January 12th was our last day of talks and marketing was a large part of the talks. First we started off at Camel Ventures to hear Noam Band speak about his two companies.
His first company, Dotomi, was an interesting marketing company that created personalized web banners. Instead of having simple and generic banners at the top of web pages, Dotomi has created the software to cater the banner to the person reading it. With this new method, it doubles the click rate. Dotomi’s revenue was at approximately $100M per year and has over 200 employees. Of course the entire company is based around marketing; however, in general, that lesson Noam gave was to not be afraid to e-mail. E-mail is vital to networking and getting your foot in the door, it’s something that is free and that you never know what might be come of it. For example, with his company, a simple e-mail got him in contact with Grey Agency of New York. In order to be successful you cannot be afraid of trying.
His second company, Timest, is an enterprise software company. He explained that, in developing software, one must go through a process: design, develop, test, pilot, phase, deploy, and production. The stages can get quite expensive and for start ups it is important to stretch your money to reach all stages. In order to better maximize efficiency, Noam built robots into the organization. This helped automate the operations.
Noam discussed some important key elements of starting and owning an idea or a start up. However much you may love your idea, you must always know when to close. When there is too much uncertainty and you have limited funds, this is when you should close. You must also find employees that believe in the idea. In a start up it is easy to find employees that believe in the dream and the idea because they want to be a part of something revolutionary. By finding employees like this you can cut down on short term overhead because they are really buying into the dream and the company as opposed to just a job. Your main expenses though should be HR and development. By investing in finding these good people and then investing in the research and development that they do is they safest way to a quality product.
The next speaker was Amir Milo, the CEO of Equivio. Equivio is a software company that analyzes text and provides analytical solutions to e-discovery. It goes through the process of near grouping, grouping documents with similar content, reconstructs e-mail threads, and searches for documents based on relevance, ultimately saving the consumer time. This company started out a strict bootstrapping company. Amir, saw this is the most efficient and necessary way to start the company and have it grow. They first started with the idea and for second stage moved it to focus groups. They realized the market had potential; however, they also realized that their company’s manpower could not compete on such a large scale and successfully gain market share, they needed to be specific. Amir placed a high value on segmenting the market.
To develop their target market they looked at the potential of corporations in general and saw that this software could apply to about 2000+. They then decided to specialize in a certain area of this market and they looked into law firms which equalled about 500+. Everyone wants to be the top dog, the market leader, and Amir still saw that for a bootstrapping start up if they wanted 25% share of the segment they were going after, it would have to be an even smaller segment. Therefore they became even more specific by just focusing on the service firms within the the law firms, this was about 100. Now this gives them a goal of reaching out to just 25 of the 100 in order to gan 25% market share of the service firms market.
Their next step was developing their pricing through the channels of distribution strategy. They decided to sell the service to providers for $.06 per document with an additional $10k fixed cost. The service provider would then sell to the ultimate consumer at $3.00. Through this strategy, instead of just using one solid fixed price per company, they are ensuring a continual stream of revenue.
Another piece of advice that Amir had for starting entrepreneurs is to not rely on sales people, no matter how good or how talented they are. You must market and do the sales yourself. After all, no one knows your story better than you and when you can have someone relate and reach them on emotional side it is much easier to make the sale. Amir admits to having invested a lot into marketing. He believe that marketing gives you the ability to make the right impression. For his company he attended a lot of trade shows in order to network and to get the brand name out there, he also continually made press releases. He believes that marketing should be about 40% of your time.
His closing words “keep the future in mind, keep your potential moving forward, don’t sacrifice the future for hard money today” really sums up the spirit of a successful and passionate entrepreneur. If you are starting a business just for quick money then you are limiting its potential. Always think of the future and what you can and will be able to do before making any large impact decisions.
Our day ended at Tel Aviv University where we had the privilege of sitting in on one of Ayla Matalon’s classes. Ayla is the Executive Director of the MIT Enterprise Forum of Israel, and we were able to sit in on an engineering management class. Here in the class we had two guest speakers: Ed Mlavsky and Bruce Bachenheimer.
Ed Mlavsky talked about the High Tech Industry in Israel and how it operates. He explained that Israel’s main target is the U.S. As mentioned in previous blog posts, the Israeli government is extremely supportive of High Tech start ups and put many programs into play that help garner success for the companies. One program is called B.I.R.D. This stands for Binational Industrial R&D Foundation. Here, they promote and support non-defense high tech progress between the U.S. and Israeli companies. They want to stimulate growth and activity and so all of their services are free of charge. Since it’s beginning it has approved over 800 projects.
Another point he touched on was the Israeli culture and their “smarts, chutzpah, and never give up attitude”. I think that the culture he describes here has been witnessed in many of the companies we have visited. These characteristic of the Israeli culture contribute greatly to the strength in success of start ups. It can even apply to the fact that the Israeli government encourages failed entrepreneurs to try again.
The second speaker, Professor Bachenheimer, talked about entrepreneurship and what it means to be an entrepreneur. He used the quote about entrepreneurship that reads “A mindset or way of thinking that is opportunity focused, innovative, and growth-oriented.” Together these characteristic develop the personality needed to be an entrepreneur. The idea of being opportunity focused ties in nicely with what Ed Mlavsky had previously discussed about never giving up. We completed a short exercise on how to improve a product and it displayed to us the basic principals of being an entrepreneur: thinking outside the box. I believe that being an entrepreneur means removing all barriers. Not all products or ideas may be technically possible, but as an entrepreneur you must think as creatively as possible and when pairing this creative idea with a creative solution, this is when you develop an idea that is revolutionary, ground breaking and innovative.