ve always invested a ton of money back into the business. And I did that ferociously and as fast as I could. So the minute I sniffed that there was a place that we are ready, like if I thought that our marketing team is ready for something, then I did it super fast and I did it crazy aggressively. So weren’t able to grow 100% a year over year most of our time as a business because we grew organically. But when we felt something is right, we were very much aggressive on it. So I think if the audience get an erroneous notion that says that, “Yeah, just take it step by step slowly, you’ll get there.” No, you should be competitive, you should be aggressive, you should be tactful. And if you feel that something is right, execute on it with the highest quality and the highest speed you can because speed does count.
However, don’t be in a situation that you’re doing things, that you’re taking a lot of bets. Like, “Hey, I don’t know what’s going on, but I have a lot of money. I just try to hire this guy, this guy, that guy, and see what works.” This I don’t like. But I think something that I did learn from the VCs is this notion that essentially growth is king. So to get a successful company and to get traction from the market, to get traction from employees, from your customers, everybody is kind of bowing down to this old god of growth. This is the god of the capitalist world, right? You can make a lot more revenue as a company, but if you don’t grow fast the market is going to penalize you, right? The market is not going to give you a high valuation if you look at the stock market. So I got it, I got it from the early beginnings, but I just invested the money in a smart manner organically where I thought was the best places in the company to unlock growth. So we did it in a more kind of peaceful manner. It was paced steadily and surely, but it was still pretty aggressive. With what we could do. Right? So I just wanted to clarify that.
– Yeah, thanks for that. I’m curious about one thing. You studied industrial engineering at university, you’re in a company which is very data-driven in what it does. Yet from when I looked at kind of how you made the decision about whether you were going to take the $1.5 million-dollar in VC funding or the $20 million that you just raised from the growth fund, and while we talk about it you’re able to kind of explain the thinking process and it sounds very logical and rational in terms of kind of why you made that decision. But from what I understand at the time those decisions were made from the gut, there was a lot of “this doesn’t feel right,” “this gives me a sinking feeling,” “this doesn’t give me a sinking feeling,” “this makes me feel good.” And a lot of times listening to the gut or your intuition is sometimes considered very kind of new age stuff, right? Or especially if you’re in an environment which is sort of very data-driven. So is that kind of a good reflection of just generally how you make decisions?
– Absolutely. Absolutely. I think that you’re hitting the nail right on the head in terms of I think it’s a true modern life dilemma. Because today we do have a lot of data, and then people, they will try to make more and more of their decisions to be data-driven. I think that people should be very much data-informed and data-driven in terms of there’s many things, you can’t manage what you can’t measure, and I’m a big believer in that. I think that if you reflect the true situation of the business with data, that’s also great. Because what data allows a company to do is you get rid of the myths and the drama.
I’ll give an example. Somebody goes into your room, an employee, and he’s like, “You know what happened? Last night we had this issue in the support team, there was this failure.” And the guy is super dramatic and he’s talking about it for an hour, and he’s going across the company and telling this story. And this story happened once in three years, it doesn’t reflect anything. And it’s not a real problem, it’s just something that happened. It was a fluke or a misfortunate event. But if you show the data and you say, “Yes, but our service level is 99.9% and it still is and the trend is not changing,” then everybody shuts up. Everybody shuts down because there’s no room for drama anymore. The numbers and the data gives us a way to see reality as it truly is. So this is, I think, the way you should use data.
What you should not do is look for every type of answer in data. Because still most of our lives and our realities, both as managers and as people, is not digitalized and we do suffer from a tremendous deficiency of data. Because of this deficiency, our human brain and our ability to perceive data from multiple dimensions. If you talk to somebody and you just hear their intuition and the way they speak, if you have a true sense of your identity and your story as a company, you know not to do something. And I don’t care if somebody shows me a research that Harvard Business School is saying that the next big thing is this and that. If it’s not in my company’s identity, so we should not pursue it because it’s not in our DNA. And even if we tried to, we’re probably going to fail because we don’t have the passion or the talent in-house to do that.
So I think that what makes us amazing at deciphering different situations as human beings, and you can call it intuition, gut, whatever you want, but it’s also a data-driven process just run by your brain and it’s based on different types of dimensions in the data. Some of it would be qualitative, some of it would be quantitative, sometimes you’re going to rely on gossip, you’re going to rely on something that a person you trust told you, you’re going to rely on the study you read. So we accumulate tons of bits and bytes of information, we have our own experience of things that we saw happen and work and don’t work in the past. And based on that we have this feeling that something would work or would not work, something suits us or doesn’t suit us. And I think this is the best way to grow a business, even in modern reality where we do have so much data around us.
– That’s a really interesting way to think about it. I never even though of it that way. That, as you said, a lot of the times your brain already has a lot of this data. And when you’re in those situations where you need to make a decision, maybe your brain is kind of making these calculations at light speed and the output of that is a feeling. Right? “This feel good,” “This feels bad.”
– You’re exactly right. And by the way, there’s a lot of studies about that, there are things that happen in kind of, in your conscience, but there’s a lot of things happening in your, I think it was in the cerebral brain. But essentially yes. Also, again, our brain is probably the most advanced computer ever kind of scene on this planet. And yes, it’s absolutely happening like that. And we remember things and we have emotional memory. And sometimes it could also lead us to bad places, right? This is why some people do it better than others.
– Yeah, yeah. I think it’s that it’s a skill in terms of learning those feelings, the gut kind of feelings that you get, and knowing when you’re getting a good signal that kind of is going to help you make the right decision, versus when you need to still kind of go and back that up or get additional data or whatever it is you need to make that decision. It’s a fascinating topic and I’m sure it’s something we could talk about for hours.
– For sure.
– I want to get on to our lightning round. So I’m going to ask you a series of questions, just try and answer them as quickly as you can. You ready?
– Beautiful. Yes.
– What’s the best piece of business advice that you’ve ever received?
– So in one of the books I had in my first degree the title was Learn By Doing. So I think that that’s the best. This is something that I’ve been following, learn by doing. If you want to get something done, roll up your sleeves, start to kind of get real feedback from real customers, real people. Fall down, get up, iterate, improve, constant improvement, kaizen, all of those things. I think life will give you always a ton of opportunities to change and improve, you just need to see that and do it.
– What’s one attribute or characteristic in your mind of a successful entrepreneur?
– Not having a plan B.
– I think I heard Will Smith talk about that once. What’s your favorite personal productivity tool or habit?
– So one habit I have is if something takes, I think it’s from one of the books, Getting Things Done, if something takes less than two minutes I do it now, even if it intercepts me in the middle of something else. And another thing I do is I try to combine many tasks together, the ones that are related, and treat them as a kit. So if you need to do something that’s comprised of three things, don’t break them down. So if you do one and then let the other two wait for the next day or the next day, it’s a big problem. I just try to do everything. So I have one e-mail, another e-mail telling these guys, another e-mail, another. So these four, five tasks together are all related to one kind of metatask, if that makes sense.
– Yeah, certainly. What’s a new or crazy business idea you’d love to pursue if you had the extra time?
– So there’s a lot of things I want to do instead of Optimove, but a crazy idea is something like opening up a restaurant that serves very simple food, like a bowl of cereal with milk, a simple toast with cheese. Like food you do for kids, super, super simple. And just a fun place with no fancy herbs and Brussels sprouts with god knows, yeah.
– Seriously, I would pay to go to a place like that every week.
– Me too, me too. Me too. I’ll just sit there and someone will say, “Hey, there’s a simple pastrami sandwich with just bread and mayonnaise, there you go.”
– Yeah, that’s all you need. What’s an interesting or fun fact about you that most people don’t know?
– So I’m married to an actress and I have a lot of kind of artist friends.
– And finally, what is one of your most important passions outside of your work?
– So I’m a big nature buff, I like to watch a lot of types of National Geographic and I learn a lot from that, in terms of strategy and life and just internal wisdom.
– I love that, too. I’ve been watching a lot of the BBC Planet Earth lately.
– Amazing, yeah.
– I love that stuff.
– Yeah, amazing.
– Cool. Pini, I thank you for joining me, it’s been a pleasure, I really enjoyed having this conversation with you. If folks want to find out more about Optimove, they can go to optimove.com. And if they want to get in touch with you, what’s the best way for them to do that?
– So just go to my LinkedIn page, ask me to be your friend, I approve everybody, and then you’ll have my e-mail and you can contact me.
– Awesome. Listen, it’s been a pleasure. I appreciate the time you made and for sharing your experiences and insights, and I wish you all the best with Optimove and to your next big milestone, whatever that is.
– Thank you so much, we’re going to need it.
– Cheers, mate. Bye-bye.
– Thanks for listening. I really hope you enjoyed this interview. You can get to the show notes by going to conversionaid.com/131, that’s 131, where you’ll find a summary of this episode and a link to all the resources that we discussed. And if you enjoyed this episode, then please show your support by leaving a review on iTunes. It really does mean a lot to me and I read every single review. The easiest way to do this is to go to conversionaid.com/itunes. Until next time, thanks for listening, take care.
– Thanks for listening to ConversionAid, the podcast that shows you how to take your business to the next level and create software that sells. But things don’t have to end here, head over to conversionaid.com/vip and get yourself on the free VIP list, where we share special insider content and news about upcoming episodes. Thanks again and we’ll talk to you next time.