The redefinition of personalised marketing

Podcast transcription -6th February 2019

Peter Cowley:                  So, welcome again to another Invested Investor podcast. Today we are in the offices of Ofri Ben-Porat, who has a company called, Pixoneye. He's an entrepreneur and we are going to talk through his journey. So first of all Ofri, you were born in Israel I believe, can you talk a bit about your background and your education?

Ofri Ben-Porat:               Absolutely. So, firstly, thanks for having me. Yes, I was born in Israel, to be fair, we were there until first grade, about six or seven years old and then moved to Belgium with the entire family. My dad was also a bit of a business freak, took the entire family for a year to Belgium to try this new company that he was working on. We ended up staying in Belgium for about seven years and then, just when we thought we were going back to Israel, because the business was going well, he sold the business in Europe and re-opened it in New York, and we moved to New Jersey.

                                           So I actually finished my high school in the USA, in a nice little town called Tenafly, New Jersey. Then went to college in America in Rhode Island, at University of Rhode Island, my major then, was dance and theatre.

Peter Cowley:                  Okay. I think you should say that. You have said it.

Ofri Ben-Porat:               And I have said it now, my life was geared towards theatre and dance and a year into college I just decided that I will probably at some point want to live in Israel, the army is a big factor in life in Israel.

Peter Cowley:                  You only had an Israeli passport at this point?

Ofri Ben-Porat:               Yes, I wasn't required to do the army, because I hadn’t lived in Israel since I was seven.

Peter Cowley:                  Right.

Ofri Ben-Porat:               It would have been as a volunteer if any, but it was something so deep rooted in my family. My father was a brigadier general in the Armoured Corp and so after a year of college I decided to go to Israel. Much to the dislike of my father, instead of joining the Armoured Corp I joined the Infantry, I ended up spending five years in the Israeli army.

Peter Cowley:                  So, this took you from the age of about 21?

Ofri Ben-Porat:               Well I only did one year of college, so, about 20. I moved to Israel and I stayed there until I was about 24, towards the end of 25. And so, finishing the army, I ended up falling in love with Israel again and stayed, did my final college years at IDC Herzliya, studying government.

Peter Cowley:                  I went to that university last year, when I visited Tel Aviv. So, you have got an army background, which is an important part of team building and all the other things that come out of Tel Aviv and Israel. So, what then triggered you, to become an entrepreneur? Did you work for another company first?

Ofri Ben-Porat:               The thing about becoming an entrepreneur I think, started in college, at the IDC, it’s what it does very well. It's not surprising that, when going to Israel to visit, like yourself, you would end up going to IDC Herzliya, not the seven other big universities, the Technion and Tel Aviv University. That's because IDC is very much geared toward entrepreneurial learning. My first six months at the university, in Israel, I founded the first fraternity, outside of the United States. Alpha Epsilon Pi with funding from the US fraternity, the college gave so much support to this, which was unheard of in Israel, including funding for events and so on. So there's a lot of support there.

                                           Two months later, we founded the International Festival and we got a lot of support. That's where, everybody brings food from their own country and we display it over a couple of days. So there's a lot of “get up and do” mentality at IDC.

Peter Cowley:                  So, you formed Pixoneye with your co-founder, and that was initially in Tel Aviv, was it?

Ofri Ben-Porat:               That was in Tel Aviv, Yes.

Peter Cowley:                  Okay. Did you raise funding there?

Ofri Ben-Porat:               The idea came to life in Israel. We had grown a bit cynical of Israeli funding, I think Israeli VCs or investors tried to imitate the US valley, this made them very cynical for me, it just didn't feel like this kind of tech should be going into the Israeli funding circle. Actually what we did was, we went to Dublin.

Peter Cowley:                  Okay.

Ofri Ben-Porat:               With a very terrible looking, made Power Point presentation on Loop. All the mistakes of a terrible Power Point presentation. We went there with a very interesting idea that Nadav had presented to me in the first iteration.  I wanted to go to Web Summit, more because, it was in Dublin than because it was the Web Summit. I mean obviously everybody back then heard about Web Summit being phenomenal, but I wanted to go somewhere where it's a bit less American, and I just felt like Dublin was a nice, neutral land.

                                           We went there with zero expectations. However, that is where we got our first funding.

Peter Cowley:                  And that funding was from where? Where were the resident funders?

Ofri Ben-Porat:               So, we were presenting, and this lady walked by, and she seemed fairly interested but not too interested. She said, "I'm not interested. Give it to me in 10 seconds." So I gave her 10 seconds of the craziest thing, which is far removed from what we do, but as crazy as I could make it. She said, "Okay, you know what? That's actually a bit more interesting." She took a step in, gave me a bit more time, saw the presentation, gave me her card. We got in touch later that evening. She said, "Listen, we are closing our first fund cord for 2015. Why don't you come and speak to the Board next week?"

                                           She is part of Collider, which is a marketing and advertising tech accelerator.

Peter Cowley:                  Here in London?

Ofri Ben-Porat:               In London.

Peter Cowley:                  Yes.

Ofri Ben-Porat:               They're London-based. Flew to London, pitched to the Board, pitched to the investors. They loved it and we got 50,000 pounds from her. Well 50 for four months for 10 companies, and the five companies that really succeeded creating something in those four months will get another 100.

Peter Cowley:                  Yes, okay.

Ofri Ben-Porat:               We were one of the companies that got the 100. In fact, we won the demo day after four months and then obviously got the extra 100. So that was our first investment.

Peter Cowley:                  And what was the idea then? What are you doing now?

Ofri Ben-Porat:               The idea of the company was to create a new value exchange, between data and value, for the brand, to kind of. To create a platform where marketeers could engage at a very personal level, almost like a bartender would engage with a regular, to allow brands to engage at that level of personalisation with their customers, without knowing who those customers are or by taking the least amount of data from their devices.

Peter Cowley:                  Isn't that what Facebooks’ trying to do, or not?

Ofri Ben-Porat:               Facebooks’ taken a lot from your devices, from Cloud for analysis. But, essentially, allow a brand like your insurance or your bank app or your retailer app to have the same level of personalisation as Facebook does. Because Facebook has it.

Peter Cowley:                  Yes. Because Facebook has access to that information?

Ofri Ben-Porat:               Yes, but it does it on Facebook. It personalises Facebook.

Peter Cowley:                  Yes.

Ofri Ben-Porat:               The brands are left with whatever they can buy from DMPs.

Peter Cowley:                  DMP? What's that?

Ofri Ben-Porat:               Data Management Platforms.

Peter Cowley:                  Okay.

Ofri Ben-Porat:               I think Ernst and Young published a report this year saying DMP data accuracy on gender for 2018 is 50%. So, it's like, you'll be cheaper to use a 25-pence coin, or they said a 25-cent, it'll be cheaper to flip a quarter than to pay a million dollars to a DMP to give you data by geniuses. But again, we wanted to create a holistic place where the brand owns the data, analyses the data and engages on the data completely on the device.

Peter Cowley:                  So that was the idea four years ago. Is that still the same idea now?

Ofri Ben-Porat:               The idea is still the same. The way that we create this engagement and interact with the user is a different. Four years ago, we were going to look at people's personal photo galleries on their phones. Today, we do an array of analysis. If back then we dragged some things to the Cloud for deeper analysis, today we do everything on the device.

Peter Cowley:                  Right.

Ofri Ben-Porat:               GDPR came along and we fully complied by pushing everything away from the Cloud onto the device. Our big IP is being able to use the device's CPU and GPU computing powers to run AI deep learning processes that would take a tonne of space.

Peter Cowley:                  I have just got a new phone, last Friday, it’s got two neural network engines inside it. Tells me which programme to use.

Ofri Ben-Porat:               Exactly. So we use those. The question is, can you use these computer vision processes on neural networks on our device, and our solution allows that. So Yes, it's very similar to where we started. There's been ups and downs, and I wouldn't call them pivots because the idea is still the same, the vision is still the same, but we've definitely had challenges, like GDPR coming in and brands not fully ready to analyse data, or not fully ready, to give up a DMP because of it's legacy.    Some of these brands have apps written in code, in a language that none of our coders have heard of.

Peter Cowley:                  That's where you need to embed in the app?

Ofri Ben-Porat:               Yes, Yes, it needs to be embedded. If we don't have our own, we are a tech enabler.

Peter Cowley:                  Well you do have one because I've loaded it on my phone.

Ofri Ben-Porat:               Oh, we have a demo, we have a demo we'll use for investors and potential POCs if they're afraid to use their own. We use it for internal stuff, but it's not marketing.

Peter Cowley:                  Okay, so before we get on to the ups and downs, I'm sure you have both. A typical cost, as a brand who has got an app, you want to improve the experience, the knowledge of, A, the experience of the user, and B, the knowledge the brand has.

Ofri Ben-Porat:               100%.

Peter Cowley:                  Yes.

Ofri Ben-Porat:               And reduce the amount of information that the user has to give up from their phone. Everything is stored locally.

Peter Cowley:                  Right, okay. I've got to ask the privacy question here, I assume, if I went further with my demo app, it would ask for access to my photos, access to my contacts?

Ofri Ben-Porat:               So, no contacts, we don't need any of that because we do everything on the device, all we need is pre-rented access to image media files, which a lot of brands ask for. We always say in the pop ups, "At no time will this app," it's never Pixoneye, but let's say it's brand X, "will see your photos, touch your photos or move them to a temporary folder."

Peter Cowley:                  And if you say no to that, I assume that the app still works okay.

Ofri Ben-Porat:               Oh Yes, everything works, it's just that Pixoneye is not activated.

Peter Cowley:                  Yes, fine.

Ofri Ben-Porat:               So, we have a piece of tech in there, privacy wise, by far the least intrusive data navigation mechanism that exists today in the market, I can say that hands down because we test that constantly. Having said that, you know, British Airways just got hacked.

Peter Cowley:                  Yes, credit cards.

Ofri Ben-Porat:               Credit cards and numbers, that's because they store that stuff locally on their servers.

Peter Cowley:                  Yes.

Ofri Ben-Porat:               So that they can create promotions. That kind of stuff cannot happen if you're using Pixoneye, but you can get to the same level of understanding.

Peter Cowley:                  Well you still need trust. A, the brands need to trust you and B, of course the users.

Ofri Ben-Porat:               Exactly. And for us, it doesn't matter because we are ring fenced for brands. So if you have two apps on your phone that carry RSTK, we analyse it twice.

Peter Cowley:                  Oh, you analyse twice.

Ofri Ben-Porat:               Yes, Yes, we have no way of cross referencing it. So in fact, we don't own any of the data. We are tech enablers. You integrate our tech and then it's your data, it's your tech, we give you services on top of it. We never see that data, we don't care about that data. It's yours.

Peter Cowley:                  Okay, but there's just one more question about this. As a user, how has my experience improved if my brand, say, it's one of the banks, includes your tech?

Ofri Ben-Porat:               Right, so I'll take one of the big banks today. Barclay's for example.

Peter Cowley:                  Yes.

Ofri Ben-Porat:               Barclay's have introduced something called life events to their app, which shows you 10 life events, that you might be going through.

Peter Cowley:                  Divorce, death?

Ofri Ben-Porat:               Right, getting married, having a baby, buying a new home.

Peter Cowley:                  The positive ones?

Ofri Ben-Porat:                All the good ones. Yes. We have an employee here who is with Barclays and she is relatively young, but already married and definitely not thinking about buying a home, but given her age and her income level, the bank only pushed her getting married and having a baby, she is definitely not planning a baby in the next ten years and she's living with her husband. They missed there because the personalisation came from transactional data.

Peter Cowley:                  Which is negative for the user and negative thinking about the brand.

Ofri Ben-Porat:               Exactly. Exactly. If she opens the app and the first thing she sees is a picture saying, "Thinking of getting married? Thinking of have a baby?" I mean, and I'm Jewish so ... And I don't have kids, and I'm 34, which means I get that from my aunts, that is enough? I don't need to get it from my bank, you know what I mean?

Peter Cowley:                  So that's an inferior experience?

Ofri Ben-Porat:               Right. So, with Pixoneye, the great thing is we are on the device, every new photo you take, every new action you take, is already added to your local understanding, and so instead, it can be planning your next holiday, which would be a much more positive experience, if I opened my bank app, especially if you can tell I've been to three summer holidays in the same area approximately for the past three years, and you can interact with that directly.

Peter Cowley:                  So, this is where the machine learning comes in, presumably?

Ofri Ben-Porat:               Exactly.

Peter Cowley:                  Yes.

Ofri Ben-Porat:               Exactly. They just create that positive engagement, so knowing exactly what your users need without knowing who they are, right? That's the idea, the underlying idea.

Peter Cowley:                  So, you have raised some funding from. You have had another four or five rounds since then, haven't you?

Ofri Ben-Porat:               Right, so we've had four rounds all together.

Peter Cowley:                  Yes. So talk just a bit about that, how you found investors, how they found you. You have had a big Series A. Is that in the public domain? Can we talk about that?

Ofri Ben-Porat:               Yes. Yes. We can talk about the Series A. Yes.

Peter Cowley:                  With Octopus.

Ofri Ben-Porat:               Yes, with Octopus. That was the most recent one.

Peter Cowley:                  Yep.

Ofri Ben-Porat:               So, I the Collider round, was £150,000, that was the base, pre-seed round. We call it a friends and family round because we have become very close to Collider The great thing about Collider is that it's a network of angels that invest under one hat. We deal with one person, in shareholder meetings, we have 18 ex-CMOs, ex-CEOs, ex-founders who have money, who have all come in, and because they have all invested very little, they are not high, level investors that are disconnected from reality and what's going on in business. They all left their job, maybe yesterday, or are still working as CMOs and are investing off their personal PML sheet. They still have contacts in their industries. That was a very good way for us to start, because, we didn't know anything about London and the UK. Collider, which was also an accelerator type, had events, so I kept coming back and forth from Israel to London to meet the investors, to attend the events, meet potential clients. We spent it on tech, we had the challenges of the tech. We are a code tech company.

 I was on my own, back and forth, what it did was set us up for the next funding round. That 150 goes by, I mean, in an instant. 150 is nothing, especially in this market today. If you're trying to make a move on any industry, like marketing, like tech, like financial, whatever it is, people have money and they're pushing forward.

Peter Cowley:                  So, you raised another round, fairly soon?

Ofri Ben-Porat:               So, yes fairly, soon after closing that 100, four months later, we decided to go on a pre-seed round, though we had a strong team of engineers and researchers in place, so we did a £400,000 round.

Peter Cowley:                  From Collider and who else?

Ofri Ben-Porat:               So, Collider investors came in pre-empted, but we started looking around, from Collider, it's a network effect and I think, fundraising is a full-time job. Because the company was focusing on only tech and not selling any products, it wasn't looking like we were going to sell any product for two years.

                                           They gave me the ability to become a full-time fundraiser,  I started creating this, continuous network effect, off the back of Collider and met somebody who sits on the committee of Harvard Business School Angel Association.

Peter Cowley:                  Oh, right.

Ofri Ben-Porat:               And he pushed me to go to their committee. They pass four companies a quarter to their network, the Harvard Business School Angel Association also comes to see it, they can invest off the back of that. You do a 20, minute pitch.

                                           I was told that we had made it to the final pitch. I was told to come with term sheets ready, printed, because these guys come with cheque books, I thought it was a great joke, an attempt to spike up a Harvard Business School event. I didn't go term sheets, but I finished my pitch, you're supposed to go outside and wait until everybody finishes. The four companies have tables where they ask questions. I finished my pitch and as I'm going out, this guy follows me and says, "Listen, I've got to run but I'm in for 50,000. Where do I sign?" And I said, "What do you mean you're in for 50? You don't know the terms." He's like, "Love it. I'm in for 50."

                                           The investors take the fact, that, the committee has vetted you enough. So, I took a piece of paper down and I wrote 50, I wrote his name down and went to my desk and people came in and said, "Put me down for 20." And over the next few days we raised over £250,000 from about 10 angels, that heard me speak for 20, minutes and then figured, "You know what? This is worth the investment." So, Harvard Business School Angels came in, we had the Collider, having made some noise around that, got a Russian investor, they were a big fund called The Impulsive. We really liked the way they pushed their businesses forward, so we took a hundred from them and created £400,000 quite quickly, from tough networking.

                                           So, we are at £550 now, that allowed us to put some things in motion. Raising that money, we agreed that would be the landmark to me moving to London, full time.

Peter Cowley:                  Were your customers not in Israel?

Ofri Ben-Porat:               Yes. To understand the scope, we need brands that have apps, right? And we get paid, by the amount, of users they have as we analyse them. I remember meeting the Daily Mail in the UK and them saying, "Can you cope with our bandwidth? Analyse your device, we have between 6:00 AM and 7:00 AM, close to 60 million visits to the app."

Peter Cowley:                  Wow.

Ofri Ben-Porat:               Right? So, across the world we were averaging 100,000 on our test POC, so, I say "Of course we can, right?", and so we started working, really fast, on it. It doesn't matter if we work with them or not, that's beside the point.

                                           Flew to Israel for a meeting with Israel's biggest news app. It's the Daily Mail of Israel, but not on that scale. We are sitting in the meeting, I just remember him saying to me, "Can you work with the biggest app in Israel?" And I was like, having just had that meeting, I was like, "Yes. What do you mean?" He was like, "We do have close to 1.2 million users monthly”. Equally, I would have a meeting in London, great meeting, go back to the airport to go back to Israel, get an email at the airport from the guy I met saying, "Listen, I pitched you to my boss, the CMO, he loves it. Can you come in tomorrow, 9:00 AM?" And I'm already at the airport flying back to Israel. I said, "Actually, I'll be back in London next week." By then the conversation's cold.

Peter Cowley:                  Yes. Exactly.

Ofri Ben-Porat:               It's started making sense.

Peter Cowley:                  Yes. So, you need to be living here?

Ofri Ben-Porat:               It started making sense. We needed the money for it and so as soon as that 400 hit, I moved to London.

Peter Cowley:                  And you went to Wayra did you, at first?

Ofri Ben-Porat:               Yes, Wayra opened their doors to us. They were part of our 400, round. It's a co-working space with very friendly people, sat there for a while and started the business there, was able to hit meeting after meeting after meeting at a much higher pace.

Peter Cowley:                  So, it's you, by yourself, here, and a small tech team?

Ofri Ben-Porat:               There was about 10 in Israel and myself, here, me and a laptop.

Peter Cowley:                  And then a couple more rounds before you got to Octopus?

Ofri Ben-Porat:               So, we had one more round before the Octopus round. It was a 2.25 million seed round.

Peter Cowley:                  You still call it seed?

Ofri Ben-Porat:               Yes, we had a pre-seed.

Peter Cowley:                  You had two, pre-seeds.

Ofri Ben-Porat:               So, we had the family and friends, which was 150 ...

Peter Cowley:                  These numbers are going up.

Ofri Ben-Porat:               Then the 400s.

Peter Cowley:                  250k was a great seed round, and then you move onto 750 to a million?

Ofri Ben-Porat:               Interesting, because in the US today, I just came back from New York and Chicago, I was meeting a few VCs and I told them that we did a £6 million Series A, and they said, "Series A? You mean seed? 8 million, right?" And I said, "well, Yes."

Peter Cowley:                  10 or something.

Ofri Ben-Porat:               Going from 10, 10/20.

Peter Cowley:                  Yes. So you got 2.25 and this is where Zen invest came in?

Ofri Ben-Porat:               This is Zen Invest, we were introduced.

Peter Cowley:                  And what do they? Is that a family office?

Ofri Ben-Porat:               It's a very, big family office, run by one of the brothers of the family. Extremely friendly, personal environment.

Peter Cowley:                  Yes, good.

Ofri Ben-Porat:               I was introduced to them through a “finders’ fee”, kind of person, that I was in touch with. I had a few meetings with them, they liked the idea, they liked the team, that's what their investment is based on.

Peter Cowley:                  And they put in, what, 1 to 1.5 mill?

Ofri Ben-Porat:               They put 1.4 million.

Peter Cowley:                  Yes, fab, and then you topped it up with preliminaries?

Ofri Ben-Porat:               I really, wanted a strategic investor next to Wayra, we felt Wayra was Telefonica, it turns out it's Wayra is Wayra and Telefonica is Telefonica, so that wasn't as strategic, as we wanted.

                                           We wanted a strategic impact. At that time, we were looking at financial services as a potential move and managed to bring in Santander. The reason we brought them in was Octopus. Octopus said no to us for that round.

Peter Cowley:                  Yes.

Ofri Ben-Porat:               We went to Octopus for that 2.2 million, round, the seed round, as we called it, and they said no for a couple of reasons. Two of the major ones were, "We don't see any cap table, a conventional VC, with enough at stake to risk this kind of risky tech." And because we don't have a VC there yet, or institutional money of some sort, they feel like the tech of the company's a bit too risky.

                                           That was one thing and the second thing was, "You're too much focused on ad tech." Especially with Collider being in ad tech too.

Peter Cowley:                  Yes, okay.

Ofri Ben-Porat:               And so, in 2016, when I moved to London, we won KPMG's best ad tech company in London. In 2017, after we did our seed round, we won KPMG's best vid tech, so that's the starting position for Octopus, and Octopus always said, "Come back. Love your stuff though, let's keep in touch." So, we took all their negatives and I just made sure to hit them. We had to do some changes, and bringing in Santander in the seed round, made sure they understood d that, A, we have a conventional, institutional VC in there, because it's Santander InnoVentures, they work as a VC, and, B, it's a bank and obviously the privacy thing, the regulations we had to go through with Santander before they invested, we are talking audit by a third party.

Peter Cowley:                  So what else have you learnt in this journey? There must have been times when you have stayed awake at night?

Ofri Ben-Porat:               I think one of the biggest things that I've learnt is that investors, VCs, Angels, family offices, no matter who you're talking to, they need as much catering as any other person in the company, or client that you are selling to. I think the first thing I learnt is that there is no chance at all to do that whilst doing anything else. I got slapped in the back of the head once, when we did our seed round, where I figured I would hire a team in London, and we will start doing sales.  Whilst I did the 2.2 round, which ended up with me almost losing both.

Peter Cowley:                  So, you let people go?

Ofri Ben-Porat:               I just stopped putting any effort into it. When we hired our first chief Commercial Officer. He did a brain dump on me to see where we were, in commercials. We drew it on the board. We did month by month and where the conversation starts, and then you see this three-months period where there's dead zone. No new clients. All the old clients I was in conversation with, lost. Dead silence from emails, because, we were looking through my inbox and he's like, "What happened to this one?" "Well, I was raising our seed round." There was nothing I could do about it.

Peter Cowley:                  You needed the money. The money was much more important than the customers at that point.

Ofri Ben-Porat:               I think that'd be my first learnings from doing a round; it's either you go in it full-hearted, full-time or you don't. And it gets easier as you go on, because then, you hire the CCO, so the next time you do a round, or a Head of Commercial, there's somebody to keep the company going while you're doing the round.

                                           I think the second most important thing I learned was negotiations around equity. I say this sometimes, it can be taken out of context, obviously, like everything in this world, because the rule books have not been written yet, there are no guidelines.

Peter Cowley:                  I've written my book. It might help.

Ofri Ben-Porat:               It's such a wide array from small-time angels, SEIS, non-EIS.

Peter Cowley:                  You can't quantify it?

Ofri Ben-Porat:               You can't quantify it. My engineering team, if I want them to tell me if that picture has a dog in it, they do three keys on the keyboard and it runs a mathematical equation. I can't say, "Will this person invest if I show him this?"

Peter Cowley:                  Human beings. You're a human, I'm a human. That's the relationship between us. Trust that you have to build up.

Ofri Ben-Porat:               Exactly. So, I will say this, but it has been contested and can be taken out of context, but I think you run a company on capital, not on shares. I can hire employees with capital, I can't do it with shares. I can build new tech, we can hire offices with capital. I've seen a lot of people get into this rabbit hole, negotiating their hearts out, for that extra 1%, extra 2%. I don't have that much equity in the company, right? But I have a really big dream to sell it for north of a billion. And that's fine. If you're on the path and you're in for that much, we've given up a lot of equity.

                                           But you realise throughout time that a) you need that capital, b) if you have taken on the right people, that equity is worth so much more in double-time value and the network effect, and it's not worth losing sleep over. And I did lose a lot of sleep over it, in the beginning.

Peter Cowley:                  About being diluted too much?

Ofri Ben-Porat:               Diluted too much. So I think that's my second biggest learning is the amount of sleep I've lost over that notion of equity. Throughout the time, it's about keeping the relationship proper with the people that you want to bring with you. And I will say this carefully, but it's also about cutting off relationships with those that you know are going to be toxic to your business going forward.

Peter Cowley:                  You're not talking about your shareholders though, are you?

Ofri Ben-Porat:               Some of them might be shareholders.

Peter Cowley:                  Yes, okay.

Ofri Ben-Porat:               Absolutely. Because shareholders that were, positive for me when we started, can turn out to be toxic going forward.

Peter Cowley:                  Very difficult to remove those, have done this already?

Ofri Ben-Porat:               You can't remove them, but you can remove the relationship, in the sense that you just make it less of a thing. I have investors that have drained me for meetings and conversations and explanations, you need to know that there are some shareholders along the way, but, it's also about relations with the companies.

Peter Cowley:                  Yes, that's a really great thing you have said. I haven't had another interviewee that has said that, this concept of shareholders actually getting in your way. Trying to choose the right ones, not managing to do it, and then you're stuck with them. Well said.

Ofri Ben-Porat:               See, right there. You're in that relationship. You're in that marriage. You can't divorce them. It's very hard to relieve shareholders. If it is toxic and you feel it's toxic, and you have the capacity, and the time, and the legal system around you, to support you doing a move in which you make an active move to remove him, fine. There are options for that, right? There are ways to do it. If not, you as the founder needs to take the conscious decision that there will be some shareholders along the way that you lose.

Peter Cowley:                  You have got to stand firm. You have got to set boundaries, haven't you?

Ofri Ben-Porat:               Exactly.

Peter Cowley:                  So Ofri, let's finish this off, with your three top tips for entrepreneurs.

Ofri Ben-Porat:               Right. I think my top three tips would be, one, is for any company that is playing around with tech, and that can be anything from interface, UX, UI, all the way to website, even if you have some tech aspects within your business. Your reporting is digital, even at that level, my biggest tip would be keep the tech in-house. There's a huge drive to push it to third parties, contractors, different countries, all that stuff. At the end of the day, you need that control, and you need that control to be immediate. And the result is night and day. I bet you I can tell you the difference if you give me two reports, on the table, one done with internal tech, one done with external, I guarantee I can tell you difference.

Peter Cowley:                  And in your case, it is overseas, but your co-founder is living in Tel Aviv.

Ofri Ben-Porat:               Yes, Yes, Yes. Our tech is in Tel Aviv, but managed by my co-founder. All full-time employees of the business. We don't have any contractors. They're all full-time.

Peter Cowley:                  And your second tip?

Ofri Ben-Porat:               Second tip would be the relationship between the co-founders. First of all, my tip would be to always have a co-founder. I definitely think that is ... and when I say co-founder, it's 50-50. I've heard a lot of co-founders where it's a founder who then brought somebody at a co-founder level and gave him some shares of the business, or more than what you give an employee.

                                           I think that one of the best tips I can give is find somebody that you can go 50-50 with and share that burden.

Peter Cowley:                  But you need several months or even years before you have found the company to build up that relationship and trust.

Ofri Ben-Porat:               Absolutely. So my relationship with my current co-founder came from a previous venture where we did go 50-50, where we didn't define exactly who was responsible for what. He, being a very high level professor of maths, was dealing with marketing and business, and I was getting tips on the way we should develop the tech, which I shouldn't. And I think we've learned from that. But a bit of a reason we failed last time was because of that. We learned from that. And one of our first conversations was if we do this, it's 50-50 down the line. I do business, he does tech, and we don't interfere. That doesn't mean we don't talk. We speak everyday more than I speak to my wife. It means no interfering on the decision-making process.

                                           There's a big saying, in the business, that everyone likes to say "Nadav doesn't speak to people, Ofri doesn't speak to computers, and they have a beautiful frictionless relationship."

Peter Cowley:                  Excellent. I expect you'll clarify that he does talk to his team outside the company.

Ofri Ben-Porat:               Exactly. Well he talks to other people who only talk to computers, which is fine.

Peter Cowley:                  And your third tip?

Ofri Ben-Porat:               My third tip would be, raise big. And I think that is something I find myself saying when I sit with start-ups. I know I spoke a lot about the saturation of mentors, I fall into the same trap.  I think one of the biggest fails I see, is people saying, "We just need 150 to get this done and then we'll raise more," or "We just need another 300 on top." Where, in fact, if you had another million, two million, three million, four million, five million, you could destroy your competition. And I think people are afraid to raise big, because they're afraid of the answer.

Peter Cowley:                  And then you have got to be a very, very good equity sales guy, which clearly you are.

Ofri Ben-Porat:               Right.

Peter Cowley:                  You'll need to be very special, to raise a big sum, when it's a very early business.

Ofri Ben-Porat:               Exactly, but make that bigness relate to the stage of the business. So if you're starting off, don't raise 50, don't raise 150 SEIS, stick it to another EIS and make it 550, make it 600. If you're raising series A, don't make it, "We are thinking of asking for 1.2, 2 million" and I say, "How much do you need to beat your competition?" They say, "Well, four would be really good." "So why don't you ask for four?" Investors love that. People don't realise it, but I think VCs nowadays ask, "Well, what's the drive for this company?" How big is his vision or her vision that they're coming in at two. Come ask for six, we'll give you six.

Peter Cowley:                  Excellent. This has been really, really interesting, Ofri. We've learned a huge amount from it. And there's much more we could talk about, no doubt. And perhaps we should interview you again, in two, years’ time, to see how far you have got. Maybe you got your exit for your large number. So thank you very much indeed.

Ofri Ben-Porat:               Absolutely. Thank you very much. Thank you for your time.

Peter Cowley:                  Thanks for listening to another Invested Investor podcast. You can subscribe to all future podcasts via our website, or via a number of podcast platforms online. Remember, you can order our book online. And be sure to follow us on Twitter, LinkedIn, and Facebook to get the most up-to-date, interesting, and insightful content from the invested investor.