As Investors, We Couldn’t Get Enough of Datorama…
On Monday, Innovation Endeavors-backed Datorama announced that it signed a definitive agreement to be acquired by Salesforce (NYSE: CRM). Following the acquisition, Datorama will become a core part of the Salesforce Marketing Cloud. This is a significant development not only for the company and its stakeholders, but also for the entire Israeli startup ecosystem.
We invested in Datorama’s first institutional round and continued investing super pro rata through all of its subsequent rounds. Today, together with Marker LLC, we hold two board seats, and we are the largest shareholder in the company. We simply couldn’t get enough of Datorama. As investors, defining moments of any kind often force us to reflect on our past beliefs and the decisions we made. In light of the announcement, following are some (purely anecdotal) musings on what initially compelled us about Datorama and why we decided to lean in so consistently and completely.
A True Team. My partner Yuval Shachar first introduced me to Ran Sarig, Datorama’s CEO, about five years ago. Yuval’s description at the time: “I really like this team. The three founders are experienced, focused, humble, and talented. Also, they have an amazing team dynamic and they always outperform expectations.” Yuval’s description was perfect.
Ran and his fellow founder, Efi Cohen (CTO), worked closely together at MediaMind and experienced first-hand what it takes to build a significant company in this domain. They took the lessons learned there and together with fellow founder Katrin Ribant (CSO), who was at HAVAS and who worked closely with Ran and Efi, founded Datorama with a deep understanding of the market opportunity, a clear vision for the product, a mission for each founder, and complete alignment on the type of company and culture they wanted to build; one that reflects the best parts of themselves.
Here are some facts:
- Ran, Efi, and Katrin split their interest evenly.
- Employees own a very large portion of the company and will share in the success of the acquisition.
- Datorama is consistently recognized as an amazing place to work. Employee retention is off the charts.
Whenever we are considering an investment, my partner, Dror Berman, always asks whether we would want to work for this management team. The answer here was and remains an emphatic yes.
Opportunity and Focus. As a firm, we love data. But perhaps like too much of a good thing, there are too many data products and companies to count. If you’re a customer like me, the number of vendors and solutions for any given problem is staggering. How do you cut through the noise? For Datorama, the answer was clear. Rather than trying to be merely good at many things, they knew that they must be the very best at one (hopefully) big thing. And from their experience at MediaMind and HAVAS, they knew that integrating marketing data was that big thing.
On the surface, “integrating marketing data” isn’t an obvious choice for a world-class technology and product team. It’s a somewhat mundane process at the bottom of the pyramid in a domain that doesn’t exactly capture the imagination the way that, for instance, space travel does. But the pain point is acute and the problem is huge.
Integrating marketing data presents several unique challenges. In addition to hitting all of the V’s, the data are mostly external, there are countless sources (the list continuously grows), and attributes are highly dynamic. Implementing traditional integration tools is cost-prohibitive and ineffective at scale. Datorama’s mission from the beginning was to be the first to focus exclusively on this problem and to be the best at solving it.
Even teams that are initially successful often have a hard time remaining focused. Not Datorama. Throughout our partnership with the company, there were numerous opportunities to expand horizontally into other domains. Thankfully, Ran, Efi, and Katrin were disciplined enough to maintain focus. It’s no surprise that Salesforce, a company with legendary focus, took notice.
Product First DNA. Datorama’s data integration engine outperforms any other solution. The company offers a perpetually improving AI scheme that automates marketing data integration at high speed and infinite scale. This is profound. If you are in marketing, there is Datorama and then there is everything else. In fact, Salesforce’s interest in Datorama was completely unsolicited. They simply heard so much and so often about Datorama’s product from their customers that they had to take a look. This wasn’t part of our plan.
Naturally, being first-to-market and hyper-focused are key drivers of what makes Datorama’s platform work so well. It’s also a consequence of having a world-class product and technology team and making it the core of the company’s DNA. Datorama is unambiguously product centric and the company was built around this calling.
These are the companies that we have the greatest passion for at Innovation Endeavors. It’s also in our own DNA. My partners Scott Brady and Harpi Singh built Slice Technologies, a data company with many of the same amazing attributes as Datorama. Slice was acquired by Rakuten.
A Financial Machine. Budgetary and capital resource discipline is not often at the top of the list when we think about the key success drivers for breakaway technology companies and certainly not something that grabs tech headlines when large deals like this happen. But if you take a deeper look, the most successful companies often are quietly mastering their financial affairs and economic metrics.
Datorama does this as well as any company I have ever observed. They have always exceeded their budget, they have always been adequately capitalized for their mission, and they have always had access to additional capital. They have been able to do this because they deeply understand the economic value proposition of their product, prevailing market trends, the unit economics that matter most, and the importance of basic financial management and governance.
This may seem mundane, but competitively it’s a weapon. Unlike many of their peers, Ran, Efi, and Katrin have spent relatively little of their precious bandwidth raising capital. By managing resources, they have been able to punch far above their weight class and claim victory against much larger, but less efficient competitors. By having true visibility into key economic drivers, they have been able to dynamically optimize resource prioritization (capital and human) to achieve the best outcomes.
Global Beginning. Datorama began life as a “hybrid” company; i.e., as both an Israeli and an American company. R&D is in Israel while the market facing functions are headquartered in New York. Building on its capability to run a distributed team, the company took an aggressive approach to scaling globally from day one.
Partnering exclusively with resellers in key global markets allowed the team to move quickly and cost effectively into new markets. They then acquired the best resellers and further expanded their footprint. This allowed them to build a fully functional decentralized team with 400 people in over 17 locations around the world and further enabled them to lock-in tier one customers in key markets all while exploiting global usage to improve their product.
With offices in Tel Aviv, NYC, and Silicon Valley, and a similarly distributed workforce, we are purpose-built to help companies like Datorama scale in new markets. Our global value creation team, led by my partner Daniel Goldstein, was instrumental in creating real revenue opportunities for Datorama from the beginning of our partnership with the company.
The acquisition is a remarkable outcome for all of Datorama’s stakeholders, including its employees, its customers, and, of course, its shareholders. But it’s also bittersweet. As my friends, colleagues, and company management know all too well, Datorama occupies a special place in my heart. This is a feeling my partners and colleagues share with me.
On behalf of Innovation Endeavors, a warm thank you to Ran, Efi, Katrin, and the rest of the super team at Datorama, and to fellow board members Yuval, Sarit, Motti, and David, and to our fellow shareholders.