A Serial Entrepreneur’s Journey: Moshe Vaknin, CEO of YouAppi (Part 2)

Sramana Mitra: You stayed for seven years at Bell Labs until 1997. What happens after that?

Moshe Vaknin: After Bell Labs, I decided to move back to Israel. During that time, I got married and had two kids. I applied for a job in Israel. I was employed by a company called VOCAL Tech, which is a company that invented the VoIP.

Sramana Mitra: I remember the company.

Moshe Vaknin: Yes. I joined them and spent two years helping them manage their products. It was a shift for me from spending many years as a research engineer and moving to VOCAL Tech on the product side. I worked there for two years. Those days were the beginning of the bubble days. I decided, with a friend, to fund a company.

Sramana Mitra: In Israel?

Moshe Vaknin: Yes, in Israel. The idea was to build a small software to plug-in to a browser to get ideas from users, and feed it back. That time, big companies were interested in this. We had a pretty good technology product. We got an offer from Germany to buy it and they bought it.

Sramana Mitra: Tell me a little bit more about that company. How did you get it off the ground? Did you bootstrap it? That was your entrepreneurial journey, so let’s talk a little bit about it.

Moshe Vaknin: That was at the end of 1998. We came up with the idea. I put $10,000. We started with a few people. After a couple of months, we already had 10 people. We got money from venture funds. They really liked the idea.

Sramana Mitra: What, specifically, was the idea that you went to the VCs with?

Moshe Vaknin: The idea was behavioral targeting – sniffing the browsers and getting data. I can know what you did while going from one site to another site. Let’s assume you have been on the New York Times and you move to Yahoo!. I know you have been on New York Times and I deliver you an ad. That is the concept.

Sramana Mitra: It is retargeting effectively?

Moshe Vaknin: It’s not really retargeting. It was more than that. Retargeting just looks at URL. They don’t do much. We knew a lot because we had partnerships with the ISP so we could get more data about the user, which retargeting doesn’t do. It was quite unique at that time. ISP’s were very excited because that was a new source of revenue for them.

Sramana Mitra: You worked with ISPs as partners on a revenue share basis?

Moshe Vaknin: Exactly. The ISPs really liked it because we generated new revenue for them.

Sramana Mitra: How about customers? Who were the early adopters of this technology at that time?

Moshe Vaknin: That time, it was ISP – the big one in the USA.

Sramana Mitra: So the ISP was both the customer and the partner.

Moshe Vaknin: The ISPs deploy our software to their systems. They will deliver ads to the users. They were making money from the advertisers. Our clients were the ISPs. The ISP’s clients were the advertisers.

Sramana Mitra: How far did you go with this?

Moshe Vaknin: Very far from an exit perspective. It was luck. It was bubble days and we were lucky. We had the product, but we didn’t build the business yet. We had a couple of clients. A company from Germany wanted to buy the technology so we sold it.

Sramana Mitra: How much did you sell for?

Moshe Vaknin: It was about $44 million.

Sramana Mitra: How much venture capital did you put in the company?

Moshe Vaknin: $10 million.

Sramana Mitra: You made some money on that deal?

Moshe Vaknin: Yes, beginner’s luck.

Sramana Mitra: It’s a decent amount of money.

Moshe Vaknin: It was nothing that special by the way. The idea was great but I don’t think we executed that much. Sometimes entrepreneurs ask me about it. I tell them that there’s nothing to learn from that.

Sramana Mitra: That is true. Luck is not a repeatable event. What I also find strange in talking to a lot of people is people disregard how important luck is in their journeys. If you have an early exit and you get some amount of cash with which you can do follow-on projects, having access to cash early on really changed the trajectory of your career.

Moshe Vaknin: I totally agree, which is exactly what I did in my next startup. Cash gives you a better positioning to continue building ore companies.

Sramana Mitra: Especially if you’re a serial entrepreneur, you keep trying, but you have the ammunition with which to keep going.

This segment is part 2 in the series : A Serial Entrepreneur’s Journey: Moshe Vaknin, CEO of YouAppi
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