Companies I’ve started before starting my company
(for audio version click here)
The year was 2011, I was about to finish my MBA and was looking for the next thing to work on. I knew I wanted to work on my own venture and the timing seemed right. Unlike a lot of entrepreneurs, I actually enjoyed my time as an “employee” at startups, as long as I felt I had an impact on the bottom line. Today I see myself as an “employee” at a company I happen to hold a lot of stocks in. Well, back to the point. Over the years, I’ve watched my good friend Oren build his venture, Tapingo - now a few hundred million dollar business.I felt that since we were such good friends, I got to witness the ‘inside action’ as well. I shared my plans with Oren, who was about to relocate with Tapingo to NYC. Lucky for me, it was not the best timing for Oren to move to NYC, and he also had the urge to start something new. I resigned from my work @Treepodia and we were off to build something new, together.
Nova ERP
Oren had a good friend from college named Ori. Ori is truly a brilliant dude, not so much as a techie but more as a business mind. After college, Ori moved to Miami to build a Point of Sale company for SMB Specialty Retail. He named the company Nova POS. I remember thinking it was too small of a niche but after visiting malls in the US and seeing their POS everywhere I knew I was wrong. Ori has built a truly substantial business, completely bootstrapped. At the time he had about 40 employees and they were growing rapidly.
Oren and I flew to Miami to explore our options and hung out a lot with Ori. Ori knew Specially Retail value chain really well. There were constant business management problems with Specially Retail importers and wholesalers. This industry is very vertically integrated and usually wholesalers also have their own stores. These wholesalers just couldn’t find a software to manage their business. Existing solutions were just insanely expensive to fit their size or just badly fit, so after some market research we decided to open Nova ERP as a subsidiary of Nova POS to provide a solution for these wholesalers. Nova POS would invest the initial funds needed. We signed some agreements and were all set. Ori, Oren and I travelled the East Coast, meeting with wholesalers who were making millions each month but couldn’t really tell what’s their current inventory. We’ve met some characters… not the kind you meet in tech. All very, very aggressive and they were all using pen and paper! We had some specs ready and started working on the platform. Meanwhile the incorporation of Nova ERP ran into some troubles. Apparently, because of the way Nova POS was structured they couldn’t really hold stocks in NOVA ERP without a very costly restructure. We tried to solve this in every creative way we could find. We had the best CPAs from Deloitte looking into this. There was just no way around it and Nova POS was not willing to bear the cost. We knew Nova ERP had no future without Nova POS, so eventually we sold the IP back to Nova POS and moved back to Tel Aviv.
Reftor
I lived in Tel Aviv in a nice 2BR apartment together with my flatmate, Nir, who was broke at the time but now is the editor of Israel’s most successful TV shows. For some odd reason, Nir agreed we’ll turn our living room into an office. So everyday at 9am Oren would come over to work and my girlfriend, now my wife, Neta-Lee who stayed over would leave for college. We were 4 people living in the same house, I accounted for 3. I’m surprised my flatmate didn’t kill me. Oren and I started to explore what we want to work on next, and we were quite efficient at the process. We had a nice funnel to evaluate ideas. It wasn’t about passion, it was about numbers and analytics. We eventually came up with the idea of Reftor.
Reftor was a referral program as a service. We saw how successful the Dropbox referral program was, and decided every company should have one. It’s a classic Buy vs. Build solution for every company. After two months, we had the first version running and we started selling it. Clearly the end goal was self-service, but we allowed ourselves to direct sell the first few. We also had a good internal review process after every meeting with a prospect in order to get better. Somehow, one installation by one company yielded a few others in the same sector and before we knew it we were selling to Forex companies almost exclusively. Not my favorite industry to say the least, but once we showed a company all their competitors were using our product it turned into an easy sell.
With this initial traction we decided to apply to Y Combinator. I didn’t feel our application was very solid. I was still getting used to not having enough time for anything and juggling between tasks, but apparently it was good enough and got us into the interviews. We were interviewed by Sam Altman, Paul Buchheit and Garry Tan. They actually only wanted to know one thing: are our referral programs successful? Meaning, if we are getting more users to our customers. The answer was that we deployed not that long ago so it was too early to tell, we didn’t have enough data. Apparently they had one company or more trying this before and it didn’t work. But wait, we had a product, we had companies using us and a nice growth — how come they just don’t care? Night came, we were in San Francisco and got an email saying Y Combinator decided to pass. In retrospect I’m not sure if what we did next was bold, arrogant or rude but we wrote back that they just didn’t get it and we’ll come tomorrow for another meeting. Kirsty Nathoo from Y Combinator “suggested” we won’t come and we decided to show up anyway (OMG). In a very very generous move Sam Altman decided to pass on his lunch to have a stroll with us, telling us they had companies trying to crack this field that even got few steps ahead from where we were, but eventually it didn’t work. We decided to stay in the bay area for a while after.
While working on Reftor, whenever we wanted to present to a prospect, we would always go through the same process. Download their website HTML and embed our widget into it. We then drifted with our imagination to whether we can automate this process and then into whether we could build a platform that would allow us to take any website, access it through a different address and dynamically manipulate the website. It then turned into allowing anyone to manipulate every website and improve it for the greater good. Eventually it turned into: allowing people to build product on top of products. I was in love with the idea. We decided we’ll try to build a proof of concept, just for fun, to see if it is even possible while waiting for more data coming in from our Reftor customers. And this is how TOMODO (now Start A Fire) was born. We’ve started working more and more on TOMODO and eventually ditched Reftor. This time, it was pure passion, but that’s for the another post :) - added: click to read The Story of TOMODO.
