Jeremy Weisz

looking back Liron what was intriguing you was about this person you think Well, people say, you know, you invest in the jockey, right? And who’s running the company to use you saw something in this person. And it was from yours partially your experience partial gut, what do you think it was?

Liron Rose

Yeah, it’s a mix of those things. You know, I wasn’t I was less experienced 10 years ago, 11 years ago, then I’m now but still, I mean, those like, investing in these, this early stage like pre seed startups, it’s a lot about, I’d say, intuition and anomaly detection. There was something about this guy, you know, the way he looks, the way he talks was kind of, you know, it’s kind of different than than most people do this, you know, he was kind of an outlier in some way. I couldn’t exactly say, a finger on. But you know, yeah, this is like a special guy, you know, I’ll keep this business card. You know, maybe, you know, I’ll dive in and, you know, try to learn more about this company. But definitely it’s, this is not a regular guy, you know. And that’s kind of the way this thing started. It’s always about the team.

Jeremy Weisz

Yeah. And so what was also interesting is so you invested in it as you were building AfterDownload from a timing perspective

Unknown Speaker

before? Yeah, I think I invested into SimilarWeb. I think I got kind of at the same time we started AfterDownload in early 2010. So yeah, it’s kind of around the same time.

Jeremy Weisz

And so what were you doing before AfterDownload? Were you just doing investments?

Liron Rose

Well, I started with online marketing back in 1999. So I did a lot of online marketing as an affiliate marketer for software companies for like nine or 10 years before that, for software companies, global software companies, distributing their their b2c applications over the web. This was it. was like a business who relied mostly on search engine marketing, pay per click sem, PPC, SEO, and so forth. I started to do investments in 2006. So Kenshoo was my first investment.

Jeremy Weisz

Really? Wow. Back in 2006. Exactly. ecommerce space in 2006.

Liron Rose

Well, yeah, so Kenshoo basically what they were trying to do is, as

Jeremy Weisz

Kenshoo is an Israeli company?

Liron Rose

It is. Wow. Yes. And I’m

Jeremy Weisz

like a Japanese company from the name or something.

Liron Rose

Yeah, it’s a Japanese word. I think it’s Japanese word for winning or soccer. But yeah, it is an Israeli company. And they are. I think they’re like 500 600 people strong and half of the team is over here in Tel Aviv and then the other half is spread globally in the US. Europe and, and Asia Pacific. So back then there were three people and they were like the first time I ever invested into a tech company. It was very, very close, closely related to what I did. So I was like doing web, online marketing and these guys, can we the platform to manage search engine marketing across multi platform, it was Google AdWords, Microsoft bank back then, Yahoo. And then I think they did, they had Facebook and Amazon later as well. Same thing with similar web, I mean, these that this company, you know, they went, they did web analytics. And I was like, very, very closely related to what I did as, as an online marketer. So you know, I had this kind of advantage so I could base I was kind of the user of Yeah, you’re like,

Jeremy Weisz

this is really good for myself. I get See how this will be valuable for others?

Liron Rose

You know, I can use this, you know, this is really good. I need this. So probably I’m not the only one. And and you know, I can kind of evaluate this. Because I’m like the perfect user,

Jeremy Weisz

what was the side of the country in 2006? What was it like compared to now?

Liron Rose

So so they just like, you know, just launched the company I remember meeting like the three founders back at the CEOs living room. And you know, if I want to, like get into the into the numbers, yeah,

Jeremy Weisz

God, I mean, not every year allowed to share, I

Unknown Speaker

think, like, with Kenshoo was like $1 million pre money back then. And SimilarWeb was kind of the same, I think was like 1.2 or 1.5. free money. I mean, you don’t get this kind of valuation. There’s been, you know, like, there’s been like an inflation in early stage like pre seed companies, you don’t get like below 2.5 or three. million dollars these days, but back then you can get them at you know, 1.2 or something like that.

Jeremy Weisz

Wow. Um, and so, so you’re kind of through the Kenshoo journey, the SimilarWeb Journey. And then at what point did you invest in Fiverr?

Unknown Speaker

Okay, if I’ve always is much later So, so I think it was like back in 2015. That’s a couple of years after I am after Donald was acquired by eresource. I joined forces with with a with a VC fund, small fund, like Founders Fund by the name of Circa and and, you know, we invested into 18 companies. It was a very, very small fund $12 million in total. And so far, you know, I’m like, really proud of what we did. You know, we have nine exits, out of 18 investments and Fiverr is one of them Yeah, these are this is not an early stage from the I have to say this is like, kind of growth stage. So like these are like around bees. And the criteria was that, you know, these these companies have to have a tier one VC so co investing with tier one VC like Sequoia or one of these guys. So, yeah, nine out of 18 and you know, we’ve got a couple more that probably are gonna exit so we’re gonna have like, a very, very high hit ratio in that fund.

Jeremy Weisz

Very good. Um, can you say what, what are you looking at now?

Liron Rose

So, okay, so you asked about 2019 Yeah. I was thinking that 2019 was kind of a peak year. You know, valuation was like, skyrocketed. Everything was like very expensive. We’ve seen we taught him everything this sounds like like a no brainer. Legend now, I mean, you know, we’re like post COVID-19 Now I know that Yeah, in 2019 You know, every everyone was starting companies here in Tel Aviv you would see these like these guys, you know, sitting in a cafe everyone is having sitting with their laptops in cafes. And you know, talking about the next startup people were raising, you know, money on PowerPoints with three, four or $5 million pre money valuations without any traction whatsoever, like

Jeremy Weisz

running a company is hard. Come on. You’re thinking running running companies hard, you know, like, show me some you can’t just show me a PowerPoint anymore.

Liron Rose

Exactly. So yeah, so we know that any traction and I was thinking, you know, like, this is like way too easy. Lots of foreign VCs, non Israeli VCs came into into Israel in the last couple of years. You know, money was was abundant and You know, like money was chasing, chasing deals rather than startups chasing funding. So so for me as an angel investor, you know, it was really, really hard to compete with all these, like cheap money that came from for these investors. And I would say, you know, I don’t have to do this, you know, I, you know, I’m doing my personal capital. I’m investing out of my own balance sheet. I don’t have to invest. If I think it’s too expensive, then, you know, I’d rather wait and do this when things are more quiet. Obviously, I didn’t expect COVID-19 but that these early successes I had with Ken shoe and similar web, like similar web 2009 2009 so that’s just after the financial crisis, and I was thinking, you know, this guy’s like, really brave if he’s like, starting a company now, when I everyone’s like, everyone last year, in 2008, and this guy’s like, brave enough. To start to do a start up now, you know, these, this, these are the times when, like real founders like Tim Berners, you know, stick to this, and, you know, these that these guys are just there for like, an opportunistic, you know, because it’s like, easy, they leave when, when funding gets hard, like now in 2000 in 2020, like these guys, you know, you know, look back and say, No, this is too hard. We’re gonna look for a job.

Jeremy Weisz

Yeah, yeah. I mean, it’s amazing. I mean, not saying you want this happened, but it’s almost time perfectly, like 2019, inflated, who knew it would just things would crash with the whole crisis? So what are some of the things you’re looking at now? There’s certain companies that you are looking at now or maybe genres of companies now that you’re seeing what’s happening, right?

Liron Rose

Yeah. So so you know, we’re now at COVID-19 This was like totally unexpected and obviously the valuations are a guy going down now but surprisingly enough you can see like this Like this phenomenon that the NASDAQ is going is going up SNP in the public markets is kind of steadied it recovered most of of the drawdown from March but but the NASDAQ the technology and specifically them, the fangs that Facebook, Amazon, Apple, Google, they’re actually much higher now than what they were in January 1. So yeah, so technology. Basically what we’re saying here is no technology is like speeding up. You know, we’re like kind of covering, I would say, like five years at least, you know, we’re like now at 2025 and the virtual world is kind of expanding and growing on the expense of the brick and mortar world. So so to speak, and we’re seeing like, you know, retail and tourism and, and and travel, like suffering basically, you know, planes on the map like planes are grounded hotels are not, you know, they’re like, not not you know that you don’t you don’t get tourists now you know Israel basically forces you know 14 day quarantine on everyone that comes in so so you know, like these sectors that are kind of basically on total total hole but but technology and startups surprisingly enough, some of these companies you know, like like Wix, which is another Israeli company, public Israeli company, and like Fiverr and now we have this new company Lemonade who just went IPO in New York last week, I think, you know, these companies are actually expanding. Another one is Monday. That’s another issue. company monday.com they’re not public yet, but they’re like, you know, the valuation is now like around $2 billion. So, so that these companies are actually growing in this time on the expense of brick and mortar So,

Jeremy Weisz

so because they’re all virtual, they’re living in a virtual world, virtual,

Liron Rose

they they’re not, you know, it’s not enterprise so they’re not like selling, you know, million dollar contracts with large enterprises, they have these users who are paying, you know, $200 per year or $500. And it’s all virtual. And they’re a an advertising, you know, on on Google and Facebook is cheaper now, because some of these brick and mortar businesses are advertising because they’re kind of their businesses is on hold. So, so so Monday and Wix and these companies are able to get, you know, the customer acquisition cost is going down. And then we’re able to grow in a in COVID-19 times it’s just like, and the same is kind of true for startups, you know, startups who are totally virtual and this could be in, you know, in, in telemedicine. It could be in like virtual and remote work management. There’s certain areas who are actually benefiting from COVID-19

Jeremy Weisz

and these are the companies you know, that I’m looking into. Hmm. Is there a company lately that you could talk about? Enough to name their name if you don’t want to, but and what you just evaluate, like to hear how you think on is this a viable investment for you? Like what are you looking for? What are some red flags What are something because you’re investing your own money, so it’s you No, it’s a you’re really probably digging deep into the team and the numbers. But what what do you look for? Is there a case in the past couple months that you could talk about?

Liron Rose

Sure. So so I’ll give you an example from from last couple of days. So it was a company I will not name names, but here’s a company that is kind of looking at human resources. Which, you know, in startups, like the highest cost, the highest expenses is on on salaries, basically, that’s like most of the money, the burn rate is goes to, to human capital people or more more than into like, you know, rent or equipment. And here’s this company that wants to kind of give management and alert and this is especially You know more I would say relevant to COVID-19 times because like have this remote working from remote working from home. So you know, you’re running like this company and you have like hundred people you know, you’re running a an r&d department, you have 100 people reporting to you, and all of them are like working from home and you kind of kind of losing control and, and the last thing you want is people, you know, leaving and you know, leaving their their job and starting to work for your competitor, right? And but they’re not coming into the office and everyday now, and you don’t know what’s going on. So, so here’s this company who came up with a solution to kind of give you a like a red flag, if something, you know, appears that, you know, someone is maybe spending less time on Slack, or maybe they’re spending less time on JIRA or on Monday, which like is that you know, on company systems or company, cloud based systems, you know, they detect without without, like, you know, going into privacy issues or kind of

Jeremy Weisz

stone, a stone on a camera in their home office or something

Liron Rose

without actually spying on their employees, but they kind of able to detect if something is kind of wrong with with any of the employees, you know, maybe they, they, you know, maybe they’re not spending the same time on on company systems and so forth. And basically what they do is, you know, it’s the same with COVID-19. It’s either, you know, an employee’s green, so it’s okay, everything’s fine. You know, could be yellow, you know, maybe you know, something in his behavior is kind of system is not sure. All right, so let’s say you have like 100 people and then you have you come into the office and it’s like, these five people are red, because we with the system has detected that. You know, they’re not behaving By the way, they usually do. So now you’re, you know, you and you know that as their manager, you know, and if an engineer leaves you, you know, that’s like, that’s, that’s expensive. I mean, replacing an r&d full stack engineer, that could be, you know, a few hundred thousand dollars worth of damage. If someone like that leaves and if you can prevent that, you know, maybe, maybe they’re having, you know, trouble at home, maybe like one of their kids, you know, is going to school because of COVID-19 is going to be sick. Yeah, maybe somebody’s sick, you know, maybe they have, like, maybe they’re, you know, there’s not, they’re not really leaving, they want to leave, but, you know, we just want to make sure that everything is okay. And kind of detect that beforehand. And, and making sure that you know, if you can prevent, you know, people from from leaving and you know, and you know that you save a ton of money for the company. So that’s kind of a solution that’s kind of COVID-19 public They won’t say this company could succeed.

Jeremy Weisz

And then when they share the information, is this typically they already have users of it? Or is it pre? is it just an idea at this point? What phase are they in? Oh, yeah.

Liron Rose

So that’s a very good question. So for me to actually consider investing. And when I say I invest my own money, but I usually come as a bigger gret bigger group of investors. So I’d rather come as a as a syndicate of investors, you know, investing, say, like $2 million, rather than my own personal check, which is usually 100 k. So, you know, we’d like to see some subtraction. So obviously, when this is just an idea, and it’s just our point. This is kind of, you know, it’s obviously the stakes are higher so so you could get in at a much lower valuation, but obviously, the risk is much higher than this team will not complete anything and you know, it will kind of fold before even they sign up their first customer so so that’s kind of my strategy here or my tactic You know, I’m and I’m exposing this over your podcast is basically try to have at least two data like touch points with a team so what I would say you know, I would say to these guys look this is like really interesting I think this idea is is awesome Why don’t you you know, why don’t we kind of speak in in two months time and you know keep my email keep my contact details and do the same for every other investor you speak to at this stage you know, and touch base with me in two months time and then what I will be able to see is kind of the progress that this particular team has accomplished within that timeframe. So, so you know, I’ve seen them now. I will see them in two or three months time. And then they will tell me Look, we were able to, you know, secure, for instance, a million dollars worth of safe notes from this and these investors, you know, you want to join us now we’ve we’ve signed up, you know, the the MVP is ready or the alpha or beta is ready now, we already have PLCs with like seven customers, which we didn’t have when we spoke to you three months ago. And now we’ll go through these guys, you know, they kind of deliver they like, you know, I’ve seen that a taking action, they’re taking action, they’re not just joking. And now I’ve got like, two bits of information, you know, and I can kind of say, you know, I can kind of extrapolate. Okay, so, if they were able to do this in three months, what could they do in three years? Right. So, you know, if the deal makes sense at the second, you know, kind of point of touch, then, you know, it’s much better than relying on a single point data point.

Jeremy Weisz

Thanks for sharing. Yeah, totally. And I could see the huge value of actually that particular company, because you can’t just walk around the office and go, you know, Joe looks really down today, you have no idea but that activity will show you is there a yellow? Do we need to check in with them what’s going on? I can see that being valuable by like hearing your thought process. Um, you know, Liron since we only have about like six more minutes, I want to talk about the AfterDownload journey, a little bit and amazing growth. And what were some of the highlights of the AfterDownload journey? And maybe How did you meet your team to start?

Liron Rose

So so like, the logic behind launching this company, you know, as I said, I was doing like online marketing for the software companies back then. And then, you know, Google, who is basically the big, the big gorilla in this business, you know, they have these, like content and user policies, which, you know, became harder and harder. how to how to comply with all of their requests. So, you know, I was thinking, you know, the software companies are all relying on Google and Microsoft, for doing this search engine marketing. How about we come up with this other like ad network, which will have similar quality of traffic, you know, like Google, and we’ll do PPC as well will charge our customers pay per click, because they already used to do that. And he found quality is as good as Google’s, you know, and whereas will will have, will not, we don’t have to do all these like, policies, you know, we can our policies can be more relaxed and Google’s, and they will, will come to us, you know, because we’re like our traffic is converting to customers to paying customers or downloads as good as Google’s. So that was kind of the logic here. And so I met my co founder Either through an introduction. And I think, you know, that was like a very, very good timing to launch that kind of company, I would say that if I was trying to do the same now, 10 years later, probably, we wouldn’t succeed. But back then was a kind of innovative, and we kind of hit, you know, we kind of identified the needs of our customers, and all of them had problems with with those with these companies like Microsoft and Google. And they were like, closing their accounts, virtually saying, you know, we can’t You can’t you guys can’t advertise with us, because this and this reason, and, you know, they had these advertising budgets, and they didn’t have where to go. So. And they came to us, obviously, well, we they, we had to, we have to find a way of making this sound easy, but when we could prove to these guys that you know, do this campaign with us $5,000 a month 10,000 dollars, you know, see how it goes. And you know if what works well, you know, double double your budget the next month. It worked well for them. And and that’s how we grew. From there. It was a bootstrap company. So we didn’t have external investors. I think we were like, break even breaking even after six months. And yeah, in three years we grew this business from from zero to $30 million worth of revenues in three years.

Jeremy Weisz

That’s amazing. When someone’s looking to sell their business or get acquired, what are some of the things we may look back on to think we did this or what should other people are selling Watch out for?

Liron Rose

So two things, I mean, you know, IronSource, which was the company that bought by us, and they’re like this huge unicorn now and I think that the last year was that kind of 1.5 billion or something they they like, we I think we wanted their first second. acquisition and then they went to, you know, acquire a few more. And the one good thing about it is was that kind of we knew that they were one of our partners. So for a long time before we actually went through an m&a with them, we kind of worked with them for a year or two. So we kind of knew them. And we kind of knew the DNA of the company. You know, we were used to working with them, and then they made a few offers and we didn’t accept their first offer. You know, you know why, let’s do this deal. You know, we want it we want to, we want to buy you guys, you know, here’s our offer. And we like kind of internally and in the bowl, you know, we discussed and we were thinking we can grow our business independently. And, you know, we will not like rejecting the idea the idea of you know, Getting acquired by these guys, but this offer is not good enough we can, like, grow our business and maybe, you know, get a better offer next year. So that’s what we did. And I think in and year three, when we kind of approach 25 $30 million of, of revenues, I think they approached us with an offer that we thought was good enough. And it’s not that we didn’t have like, second thoughts, you know, when you sell a company, you never know if, you know, you know, what if we wouldn’t sell this company, we would have, you know,

Jeremy Weisz

what if we go to 100 million, why don’t we go to a billion,

Liron Rose

right? So yeah, it goes to 100 million, right? And by running this thing yourself, or maybe it doesn’t, so you never know. So what we did is we accepted their offer, which was a mix of cash and like stock in IronSource itself. And that gave us an you know, we’ve got some cash and and then the upside within our associate IronSource will do well, then basically we are betting on them. Yeah, we’re betting on them. So and I think that that went well, the company. It really well. And and yeah, the rest is history, I guess.

Jeremy Weisz

No, thank you. First of all. last quick question. We’re right at a time. I always ask for a challenge moment alone moment that you’d push through and then a proud moment, because you know, this journey is Rocky, it’s messy. It’s all over the place, even though it feels like it seems like like he’s just skyrocketed. There’s I’m sure points that are dipping in that three year period, even though that’s like exponential growth. What’s been a challenging time low moment and what’s been a proud moment for you.

Liron Rose

Okay. So, I would say, you know, this, when you do these investments, so I mean, some of these deals, you know, succeed and you you win and sometimes you lose the company goes goes down. But that’s kind of part of doing business and that’s okay. I think I asked about the low point. So I was running like TechStars in Israel for three years. And at some point, you know, they made a decision to, to pull out of Israel. Oh, really? Yeah. Then they reversed the decision. Like, I think, like, a year later, they decided to come back. But when they you know, I was running it for two years here and out. I was thinking, you know, this is like a huge opportunity. And I was trying to convince them because we were doing this with with a corporate partner. And I was thinking, you know, even if a corporate partner doesn’t want to continue, you know, doing this TechStars should, you know, invest their own money. And having their own accelerator in Israel. So I was trying to convince management that they should, you know, stay in Israel, even if that means that they have to fund the accelerator from their own balance sheet rather than having the corporate partner do this. But, you know, they went, yeah, they won’t do that. Because there was thinking there were too many accelerators in Tel Aviv. So, that was kind of a low point, because, you know, I was like, really happy to spend

Jeremy Weisz

a lot of time I was reading about it, that you, you know, recruit over 100 mentors, you know, like, there was a lot of work that went into that.

Liron Rose

That was a lot of work. And, you know, I had like 20 companies go through two batches of TechStars. And some of these companies growth fintechs have some of them have ever raised a bunch of money now and who will see a few good company so coming out of those two years but textile decided to pull out. And then a year later they I guess they figured that that was like the wrong decision to do and they came back to as well and relaunched in Israel. But yeah, that was like too late for me. So yeah,

Jeremy Weisz

proud moment for you.

Liron Rose

So, I would say that, you know, having started AfterDownload and growing that company into 50 people, and before we actually got acquired, I think we were like, really, really proud of the way we ran the company in terms of staff in terms of, you know, employee satisfaction, NPS scores and so forth. We had a great team. You know, the way we ran the company, I was like, really proud to be responsible for for, like, most of these people were like, at least anything which Seven or 10 years younger than me, so, you know, I was responsible for these guys income and and they were like really proud to be part of our team so growing that company into what it was and you know having that iron souls, you know bid and offer, you know offer to acquire us and they made a few offers you know and they were they knew what they were doing like really buying a great asset that may be probably you know growing a company from zero to one

Jeremy Weisz

yeah, it’s amazing. Thank you Liron for sharing your story where should we point people towards to find more learn more about you online?

Liron Rose

Sure. So so you know, if people go on Google and I go, I type Liron Rose that’s Liron ROSE. Or you know go lironrose.com. They will find me they will be able to reach out, get in touch. Send me an email. So if anyone wants to get learn more about the Israel ecosystem, what we call the startup nation, and get more visibility into that market, they’re more than welcome to reach out and talk to me. Cool.

Jeremy Weisz

Thank you. I go to Lironrose.com. Check out more. And thanks. We’ll see you on the other side.

Liron Rose

Thank you