Someone is chasing you, even if you are not aware of it. Every company should assume that there are a few other teams around the world trying to solve the same pain, or developing a technology that answers a similar need. Thus, a company should always have very high sense of urgency. This is the only way to win, the only way to become a category leader.
As part of my series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Mr. Uri Adoni.
Uri Adoni has over 20 years of experience in high-tech and over 12 years of being a partner at Jerusalem Venture Partners Media Labs (www.jvpvc.com). JVP is one of Israel’s leading venture capitals with an impressive track record of IPO’s on NASDAQ and M&A’s to large leading multinationals. Adoni served on the board of several high-tech companies, early and late stage ones. Prior to joining JVP Uri was the CEO of MSN Israel (Microsoft Networks) and was one of Israel’s new media pioneers. In his military service at the IDF (regular and reserve) he was an officer (major) and served as a commander of a combat unit.
He regularly addresses delegations from around the world in Israel, and has been a keynote speaker, panelist, and judge at high-tech conferences in the U.S., Germany, Brazil, Argentina, Belgium, Switzerland, and Ireland, among other places. Adoni is a highly visible ambassador for Israeli high-tech and is also an angel investor, investing his own capital in early stage startups. He recently departed from JVP to join a U.S.-based real estate entrepreneur who is developing a new and innovative approach for building local high-tech ecosystems and communities across the U.S.
Thank you so much for joining us! What is your “backstory”?
After spending more than 20 years in the high-tech ecosystem, as a CEO, venture capitalist, angel investor, board member and a speaker, I have decided to write a book called “The Unstoppable Startup — Mastering Israel’s Secret Rules of Chutzpah” (www.theunstoppablestartup.com ). The book is a hands-on-guide to building and investing in startups, with practical advice and real-life examples of chutzpah. I have listed what I call The Six Rules of Chutzpah, and throughout the book, I try to provide an insider’s perspective on Israel’s secret formula that has made it so successful in fostering the growth of technology businesses.
Can you share a story of your most successful Angel or VC investment? What was its lesson?
A company I have invested in has developed an innovative and unique technology, a combination of AI (Artificial Intelligence) and NLP (Natural Language Processing) that “understands” written language. However, it took a while until we’ve figured out what would be the best use of this technology, how we could differentiate the proposition and what would be the best go-to-market strategy. We have started with an MVP (minimal viable product) addressing a consumer proposition (B2C), but soon found that it is not the right model. Then we’ve shifted to a business-to-business model, and demonstrated the value that derives from the product to large e-commerce sites. A couple of years after this shift the company was sold to a large American corporation.
The main lesson — if you start with a technology and need to find the right use for it, try to iterate as quickly and as frequently with the market and your potential customers, in order to get as much feedback on the product and proposition. Build an MVP and don’t waste too much time on perfecting the product, before you have a good initial feedback from the market that indeed you are on the right track. If you’re not, react quickly and test another optional direction until you get the right product-market-fit.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
I have invested in an AdTech company that had developed a very unique technology — it enabled publishers to increase their revenues through a platform that enables real-time bidding on their ads inventory. It was a very straight forward proposition for publishers — embed our code on your site, enable the advertisers to bid on your inventory, and you will increase your revenues dramatically. The company has conducted a few pilots, did A-B testing with and without their platform, and proved its effectivity. We thought it’s a no brainer, who wouldn’t like to increase their revenues? The reality was different. Even though the company has proved in A-B testing that indeed the biddings are working and the revenues are increasing, the publishers were much more conservative than we thought, the cost of acquisition of publisher was higher than planned, the time it took to acquire a customer was longer and even when a publisher was interested, they would usually start with allocating only 10–15% of their inventory, which didn’t give the company the minimum mass that it needed.
The main lesson — even if you think you have a winning proposition, test it in the market. You may find that the market is not yet ready for it, and thus the penetration would take longer than originally planned, and the costs of acquiring customers will be higher than originally budgeted.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
Yes, Replay Technologies. They have developed a multi-dimensional video imaging technology, which allows viewers to see and experience real-life scenes through immersive camera views from multiple angles (similar to the famous scene in Matrix where Neo is fighting Agent Smith and the fight can be viewed from multiple angles). We thought at the time that the market would be too narrow (mainly sports broadcasters), and thus even if it will be implemented by a few broadcasters the potential is limited. The company was bought about two years later by Intel for $175m.
How have you used your success to bring goodness to the world?
I am a board member in a unique impact fund called Takwin, that invests and supports Arab entrepreneurs in Israel, enabling them to be an integral part of the Startup Nation.
What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
1. An ‘unstoppable’ team. The founding team should have a real passion to the company they are building, a good chemistry between them and their objective should be changing the status quo, challenging the existing solutions. This passion is what will enable to overcome the hurdle and the challenges that any startup faces. Exit (in the shape of either M&A or IPO) should not be their objective, it is an outcome of a great company.
Liran Tancman and Shlomi Boutnaru were the founders of CyActive, an Israeli startup that came up with a new and innovative approach to tackle computer viruses. They were both highly passionate about their concept of challenging the status quo in this market, and thus changing the anti-virus paradigm. Their passion was contagious and their belief in their new approach was highly convincing. They have sold their company less than 18 months from inception to PayPal.
2. A unique proposition. The proposition of the company should be unique, not a “me-too” company or a “copy-cat”. The differentiation is usually attributed to a technological advantage or a strong intellectual property that the company has developed. However, in some cases it could also be based on a unique business model (such as the ‘Something’ As A Service model, shared economy models etc) or an innovative design, UI or UX. There are many examples of companies that their competitive advantage is based on a technological development. However, if you look at a company like Waze, even though it is heavily dependent on technology, the thing that has made them unique was their innovative concept and their new approach to navigation. Their concept of data sharing between drivers, enabling drivers to find the best and fastest rout to their destination, was at the heart of their success.
3. Category leader. The company should have the potential to become the category leader, either by taking the lead on an existing growing category, or by inventing a new one. If you look at companies such as Uber, AirBnB or Twitter, even though they are heavily dependent on technology, the thing that has made them unique was their innovative concept and their new approach within the space they were operating in (transportation, hospitality, social-networks). They have invented new categories, and dominated them ever since.
4. Focus. In today’s competitive environment focus is key. An early stage startup must be completely focused with a clear proposition, defined target audience and an executable go-to-market strategy. Some of these startups manage to keep their focus also when they grow, mature, and expand their offerings. For example, Wix’s proposition is straight forward: “Discover the platform that gives you the freedom to create, design, manage and develop your web presence exactly the way you want.”
CyberArc is saying that they are “Number One in Privileged Access Management”.
Fiverr is focusing on Freelance Services Marketplace for Businesses. May be it is no coincidence that three have had successful IPO’s on NASDAQ.
5. Sense of urgency. Someone is chasing you, even if you are not aware of it. Every company should assume that there are a few other teams around the world trying to solve the same pain, or developing a technology that answers a similar need. Thus, a company should always have very high sense of urgency. This is the only way to win, the only way to become a category leader. And it’s more than that, as Jim Rohn once said: “Without a sense of urgency, desire loses its value.”
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Accessibility to healthcare! I think that anyone, anywhere without any discrimination should have a full access to healthcare. These days of COVID came to remind us that not only we are all humans and equally vulnerable, we should all have the right to receive medical treatments and health care services.
Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. 🙂
Since my book is called The Unstoppable Startup, I like “unstoppable” people. I think the best example of such unstoppable person in the entrepreneurship world is Elon Musk, that even the gravity of our planet didn’t stop him…
This was really meaningful! Thank you so much for your time.