Episode:
2

Finding PMF and exiting Gigya/SAP and Hotbar with Rooly Eliezerov

Show Notes

So we're actually recording from Rooly's place right outside of Tel-Aviv. Rooly thanks so much for joining me today for this conversation.

Hi, Omer, thanks for inviting me.

So we've got so much to cover.

This is, maybe almost like three decades of of doing creating startups from scratch, exiting. You've basically gone through the entire exercise. So I think specifically, why don't we target PMF product-market-fit because it seems like it's, we've got quite interesting. Even more than one story.

The thing with both startups as the person wearing the product hat most of the time you've gone through this exercise of finding the perfect figure and what exactly is the product and what problem exactly you guys are solving. And in, in both of those startups, maybe we start with more like an overview of the two startups.

Like what exactly, what is the story like? Yep.

Sure. So I think that overall, if I'm going back to from the beginning of the days of my my, my work in this industry, it actually began with my company named Hot Bar in 1999 we were B2C and they're actually, we developed a, almost a science, from today where AB testing is so familiar and obvious back then if it was it was not so common and we took it to really, when I call, when I talk about science, Taking the data, as far as we can with running sample groups and testing distribution channels and performance of different versions of the product.

So it began there after this company was acquired me and two other executives from that startup founded Gigya which evolved to be, through, after a two pivots to become a, actually a. B2B vendor offering SaaS survey SaaS for customer identity management. This company was acquired by SAP and then I began with a Dor Shani the recent venture called own ID which maybe we'll have time to talk about.

Cool. Wow. That's a lot. Maybe you just mentioned briefly that you've gone to through like at least two pivots with from hot buyer to Gigya and through the sale eventually. So maybe you can talk a little bit about what were those pivots and how did you guys came to actually decide that you need to change the direction of the product.

Sure. So I think that it relates to something that I'm very keen to talk about. I usually try to bring it up because many times in such interviews, the, this area is not discussed enough, I think around entrepreneurship and it's very much related to product market fit. And I'm talking about the ability to really listen to the market.

I think that one problem that creative people have is that they're concentrated with themselves. Yeah. Falling in love with their ideas and are very hard to to see the things that are maybe different from how they see them. And I think that pivot is a proof for a company to listen in time when pivot is successful.

Because if it's done, when you really are failing, it might be too late, but it's a proof for a company to really be a show that they are listening to the. Seeing early enough that there's something that they need to change, understand what it is and making the change. We can talk more specifically about the pivots that we went through.

But I think that that's the core of my message here is that all the time you need to, you don't need to follow what the market is saying, but you need to listen to the market. Why it is saying what it is saying. For example, when you're selling, for example, to businesses, a good product manager, and by the way, the CEO should be in some way the product manager of the company. As I see it when they're, for example, asked for certain things that the product doesn't do, it's not going and doing that thing immediately. It's understanding why it is being asked. Connect, trying to connect it with, where the, how the market is evolving and where to evolves and then taking the right action.

So when I'm saying listening to the market, it's not listening and doing what the market says, but it is listening.

Interesting. , I think I've run into simillar situations where I sometimes consult or with friends I see either founders trying to find a use case for a specific technology because they have that technology especially with AI or just found they're falling in love, with an idea and just pursuing it. And it's, it seems almost you need a little bit of humility to be able to listen and do this, take this U-turn and specifically you too touched on. CEO as like the CEO is part-time the CPO or part-time like product manager or something like that.

I think that some CEOs are very much focused on the business because they want to keep the company alive. Especially with startups, with VC backed startups and also bootstraps. They want to keep the company alive. So they're very much focused on the sale's funnel.

The business and they let product, people like, quote unquote, do the product work, come up with the roadmap. Like what's your take on that because I think that's not exactly how you see as the CEO.

So I think that it's not so crazy to hear the statement that the, this the, the company will fall or succeed first of all, upon the product and product market fit, which is part of the product. And therefore the CEO needs to be involved with the details. But maybe I want, when I'm saying to take it further, I want to talk in a higher level.

when  Gigya was acquired, it was already a 100 million in ARR and a 300 employees. So we really went through from zero to scale. And what I learned there is that each stage is a startup of its own in terms of the challenge. So maybe the first stage is the product and maybe creating, setting up the business model.

And then in that point the CEO needs to be the product manager. He, or she cannot just delegate it. I have an idea. I want to do X and hire someone. "I will hire a product manager that will create it". But let's say then, the product is ready and is really good. And the CEO acted in the way I just suggested, and now they want to go to the market, setting up, do you know the positioning and the messaging of the company?

So you know, the next natural step is to hire a VP of marketing. So yeah, go ahead and hire someone like that, but your, you need to be the VP of marketing. That's the new startup that you need to crack this, the strategy and how you do it, the tactics around it in the marketing and everything that is related to the marketing.

And when you know the marketing is ready and you did that because it's as challenging as coming up with a product it's, that's why I call it another startup and then starting to sale thing to sell, to do from doing the sales speech to hiring to how in your incentive, the organization. The sales organization, you need to do it.

You cannot just hire someone to do it. Cause again,  maybe much of the work is known, but also much of it is unknown and is new to this specific space to this product. And you need to come up and do it. And that's again, another new challenge. Maybe a more general tip to anyone who wants to become an entrepreneur- you need to understand that you need to be successful in three or four startups to be successful. Your journey is going to include be successful in three or four startup until you are successful with your startup. The next one is just growth. We learned that any stage that the goal the company goes through is a startup of its own because when you grow you need to keep, of course the the pace of growth and And it's because it becomes harder when, percentage wise it's maybe the same percentage, like growing 30% year over year, but changing from one to $3 million in revenue to three to $10 million in revenue is a whole new, different operation.

And and it requires you to, for example, how the knowledge is trending. Between the management levels and how, again, things like incentives and suddenly politics get into this this game between the executives. So you just deal with each stage of the growth. So you deal with new set of challenges.

So that's another, like the fourth maybe start up that you need to do to a result.

Interesting. So basically you are saying the startup would go into different phases. Each one of those phases is like running a startup. Then you've got to be successful in each one of the phases. Like you're going to be as strong as the weakest point in the chain.

Interesting. And we've got a lot of bullet points right here in front of us. One of them says the art of listening and this is something I'm. I was actually a wondering. What, when you say, CEO and the entire company founders need to be humble, listen to the market, but not do what the market says, but really understand what the need is.

What based on your experiences, this is a tough one. So I'm putting you on the spot. What frameworks do you think product people and founders can use to make sure that they do well? There's a trade off between. Identifying a signal for something new every month and staying in focus. There's a trade off between executing and not listening at all to constantly interviewing people and changing the roadmap. So what was the framework you guys used and how do you see this?

I think the first thing is focus and being narrow. I think the more narrow and focused you are, even though it sounds like you're limiting yourself to a very narrow market. Market size is small. Just, you need to have a big vision of course, where you can grow from there, but the narrow, the more narrow and focused you are, the more chances you have to succeed.

Because then you understand how to fine tune. focus it's both on what the product does. So he does a very simplistic functionality let's say, and also the market. So instead of, addressing all the FinTech for, I don't or not FinTech or financial institutions, you can address just, institutions that are giving that are focused on loans.

Initially both in the market and then also begin with a very Very specific offering. And I think that, I gave an example that maybe relates to B2B, but on the B also, it is correct on B2C. First of all, this discussion is a little bit different when we're talking about B2C and B2B.

Because B2C is more of the science that I mentioned before. B2C is really sitting in front of data and analyzing, it's not interviewing because very hard for people to say how they will, what they will use and how will they will use it. You need to just measure it and not ask about it. So I think that in B2C, again, you begin with something very focused also for people it's much easier to, for the, like the target audience or the market to connect with a simple message.

A hundred, your, your offering is solving a hundred problems or 10 problems around the same subject. People will use  surprisingly enough. People will use you more if you're just solving one problem rather than 10 problems, because they have, they can put a cell in their mind for that connects this problem with your name

they will not put ten cells in their minds and it's much easier for them to do that. Google equals search for example. Yeah, of course. Twitter is think of how simple it is. Of course, once you become successful and you occupy more in their mind in their brain, then you can expand like Facebook or, many other If you look at the successful services, Airbnb, I don't know you will see that they all began with a simplistic of even Uber, a simplistic offering, and then they expanded don't begin with an expansion, not only because of the product development, but also how it is easy to to be perceived. So that's taking it back to the focus in the narrow.

So on B2C. You just need to test very basic functionality to see, the churn, to see how it is, if it's viral and to try and adjust when it comes to B2B, it's more of a sales operation. And then I think you need to understand something really critical for anyone who is launching a B2B offering.

Obviously they need to want what you're doing, but then after that, it's not about how much it costs. It's about how much attention they and their organization need in order to begin using your product. So if it is, for example, requiring their developers to do something you're going to be far away from succeed, a successful sales cycle.

If they need. 10 10 different people approve it again. Because they, each one is concerned. They're are under, their existing task list in their job. And I'm bringing something new can add them a few points, but it's much less, it has much less weight than just doing what they are asked to do, even if they're very senior And what I'm saying is that you need to find the easiest path for them to get value from your product

Easiest both in terms of implementation, but also in terms of of approval or how much you disrupt disrupts, even if it's super valuable to their business. If it's a big disruption, it's going to be too hard for you to penetrate. So beginning with something small, even small impact on their business, but very easy for them to.

And then take it from there.

Yeah okay. So this is, we were going to be on like a different track of the sort of I go to market, especially with B2B. And that's, I think that's super interesting. So maybe we get back to that a bit later, but I think w touching on just to wrap up  with product market fit,

do you think, and this might be a bit practical, but do you think there's anything, a product folks and founders should have in mind when they structure the company? When you're talking about startups that are more than five people, obviously, and you start thinking about the structure and who's doing what who's reporting to whom is there any way or even like frameworks of how to work like.

Do we do sprints? How long do we give for an idea to develop and things like that? Do you think there are any frameworks that can accelerate finding PMF?

One thing that is interesting that I learned actually. a few years ago within giga, when Gigya was already a pretty successful, is that larger organizations or like your B2B clients, if it's like Nestle or Coca-Cola or whatever organizations that are your clients they are eager to get these new technologies.

So there it's not that anyone that will approach them, they will leave everything and adopt it. Once you get the traction. Once you have the foot in the door, the interest, and they see that it's not interrupting their current, the, to do list too much. They they will, there will be they need you as much as you need them.

And therefore, of course you can't risk them on security issues, for example, because they don't want to have huge liabilities. But if things break they're okay. For example, Gigya was hacked once by the Syrian electronic army, we were implemented by hundreds of clients and in one minute a popup because there was a JS of us, of ours included on the pages of all our clients, including, all the leading media outlets, like wall street journal the independent in the UK NBC and others at one moment, a popup popped up on all their homepages of all our clients saying "hacked by the electric Syrian electronic army".

And because of us. And then the news. That these and these websites were hacked, which wasn't the case because Gigya was hacked and of course, it was a disaster for us and I can get into what we, how we dealt with that and how we resolved it. But it was a disaster and surprisingly it didn't affect the business too much.

Yeah. We recovered. They all continued working with us standards. We explained what happened. We explained why it will not happen again or what we did to avoid this from happening. And again, and, we lost, I think I don't know 3% of our business in terms of renewals because of that incident.

Wow.

Interesting. Okay. We will, in the, not too far future, we will need to regroup and talk about a crisis management for B2B. I think there's a lot to discuss. another way to tackle this subject, I think interestingly is maybe to ask and we touched on it, but maybe to ask whether. Some bullet points in your mind for what funders usually get wrong. Obviously it's specifically first-timers so this, it could be related to PMF, but not necessarily a what do you usually see?

I would just say once again, because I think it's so critical, but then I move forward -  that they're falling in love with their idea and they stick to it and they don't adjust it according to what they see in the market.

So that's, first of all, I think most the other thing is like Navin Chaddha our main Gigya investor from Mayfield was saying that "most startups don't die of starvation, but of indigestion" because they tried. And that's also something that is related to creative people that they have many ideas, they want to do everything.

That's a great thing, but we're not artists. And we're serving here at purpose. We need to be connected to the market. We need to understand the business environment. And therefore we need to choose our, our battles or to choose our. What we want to move with and leave on the side, all our other creative, amazing ideas. So that's the second one.

I think that another thing, and it's amazing, cause everything is related here to personality, to things that you need to work with yourself. The third thing it relates to ego. I think that to be successful, you need to strive to hire people that, and also to add like for co-founders that you think that at least as smart as you are, meaning I see many times either executives or founders that feel intimidated working with people that they perceive as stronger than them, but the upside beyond the fact that it's just giving mentally giving up about who you are Cause once you go through that step, If it becomes easy, I think it's just taking this step and agreeing that you can learn also from other people, but I think the other hidden big advantage of that is that there will be less friction because once you really, if you look back at the kind of friction between people that you had in the past is because all of us probably worked in some way or studied It's when there's disagreements and you think that you're right.

And I think that when you hire people that you really respect, if there is a disagreement, you are much less frustrated on if I'm doing it their way or. It's much easier to not to just stick always with what you think is right. So I think that's the third thing, which is I will summarize it in this way - hire people that you really think highly off, even more than yourself.

In the beginning that's I think these are the three most important things. I wrote to myself something that I wanted to mention that is also, I think, an insight that we received, we found out as we evolved with the company and I call it a diminishing advantage When you think about it, anything that let's talk about B2B offering, because it B2C it might be a little bit different. Any, a service or product that you do after let's say it's successful. There must be a competition that will be coming up. And many times this competition will not be only startups, but also large companies like Oracle or Salesforce that will either acquire or just throw millions into. And the competition will be very hard.

And therefore, I think not at the very beginning but pretty soon after you need to realize that this will come up and begin to develop a reason for or a way for you to be distinguished from the competition when you're becoming successful because it's not only a matter of having more competition when there is competition the margin of the sale needs to cause at some point price is also a parameter and And then the margin also shrinks and when there's competition, Mar margin shrinks, and then it's harder for a company to to operate. And one of the best ways to to create such an advantage is a network effect. And that's why kind of a general recommendation if you're coming up with an idea that potentially has a way to, to gain a or create a network effect, which means a way for whenever you're the bigger you are, the stronger is your offering.

And it's not the bigger in terms of the market. And it's not only about the product that makes you strong, but also the  📍 market. And then you can create a gap that competition will not either, it will be very hard for, or one be able to to keep up with.

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