Interview with Omar Tawakol
Here at Rising Tide we are launching a new “Interviews” series, which may eventually make their way to a Podcast format. The basic idea is this; we want to produce interesting research and thought commentary for the community, and we also want to empower and highlight amazing founders. Be it portfolio companies or not, there is so much incredible knowledge to be gained and hard-earned wisdom to share that it would be a shame not to do it. If only out of a selfish interest in learning more ourselves, we hope this series also proves useful over time to the community.
Omar Tawakol is a serial entrepreneur – he was formerly a co-founder of BlueKai (which had a tremendous exit to Oracle for between $420mm) and since founded Voicea (and of course, this interview and all others have been recorded using this amazing technology) which was recently acquired by CISCO. Voicea is a portfolio company of Rising Tide, and we couldn’t be prouder to feature our first interview.
Without further ado . . .
Arie: How did Voicea come about?
Omar: At the time that we sold BlueKai to Oracle, I had the fortune to be meeting with all these amazing executives and leaders. One of my favorite stories is that I was meeting with Satya Nadella of Microsoft from five to six PM, and he must have met with countless others that day. I got home at seven PM and I already had an email from him with follows ups. And I was like – “how the hell did he beat me to the follow-up email given how busy he is? How did he do it?”. And I started to notice that I would meet with people like this (people like Satya Nadella), sometimes it’d be one- or two-hour meetings, and they were completely focused on me and the conversation. And then you would meet with somebody at their company maybe three or four levels down, and that person was too busy for you. They’d be sitting in the meeting, sure, and they would start out taking notes, but then they’d get emails, they’d get distracted and they’d stop paying attention. And so we wanted to take the capabilities that these execs had, and democratize it and help people focus on human conversations and taking action quickly. But be engaged in those conversations with you, and not worried about notes or action items. And so my team and I got together and we were off to the races.
Arie: You often hear the advice to look for a serious problem, and then try to solve it or come up with or create an idea that makes sense in this context. Do you think that’s valid advice for future entrepreneurs?
Omar: My first company, BlueKai, was a B to B company. I had been in the ad industry for many years, and I really understood what was broken. At that point advertising was done with contextual ads (Arie note: contextual advertising is advertising on a website that is specifically relevant to that page’s content). And then I noticed that the vast majority of people’s time spent was on pages which had very poor context. So our first premise then was; why not do advertising online based on actual data from that person, versus the content of a specific page? And second premise was that instead of becoming an ad company, why not become the data company that supplies all the ad companies. And what was amazing about this was that we basically summarized this vision in seven slides and our thesis didn’t change from that original thesis through its entire six-year journey from start to profitability to acquisition. We may have been wrong about details or hit unforeseen bumps, but in the main we just implemented those seven slides. My point here is this: I was an insider, and I knew the industry extremely well. We knew who all the buyers were by name, it’s not like we had to go out and buy lists. We would just go and meet them, and that’s a great way to start a company. In summary – for a true B2B business, it’s useful to deeply understand a problem, and have an insider view of the world, and be able to launch like this.
[Arie: By the way, Omar’s definition of an insider is this: if you go and ask people in the business who are the key people in the industry, they will say your name.]
By contrast, B2C is an entirely different category because an entrepreneur can introspect as a consumer. It’s a very different problem than B2B, where the buying is complex, and relationships really matter. So, when I started this company, it was mixed approach, because I was building a solution to make individuals productive but they also happened to be workers at a company. I call this consumerized B2B. It mixes some of the rules for B2B and consumer businesses. I was an outsider coming into a new industry, and yet it was a new industry for everybody.
Arie: I’m behind the times, I know … but I just read this book called The Lean Startup, and in it they talk a lot about this concept of releasing an MVP, testing it and integrating the changes, and it feels like with B2C companies that’s especially important. Did you guys go through this a lot in the early days?
Omar: Oh my God. Nonstop. IT was amazing. There were parts that we thought were right, and others we thought were wrong. So we started out with this thesis that people in the long run are not going to read transcripts. You’re just going to want the key summaries and the key parts. So, when we started out we built search and then we built voice commands so that you can be in a meeting and someone says something important and you would say “OK, Eva, highlight that. Thanks Eva”. So that was our initial thesis, and we went out with that to fourteen initial users.
And we went – Okay guys, here you go. And they said. No, I don’t want to use voice commands. I want you to just figure out what’s important. And that’s a super hard problem. How do you know what’s important? And, of course, they said they weren’t going to trust us until they see the whole transcript. So, we got that part of the thesis wrong. We iterated constantly on this thing. I call it lean back, lean forward.
Let me tell you a story, to better highlight the problems here. Do you have an Alexa at home?
Omar: Okay, here’s what Alexa won’t do. You walk in with your wife and it sounds like you’re having a nice conversation, and so Alexa automatically plays relaxing and beautiful music. Or you’re having an argument, so she starts blasting Star Wars music? It doesn’t do that. If you want Alexa to play a song, you ask. If you look at Google, they took this really interesting approach in the beginning. They said – ask a question, and we’ll answer it by giving you ten links and we think you’ll like one of the links. And then they exceeded that expectation. The big problem people get into is they say – hey folks, I’m gonna do this big, sexy, predictive thing, and I would give you exactly what you want.
So … notice the framing of the problem. If someone comes and says “I’m just going to speak for an hour and I want you to magically figure out what’s important to me.” That framing is problematic. We don’t want to get suckered into giving people exactly what they ask for when their ask is unrealistic, that would be akin to Henry Ford building a “mechanical horse” instead of a car.
In addition to that, we didn’t want to build an experience where our users would experience the “glasshole” effect …
[Arie: embarrassing side-note – at about this point, I had to ask again what the “glasshole effect’ is, which is basically that those who utilized Google Glass were termed “Glassholes” and had this bad societal impression. Omar was trying to avoid having those who used the Voicea features in meetings look like a “Glasshole”. Make sense? It did to me, and made me laugh.]
Omar: What we did was to constantly balance a lean back and a lean forward experience. You had to have the right types of things where people were willing to ask Eva for something, where it is socially acceptable to do so (call this lean forward). For instance, somebody asks for you to send them the contract and you say “Ok, Eva – please remind me to send the contract to John at 5PM today, thanks Eva”. That’s acceptable, because there’s a moment where somebody needs something, and it fits in as a natural interruption and you’re adding value by responding to the ask. We also created “lean back” experiences, which is to say you set up certain keywords, like “agenda”, or “action item”, or “financial planning”, and without making any noise in the background EVA would put those moments in the highlight reel of the conversation.
We’ve been in this process of trying to find the magic point between the “lean back” and “lean forward” moment that suits the right number of people. And yeah, there has been constant iteration and learning as we go. And we’re not done.
Arie: I’ve heard feedback from entrepreneurs in the past that they find fundraising exhausting, and sometimes feel they have to make their pitches more exciting to appeal to investors, and/or expand the market opportunity to do so. What are your thoughts?
Omar: I think that somebody who is struggling with that notion isn’t thinking about it right in the first place. If it really isn’t a “big enough problem”, then don’t go get money. You really shouldn’t. If you haven’t found it yet, be disciplined and don’t go for it. Every idea you have, you’re going to have to change along the way. Something about your idea isn’t going to be right, but so long as you’re in a big enough market, you can find a way.
Arie: Perhaps a dumb question, but when you say “big enough problem”, how do you define that? Is it strictly numerical – like a dollar figure size of market? Or do you think about it differently?
Omar: Good point. When we started BlueKai, everybody would ask us what was the market size for this? And we’d say – it’s a huge, huge, market. Do you really want me to be super precise about the market sizing? And we were asked to produce these detailed spreadsheets and I’d hand them to people and they’d poke little holes in the data and eventually they’d agree. And at that moment I’d become disillusioned with them, because I’d be thinking “You’ve got to be kidding me. This thing could be off by ten times in each direction!”. Why are we wasting time here? This is not where the question should be.
We ended up being right in the sense that obviously big data drives marketing and there were lots of outcomes where billions of dollars are spent by companies in this area and it’s still not even done. But I’m not very confident in that level of over-precise analysis. Like if somebody told you in the early days – Alexa is going to be a big, big market. We still don’t even know how big, we just know for sure that voice is going to transform the way we compute and communicate. Perhaps even someday as large one day and how mobile has transformed the way people communicate and interact. How we get there is the real issue, it’s not just the size of the market, so on.
Arie: on that note, Mark Andreesen has this great point about market timing, and being able to gauge the “timing” of your product or discovery as being crucial. I love his stories about pen computing in the 90s, and how many investors lost their shirts because it wasn’t ready yet. What are your thoughts on that as an entrepreneur?
Omar: In the case of BlueKai, I go back to this concept of being an insider. I knew that people and the market were ready because people were asking “how do we get data for something like this?” And they’d go to an ad startup that sold ads. And so they would ask “do you have the data?”, and the ad-startup would say “no, not really – you have to buy my ads. I have the data and I’ll run your ads”., and we thought – this is a clear opportunity to separate these two layers. I think it’s easier to do this in a B to B context.
What I’m still trying to crack is this concept of consumerized B-to-B, where you know the opportunity is there, but you don’t exactly know how the customer behavior will adapt. So I don’t for sure have the answer there. What I can say is that I think it’s easier if you look at something like Slack. Slack came into the market, and there was hip chat. There were like . . . five solutions at this point. It was a very well understood consumer behavior and they just needed to do it better and make it more viral.
Or look at Zoom. Zoom copied WebEx to the nth degree. Actually look at it. They added chat that literally looks like slack. They even have some of the same exact icons to the point that I thought it was based on a partnership! But consumerized B to B is a bit harder when you’re innovating something totally new – like we were doing – which is an assistant that shows up in a meeting which didn’t exist before. It’s harder to predict. We knew that there was adoption of technology in meetings, we knew it was advancing, and we knew that transcription was a large industry, and that it had two big problems. If you did human based transcription it was sixty bucks an hour and several hours before you got it. And you’re just not going to do that for every meeting. In other words – it’s prohibitive in time and money. And then if you did machine transcription it wasn’t accurate enough. So, we had to work on the accuracy. We knew that problem needed attention.
Arie: Shifting gears to team building. I hate this concept of natural hierarchies, but do you think it’s true that you should aim to hire only A-players, or is it OK to bring in B players whom you could potentially train and elevate to become A-players?
Omar: I’ve never heard it described that way before! In short, we believe that you should only hire the A-Players or the best players, and don’t try to train B-Players to become A-Players. It’s OK to train skills, but not culture or character, etc. We have a “get s*** done” mentality here, and we really care about that. It’s important part of who we are. You want competence, of course, a high degree of competence.
And I really believe in getting the best people and taking your time to get them. Even if that means getting junior people who are smart and versatile. So yes, absolutely. Only hire A-players, even if they are green. And you can train them in skills, but don’t take someone who doesn’t fit your culture and hope you can train it.
Arie: What general advice can you offer other entrepreneurs you wish you had known when you started?
Omar: I run into a lot of entrepreneurs who talk to me and say “Hey, I want to run this idea by you. I’ve been thinking about starting this company . . . should I start it?”
When my wife was about to have our baby, there wasn’t a force in the universe that was going to stop her from going to the hospital when the time came. And I think, when you’re ready to start a company, you should feel that same way. It’s all about your level of conviction. On this journey there are so many challenges. It could take many, many years and you’re gonna have to convince so many people of so many things, and there are so many incredibly low points, you have to have the conviction.
Arie: Speaking of low points, can you talk about one or two major challenges you’ve faced in your entrepreneurial career?
Omar: Sure. So, when I was at BlueKai, we were running a marketplace and one of our early data providers was eBay. It was a thing of beauty – we were this small company, and suddenly everybody wanted to buy that incredible data. And then, one day, I was going to an off-site and I get this call and eBay was like – we want to pull out of your marketplace. It was a punch to my gut. And I was on my way to an offsite, and I couldn’t just show up all depressed. So, I kind of flipped it, and said – from that day forward, we will never be more concentrated by customer revenue or supplier by more than ten percent. That’s it. I want a plan to get there.
Arie: Yeah – it came out well. It’s like even though things are bad, there are ways to make a positive out of it. Obviously, there are truly bad things that happen that are hard to find a silver lining in, like children dying, etc.
Omar: I’m glad you said that. I had some time off between companies, and I realized this attitude that we have here where we can control and fix every challenge has been squeezing the empathy out of us as humans. It is making us better entrepreneurs, perhaps, but not better humans. If your child has been hit by a car, there are things in this world that are really and truly out of your control and bad no matter how awesome you are, with a degree from Harvard or Stanford, and you’re a huge bada**, and you run at five in the morning and come into the office with enormous energy. There are things that are sometimes out of your hands. And if your world view is all about what you can control, you will have so little empathy for people who struggle for things that are out of their control.
So much of our training centers on – hey, stop whining, get up and solve your problems. And it’s deeply embedded in us. And it is a very empowering philosophy. And it can be hard to see past that worldview. And yeah, maybe it’s a good philosophy for an entrepreneur, but when you’re out with people who don’t have the same privilege as you do, it might blind you to their needs.
Arie: Anything else important to add, you think?
Omar: Thanks Arie for taking the time