How do you sell your company when you're afraid it's worthless?

We only risk 5 million. We were so afraid that this deal would disappear. We have to sell the company because it's very hard for us mentally. >> Did you feel that founder burden be lift off your shoulders after the acquisition? >> We wanted to realize the value of what we've built. If you don't build a company that's big enough and fast enough, then you won't survive. >> What gave you the buzz to go back out and start something new again? were close to quitting because of the stress. You compete with Google and Facebook and they have first party data. The whole advertising ecosystem completely messed up. When you're a first- time founder, if your dream is to sell your company, you have to understand. >> Yeah. Pretty much what I talk about on this on this podcast is predominantly like the deal experience. I call it PTSD for for me and my past transactions. is just like the stress you go through and you know getting everything finalized and get transactions done. Uh those are kind of the things that really resonate with the audience and you know kind of stick with people are those personal stories. Most people tend to try to gloss over, yeah, raise, you know, then we did this and it's like, whoa, it's a big deal. Let's talk about >> Yeah. >> Uh, >> no, I mean, I really like to talk about how I personally experienced this, you know, I, you know, had some, you know, a lot of mental issues, right, around anxiety attacks and, you know, stress and these things that I I actually like to talk about these things because I think people don't talk about these things often. They do not. It's We always have to puff our chest and say everything's fine. But it's like that picture of a guy sitting at the table. Everything's on fire. Like everything's fine. >> This is fine. Yeah. >> Don't look at this. It's okay. So Crosswise was a previous company to Oracle. Um how much did you raise for Crosswise? >> Uh I raised a total of $5 million. Two in the seed round and then another three. And um and with Sentra, we'll talk about like why you did Sentra after Oracle and all that kind of stuff. Uh but uh and then just to confirm, you closed a $50 million series B like just a couple months ago, right? Like this year. >> Yes. Correct. >> And for a total of over 100, >> correct? >> Awesome. So those like the stats I don't want to like mess up when you >> Yep. >> when you realized Oracle was about to buy you, like what were you going through? Why were you selling? What was the decision making going through your head? And that's kind of how I usually start and then we'll start unwinding your background um as we go along and kind of your angel investing and other stuff from there. >> Um so I think uh the first thing that happened when we realized that Oracle wants to buy us is that we understood that um it's the right time to get a banker. And at the time the only reason that we knew that that it's an option is because uh people have reached out to us and uh offered their uh their services and we were very young at the time. I was only 28 29. Um my co-founder was 30. We had another co-founder that was I think 35 at the time. Uh 36. And and uh we you know we we had a rough time. I mean it was scary, right? We had some close um encounters with uh you know almost you know running out of capital and and we got our main data source shut down at some point. So crosswise what we basically built is technology to identify people across their devices and you have to have a lot of data for that. So we we had some close um you know near-death experiences there. So, we really wanted to sell, right? We wanted to realize the value of what we've built and we almost couldn't couldn't believe, you know, that we built something that has value, right? We kind of had this notion that um if someone, you know, we're kind of close to quitting because of the stress and if we quit, then everything disappears, right? That's what you feel when you're a founder, right? Um, and it's a constant feel. It's it's it's just something that, you know, maybe it's um some sort of mental disorder, I guess, right? It's like imposttor syndrome of some sort. It's like you don't really believe that what you've built is worth tens of billions or hundreds of millions of dollars, right? It's kind of hard to believe. And at the same time, you're expected to act like it's worth hundreds or billions of dollars, right? So, and I I think all founders have this feeling, right, when there's like this gap between what they're supposed what they're expected to behave like across, you know, in front of people, in front of customers, front of the board, in front of um the market uh versus what they feel internally. And it's a it's a gap that every founder has to manage and has to control. And sometimes it's it's real, right? Sometimes you have to fake it until you make it. Sometimes it's not real. Sometimes it's you've actually built something that has value. And and and what I and I think what I I really kind of missed in the journey is that you know if I quit today, I still built something, right? Something it's not everything about just me, right? Um, and that's the scary part when you start when you when you uh start a company. And that's why selling a company once you get an offer is so um desirable, right? It's it's a way for you to check out to exit, right? To to reduce the risk, uh to stop for a second and say, "Okay, I actually built something now. I can continue." Whereas when you sell your company, you don't actually continue, right? You you end it. It's amazing you bring this up in the context that you do when it comes to the the exit experience. You're talking about like there there's this huge burden on your shoulders. You you realize that selling was in your best interest which I want to go back to in a moment. But then when you sell, so in your case, Oracle ends up acquiring and you spent several years with Oracle after the fact. Did you feel that kind of founder burden be lift off your shoulders after the acquisition? Of course, I was a free man after the acquisition. I think it's not only about the money. I think it's about the uh the responsibility. You can drop the pen, right? Uh you cannot do it while your the company is yours. Um and I I'm a person I actually like being managed, right? I mean it's it's it's very um the the your life becomes much easier because there's expectations you can manage them when you're a founder of a startup you manage the expectations in front of the employees and the market right you have to set the tone there's there's no such thing as as knowing like there's never um a a day that you wake up and you you can tell yourself Okay, I'm I'm doing well because I am meeting the expectations of my board or my No, because tomorrow morning a new startup can come up and uh destroy your company and it will be your fault because you didn't think it through because you didn't realize that this is something that could happen. >> It's so painful. I sometimes when I do this podcast I get like PTSD of moments where I'm just like wow. like th those moments where you're in the trenches and you got to make a thousand decisions a day and ultimately it's like only really one decision leads to like the outcomes or like the big shifts but there's still just people pulling in million different directions asking for different things and it's just it adds up. So I can totally resonate with you on the the desire to be managed as opposed to be the one setting expectations when it comes to Crosswise. You know you sold the company I think it was it 2016 I believe originally. >> Yes. Um but you end up you raised about 5 million. So you had some like VC expectations. What was kind like you walked us through kind of why you sold but like walk us through the process. So you started getting inbound from bankers uh you know and then you start I imagine you ran a process like kind of walk us through that that experience. So I think um and again I mean the the the constant feeling that all of the founders had is that we have to sell the company because it's very hard for us mentally right so when when the Oracle opportunity came so basically what happened I mean I'll give some background so there was this um a new business unit that was being built inside of Oracle called Oracle data cloud then became Oracle marketing uh sorry Oracle advertising It was adjacent to Oracle marketing cloud. Um and it spec it was um very focused on adtech advertising technology. Um, and it started out with a big acquisition of a company called Data Logix for I think over a billion dollars and then uh moved on to another acquisition of a company called Blue Kai uh for a few hundred million and and then uh they had uh basically a strategy of building kind of the largest um data provider for advertising. um and not only advertising but you know it kind of like started out this way from from a financial perspective but the strategy was to build this you know world's best um ad techch company and uh for doing that you have to have cross device technology um there were a few in the market I think the we had the best technology at the time it was actually proven by Oracle I was it was actually proven by data logics which was a company that Oracle acquired and then became Oracle. So they actually ped us against other vendors and we were not only the best, we were also the cheapest, right? I mean if you think about it, we only raised 5 million at the time. I it was an you know a reasonable amount of time. Today it's like what we burn in a month but uh but you know it's it is what it is. Um, so we had um and so we had good technology and and Oracle basically expressed interest in us, right? They didn't say we want to buy you tomorrow. They didn't give us a term sheet. They just said, well, we we want to buy you. I mean, we don't know exactly when. It's something that is interesting for us, right? Um, I mean, they they didn't say it exactly that way, but you know what I mean. And then that was that was I think September of 2015. So me and my two founders basically sat in the room and that we said okay Oracle wants to buy us. What do we do? And by the way it's actually the second time that we got an offer. The first time we got an offer was the another company um that uh also wanted to buy us. I won't mention their name, but they're um uh also in the IT tech space and they wanted to buy us for like I think 25 million or something of that sort. So it we weren't really interested in that option because we thought it was it was too low. Um actually it was a bit even a bit less than that. Um so when the Oracle acquisition opportunity came so we realized Oracle has a lot of money and they have a very strong strategy around around that. So what we did is we said okay we have this you know we're going to sell the company that was the decision and to make that decision happen you can't tell or you know you need to buy us right now right because you have to have some sort of leverage right so if you want something to happen what do you do right so the bankers came in and said we're we're going to sell you right we're going to find competing opportunities we're going to find more companies that we'll want to buy you and maybe there there's going to be a bidding war, but eventually at the end of the day, you know, we will sell you and we have financial interest to do it, right? Uh so we signed the bankers and we were also very inexperienced with the process and we really needed someone to take that off our backs, right? Especially um the fact that um a banker actually represents the board and not the founders, right? actually makes it much easier for the founders and the CEO to negotiate both between the board members and the um and the founders and the and the the company that wants to acquire us. So, so that's what we did. Um it was very fruitful because I think about a month later uh they brought in a competitor. We actually uh uh took a uh took a flight there and we we met the team. They were very excited. they actually uh gave us an offer and then we we the bankers basically suggested to take that offer and and give it back to Oracle. Um it took Oracle 3 days to come up with a term sheet and that was very exciting. Um we realized that we can continue this. We had a board meeting and we could have for sure continued this, but we were so afraid that this deal would disappear that we just said yes for the to the first up uh the low ball, right? They basically gave at the end of the day it was about 50 million. So it wasn't that I mean it's still a lot of money, right? especially when you only raise five. Um, so it was okay. Uh, but you know what I do remember is how and like we were really inconident with what we built. Like we felt that what we built is is is is worth nothing. So if something is worth nothing, why let's just get anything, right? I mean, I'm just telling you in that situation when you kind of just took that first offer from >> they there was there was there was this agreement in the board like that the our feces wanted us to negotiate and we were afraid we said no we want to take it and the bankers said okay I mean the bankers eventually have to agree with what the board says and since we're you know still control the board it wasn't even a question it was and Again, the at the end of the day, you know, those VCs, they don't want to go against the founders. They never want to go against the founders unless they really unless they think that the founders need to move, right? Um, so they really didn't have an option. Um, so we just sold it, right? Like I if I look at it, you know, if I go back and and would have we done something differently? I don't know how. I don't know. I honestly don't know. I don't know because you never know these things usually I mean I constantly hear about um stories just recently I've heard a very sad story about you know a CEO being acting with a lot of ego um and that basically broke the deal they because the person didn't want to just didn't want to uh buy him because of the person right not because of the connecticology He ended up buying a different competitor with competit with technology that is you know by far by far worse because he just didn't want to you know to go to talk to the founder anymore. So >> personalities matter when it comes to deal making at the end of the day >> very much >> AI is overtaking the world deals still happen between humans. So when this was going on, what was that offer? If you don't, you don't have to share like who, but that first you got a first offer to kind of like all right, this is the, you know, the not serious offer 25 million whatever. What was that second offer that you got from the competitor? >> It was around 30 plus 32 33. >> It came in with a you know serious premium on that. Uh so I can see why you know you felt and like you had the relationship and this is something I I love to kind of point out to the audience like this is how a lot of deals get done. It's like PC's with large enterprise you know companies and uh they ran a process themselves. Oracle did was multiple different vendors chose you and so they they were eager to do a deal. It just had to be a catalyst and bankers create catalyst because they know my gosh now they're serious. They're bringing in outside. We got to, you know, try to end this quickly. Uh, and yeah, you never know. You go back, push, something changes. You know, you just never know what happens. It happened to us when we, my first transaction was was supposed to be Samsung was supposed to buy my company and we, my board got greedy, not us. Our chairman went around our back and try to renegotiate a deal that we were all very happy about because we were doing everything under the right. that he came back, pushed back, and then the time that they had to go back and reconsider about a week or two for Stemson's CEO went to prison. >> Oh wow. >> Just like >> Yeah. >> Oh my god. He can't >> Oh my god. So in your case, I think it's actually easier because the what happened with the board didn't reflect on you your personality as a founder, right? Because when the acquiring company buys that your company, they buy you, but they sell like they don't buy the investor, they buy them out, right? So that's that's actually something I mean I would I would be I would prefer that would happen to me versus the other way around. Uh but of course and you know you don't want to have the deal at risk. That's for sure a problem. Uh, I think the best the best um the way you want to have a a deal like that happen is like you and the CEO want to come to the acquirer and say, "Listen, I want this. I I I'm dying to take the take this uh deal that you gave me, right? I'm truly honored. I'm and humbled by it, but my board doesn't this won't fly with the board, right? Like this this is not something I can take to the board." Like you have to understand it's not because of me, it's because of my investors, right? You kind of want to do that regardless of what you think, right? You can you can do it because you know this is what you think or because you want more. Uh but you have to say those these words when you want to raise your offer like you you can't say I mean you can but you probably shouldn't say something like dude I'm worth more than that. I'm sorry you have to go and give me a better offer. Like because if you do that it doesn't sound good, right? Yeah, it doesn't. It comes off, you know, ego and then then it's like sometimes that's a final invest and you don't know or uh if you don't have a leverage again, it all comes down to leverage and dealing and it sounds like your bankers were just just getting started. Maybe there could have been more leverage. There could have been other opportunities to to push Oracle up. Um, you know, but at that point like you guys like how it's it's really like you're this something I I look at in founders all the time is is the stamina. Like does the founder founding team have the stamina to put up with what comes with them saying no, having to go through another year or two of grind and what happens that year or two and the mental load and stress that comes with that. And that's like some founders that have the ego totally have that. They're fine. And then others that are like, you know, concerned about potential, you know, courses, maybe like you were feeling like you didn't feel like you had everything perfect. You felt the value was zero. Uh so 50 million sounds great. So it's just dealing with the the psychology of the deal making uh is what makes dealm uh all the different structures. And I think uh the acquirers know and they smell blood, right? If they can if they see that either you're running out of cash or stamina, some some people call it grit, right? Uh is they'll they'll give you an offer, a low offer, and they they'll know you'll take it. But like if you are really confident in what you've built, right? And you you get more deals on the table then obviously you know eventually at the end of the day if if you if the deal doesn't go through then nothing bad happens, right? If it does go through then great, right? You have you have the deal and everyone's happy. So, uh, it's it's definitely something that, you know, when you go into an acquisition, you have to come strong both mentally and financially. >> Real quick, if you're a founder doing over 5 million in revenue and want to know what the best hund00 million plus founders are doing to fuel their growth, then make sure to subscribe to our $100 million exits newsletter. Get the playbooks that are proven on how to fund, grow, and sell your business. I'll even give you a curated list of investors that want to invest in your business. It's totally free. All you have to do is click that link down below. Subscribe. Do it now. I promise it's worth it. You won't regret it. You got nothing to lose. Go ahead, subscribe now. Back to the show. So, you sold the company. Was there a kind of retention agreement or, you know, golden handcuffs that you had to stay for x amount of years, or were you like all cash, goodbye if you want to, stay if you want to? >> Yeah. So, we had a two-year hold back and a four-year RSU plan. Um and I stayed the whole four years and quit basically the day after I finished my vesting sub. Yes. Uh it's usually the case, right? I mean every some it's it's usually between two and four years for kind of R&D type roles and sometimes for go to market roles they could be uh less than that. uh because you know in most cases in most acquisitions right I think 90% I would say I'm not sure if that's the real number but if I had to guess that number in 90% of the acquisitions uh the acquirer buys the people and the technology and the product right they don't buy the business usually right they don't usually the business comes from the acquiring uh the the the acquirer because if they by um your company, they usually have an existing business and they can capitalize on your existing go to market team to sell your product, right? Um in some cases, you know, whiz, for example, um uh is that's a very good example because that's a huge acquisition. They bought the whole business, right? They bought the go to market team as well. Um there's um another example I don't know in in cyber security that people might have heard about which is perimeter 81 that was acquired by checkpoint for a half a billion dollars. Um and in some cases you actually buy the business but in you know most cases especially with cyber security companies that already have a very developed go to market they just want to buy your product and sell it right sometimes even not that sometimes they just want your technology integrated into an existing product which they already sold. >> What was the what was crosswise's revenue when uh when you guys sold? It was actually pretty high compared to how much we sold. It was $4 million ARR. Um it was and the reason it was high is because those the deals that we had are enterprise deals. Um and we had the a product that is very rare in the market, right? So there were there was only one basically one competitor that could provide the same uh uh service and and the reason that that was the case is because we actually chose a problem that had a very small market. That was our thesis for why we should sell by the way because if we had a small market even though we had a lot of revenue we probably captured like 20 30% of the market by then right we had to go and find other business um so at the time our our biggest competitor uh they were named drawbridge um they realized that and because they were funded by Seoia then Seoia had high expectations from them so they basically ally forced them to become something called a DSP uh uh a provider of basically ad advertising services. Um and that business has way worse margins and it's very it's very hard. It's very hard because you compete with Google and Facebook and they have firstparty data, right? Um the the whole advertising ecosystem is completely messed up because of Facebook and Google. And by the way, all the the the um limitations and the issues around third party cookies and and advertising IDs that have been recently uh been um basically frowned upon and and because of that you know there's a lot of issues around uh GDPR privacy right all those issues kind of made tracking impossible and that actually ha created a situation where Google and Facebook have are monopolies in that field, right? >> It's like 80% of the entire you know head market or something like that's >> yeah even more I think. Yeah. And and so that's that's kind of a uh you know in that sense I think we did good to the world but it and what happened actually after the acquisition was that's something that um I was actually glad uh in hindsight that we sold the company early because what happened in 2016 is that people started talking about GDPR and in 2018 GDPR um basically came into effect and GDPR killed my business completely right? Because what we did was based on tracking. So it it was a very good decision to sell early. Um and we we only we only had the company for two years and we only sold the product for one year. So we got to $4 million of VR in one year sales. >> Well, and that's why you get choir for 50. Like you you build something, you capitalized on it and it's a hard decision to sell. I think you acknowledging having the self, you know, self-reflection of like how you're feeling about business and everything like allowed you to be able to accept an offer early. But I imagine maybe your VC is like, "Look at these numbers. Everything's up and to the right. You know, maybe, you know, you guys keep going or ask for more and you're like, there's something at the around the corner we can't see that giving us a bad feeling. Let's uh let's pull the trigger now." Which, you know, it was a similar situation when when I sold Liquid Sky to Walmart. you know, we saw kind of like what was coming 12 to 18 months out and we didn't have unlimited cash to fight it and I was like, "Yeah, this this sounds pretty good. Let's let's sell." >> So, >> yeah. And I Yeah. And I I think that in in all startups, honestly, it in that happens. If you don't become a market leader in five or six years, you're dead, right? I mean, you have to you have to go either go big or go home. That's that's something that and it makes sense because you know technology becomes commoditized becomes irrelevant over time. Uh new competitors always um rise and uh the market changes right. So if you don't build a company that's big enough uh and fast enough um then you won't survive because over time these companies they build a business and then they start adding more products and they change their strategy. Right? So in and companies change we had to go this uh through the same process in in central right. So we started with a product called uh DSPM and then we were kind of forced to build a broad platform because the market has changed and people have more requirements right if a company wants to start and uh to to and compete with with Sentra they cannot compete with us uh directly on the same RFPs that we have right because we have such a wide product today then it's very it's got to be very hard for a competitor to to compete against us in in that specific uh world, right? And it's it's true for everything, right? I mean, you won't start with competitor today because it's it would be extremely hard unless you have a very specific edge, new technology, a very strong why now thesis, right? Something that will make uh room for you in the market. That's uh what people mention a lot of times as blue ocean versus red ocean, right? Blue ocean is the market's wide uh open. Everyone's uh new to this product. Everyone wants it. That's a blue ocean. A red ocean is, you know, where the market's pull basically uh with competitors and you have to replace an existing product to um make your market, right? when in some cases it's actually easier when you have better technology because the the budget line exists in blue oceans usually the budget line doesn't exist exactly as you um want it to be to to to exist and then what you want to do is you want to actually build it for the market build it with you know the channels and and market education you want to make sure that people understand what you're building you want to work with analysts you know in cyber security Gartner is very uh dominant, right? So, you want to make sure to build maybe a new category um in cyber security. Do you want to you want to define what goes into this desk category? >> Let's talk about that. Let's talk about kind of centra. So, to kind of catch the audience up, you you sold Oracle, you spent many years at Oracle and then despite kind of the preferred to be managed and you know kind of like the Oracle like it look like did a bunch of angel investments during that time. What gave you the bug to go back out and start something new again? Um, what was kind of the the catalyst for that? >> Well, I mean, I woke up basically asking myself, what do I want to do when I grow up, right? Like after I quit. And so, and I think what happened was that I quickly got bored, right? So I started advising and I and angel investing more and and and then I kind of found myself ideulating looking for ideas you know building stuff because I'm I'm also a coder so I like to code myself. So I I was building stuff. I was thinking about ideas and then and naturally people who want to start companies with me started talking to me and so I I started working with my my co-founder Ya um and he also I I knew him from the military intelligence. we were both in the military intelligence and we were working we were not working together but we were uh very good friends right so I really liked him and I think one of the things that I realized I I started kind of adding um a lot of um thesises I would say I mean assumptions around what would make me happy um so I first of all I think the most important thing that I've learned during my career is you want to make sure that if you start a company, you do it with your friends. You want to do it with your friends because you want to enjoy the process, right? You want and it's it's fun when you do it with friends and you also want to be able to resolve conflicts, right? So, when you have friendship on the line, then you kind of are forced to resolve conflicts, right? because a lot of the um companies actually uh fail because of issues with you know the people who don't really get along with each other. Um so I knew that right so and then and then the question became okay what would make me happy as a person I it wasn't necessarily starting a company and I had multiple ideas one of the ideas that I had so I do like to create products and and and I do like to create value um and I I had this idea where I might you know start several companies at once and advise them um and that was an option, right? But but then, you know, over over time, I think what I realized is that um what the what I need to look for is something that would make me um happy when I wake up and go to work and say this is I am enjoying my work, right? As opposed to what I did with uh Crosswise where it was more mostly around I was very goal oriented. I wanted to sell my company. I wanted to be this guy who exited his company, you know, everyone talks about I was really looking for that fame and and also the money, but like it wasn't I don't think I mean I'm I'm smart enough to understand that this is not the best way to make money, right? I know that there's better there are better ways to make money on average than to create a company. So it was mostly around that and uh and so what what I realized is that you know I need to rethink started a company because I did want to and I didn't really know uh why right and and then I kind of realized okay I need to find something that I genuinely enjoy doing and so I thought about being a product manager and I thought about being a CTO and I thought about being a VP R&D and I thought about all these things And at the end of the day, what what I realized is that I'm a person who really enjoys technology. Uh I'm a person who really understands uh how to create value and how to sell and the those these three things um basically mean that I would probably I would probably enjoy being a CTO, right? And I knew that means giving up the co role which is something I could have done but it would have been basically it it's not something I would enjoy doing because it would take me out of my comfort zone. I can explain why but this is something I I did speak about with my therapist by the way like why why being a CTO for me is much better than being a CEO. So I I actually did a lot of thinking around what is my next role going to be regardless of whether or not I'm starting company. Um so after realizing that being a CTO of a company it doesn't matter what right in product really means a lot where what field you're actually working on. So enjoying product in cyber security is very different than enjoying product in Figma, right? These are two completely different things, right? Whereas being a CTO actually isn't too different than being the CTO of Figma and the CTO I don't know if CTO but definitely a VP R&D right because the technology stack I mean usually is very very similar u um in most companies nowadays right cloud backend microservices cues Kubernetes it's all kind of the same right web applications react type server >> I I want to touch on on one thing you you come to the realization of what role you should play. You know, you have a background. You kind of know where you fit, you know, play into. You you start building with your friends. I want to kind of skip ahead a little bit. You guys raised in my eyes a monster C round. Um, you know, relatively quickly, like how did you Well, one, we'll start with why did you decide to raise a monster C Brown and how did you guys pull it off? But what what did you have already lined up? Was it just the right investor relationships? Was it, you know, initial traction or contracts or pride? What what how did you do that? >> That's a great question. Um, so first of all, I mean, why is pretty easy? What my um my general suggestion to founders uh when I advise companies is and raise as much as you can, okay? on the first round because in the first round you don't need to prove anything. So you might as well get as much money as you can. Um and you're probably going to sell your company uh in a valuation that's greater than your first round. So this is basically a classic market question, right? What is the market for you as founders? Uh when you are this the the product and the VCs are the buyer, right? the person who would pay the most which means the most valuation is the person that uh you should probably go with right there's there's no in the first round there's you just need to get as much as you can later on it becomes much more complicated right because the next round basic the more you you raise money the harder it is to acquire you so if you actually want to be acquired you might not want to go and and get too much venture capital um because >> so I normally I'd normally agree with this, but like you raised 23 million in your seed wrap like shortly after inception like a year or so like that's that's not just an outlier that's like at the the far end of the seed that's you know less than point probably 1% of seed grounds. So what was it being thrown at you was a bunch of people coming to you and say we'll give you five and another guy come says we'll give you 10 other you know customers like we'll give you 23. Like how does how >> that's a great question. Yeah. So, so, uh, first of all, it was 2021, okay? So, 2021 is a is is add 30% to everything, right? So, today it would be 50 um or 20, I don't know. But the reason is because we were at the end of the day, we were four founders, right? And we had a few things that were um basically on our side. Um, first of all, I was a second time founder. uh highly appreciated in the industry. People all of the investors basically know me in Israel. Uh the second thing is that we had very two senior uh officials from from the army um high ranking commanders. One of them was the head of unit 8200. That is a 10,000 people unit, right? That's um the the cyber security unit in Israel. And then the other thing that was really uh for us is that in Israel specifically is a um a a factory for creating startups in cyber security right so because there's a lot of knowledge on how to create companies in cyber security the risk is actually very low so the rounds can be actually higher right uh so the combination of a good market uh second time founder in in the uh in the mix uh high ranking officials in the army and this deep expertise in cyber security in Israel made this possible. So we actually got the first offer we got was 20 and then we we got it up to 23 because there was more demand than supply. But what once you have uh uh demand for for you as a product meaning you know us forefounders going to raise money once you have demand for that then you can quickly realize your your actual value. And that is true for acquisitions by the way as well right once there's more than one person who wants to invest in you they will give you will get as much as you can. Um, yeah. So, and it does make sense financially. I mean, the our first investors will make money regardless of what what will happen, right? >> I love the confidence. It's very sounds like a very different uh mindset in this business than it was with with Crosswise. Um, >> yeah. >> Yeah. >> That goes back to my first comment, remember? >> Um, yeah. I I think that's you know again like stacking the deck you know with the team and then leveraging those relationships kind of get the max value upright. Um so what kind of like because then it's like all right you have a bar you have an expectation you raise that kind of money that quickly you know it's expected that you will continue to assemble the team traction and whatnot like what was the mark for the series A and series B like what kind of momentum were you developing to where investors were like all right let's double down >> so for the the first round was actually um some people call it the FOMO round right u it was a preeemption um we haven't proven anything other than being able to hire people and that is not something that you need to spending money is not something you need to prove right uh so that's definitely not something so we haven't proven anything by our air our errands was very quick I think it was 7 months after the first round um and it was it was just because you know we had a lot of interest and and the hype was strong even then you know with us raising this big round so it's kind of like um you know a self-fulfilling prophecy or a chicken and the egg, right? It's like you know once you see a company that raised a lot of money, you probably want to invest in it more, right? Makes sense, doesn't it? I don't know. Um >> DC logic sometimes confuses the rest of the world, but uh you know, when they're in their bubble, it makes sense. >> Exactly. Um and then um so so the the the our last round was actually uh we had to uh have success and we had success. So we we raised it based on ARR right uh and we raised it based on product market fit. are the two things that the market that the investor that did due diligence on us saw and this is they they said that right they proved they checked with customers that acquired Sentra that basically they came to the conclusion that we have the best technology in the market. Um again that's what they told us. Maybe they're saying it because they want me to like them right but that's what they said. Uh and also if when you look at our um you know what we we uh we tried to achieve in terms of revenue. So we actually overachieved um our revenue numbers and um we were we are we were very at a very good spot. Um and I think when when you see these uh numbers what you see is the numbers are still quite low compared to you know an actual company. We're still at the startup mode. Um, and that's startup mode. What you want to do in in a B round or I guess that was that was a B round, right? Uh, what you want to look for in a B round is you want to look for product market fit and you want to look for a healthy company, right? So healthy company is, you know, a company that doesn't burn too much cash but can generate revenue and and uh achieve goals uh revenue goals that are that make sense and would eventually become a profitable company, right? Uh but you also want to make sure that you buy that you invest in a company that really found uh pain and could really prove that really proved that they are solving that pain for the market that there is a product to be sold. Right? That's product market fit. And we had these two things. So we sold product market fit. We sold actual revenue and and potential. And that's why our the companies gave our investors gave us $50 million because they want us to get to the next level. And is it competitively? Like were there bigger competitors spending more or raising more that you did this to out compete them or you wanted to kind of make sure no one showed up and you raised as much as possible to deter players coming into the market? >> Um so we are in a tricky market because it's a combination of an old market. uh for example Veronista they're in the high $600 700 million of AR publicly traded company but then there's also Sierra uh which are the new incumbent uh which are directly competitor competitors of Sentra uh and by the time I mean when we raised the money that our last round I think they raised up to $600 million and I think now it's I think around a billion Um so they are being you know if you look at the cyber security uh ecosystem around our market they have been kind of um the the the amount of investment that have been done to them was probably around the thesis of okay if we will fund a good company with a lot of uh cash they will outperform the competitors because they will hire 150 200 uh reps and at the same time build technology that would outperform everyone right with a lot of capital so the thesis is already very strong in our market um and I think it's a it's it's mostly a risk uh it is risky for us but what is for sure happening and we can see it is that no one is is able to compete in our market today right it's basically uh set. The market is set. Um and we would need to basically prove that we can still outperform in some deals if not all deals, right? Because at the end of the day, you can have more than one one company sell a product, right? It's it's not that every market only has one one uh uh strong competitor. Usually, it's around five or six. So, >> yeah. So, you know, I love hearing the story and just kind of how because like there's just so many different ways to look at venture and you know, summits everyone's so focused on traction uh and looking back to look at forward projection and I think what you guys have did was kind of figured out that product market, you know, figured out the narrative of the niche and, you know, really hunkered down on that particular problem and got, you know, created the FOMO, too. I think capitalizing the the day of, you know, the early early 2021, being able to capture those, you know, investors to come in and write a big check, that creates a snowball effect that allows more and more to kind of fall in line, get the better talent, get the better deals, get the better name recognition, which kind of forces you, and that's like kind of the Sequoia model in a lot of ways. It's like once AOA backs, you're the huge check, uh, it creates a snowball effect that everyone starts paying attention to you, which then affects, you know, your ability to acquire market share. um you know with would you kind of like looking back at your your experience from Crosswise to to Centra and you made many we we didn't talk about this but you you made many investments into uh early stage startups to which you know I'm just getting through your LinkedIn it's like this company raised 50 million that one raised 50 million that one raised 100 million that one raised 300 like now I'm sure that's not all your entire portfolio all awesome hitters but you know just kind of for fun to touch on that. Like walk us through kind of your thought process of being an exited founder yourself and you know making bets on other founding teams like what are you looking for in founding teams that you've now clearly shown that are you know you picked some good ones that have has some legs and are running. >> Thank you. Yeah. And those are only the ones that I can talk about right. There's uh still the ones that aren't stealth. Um, and I I think for me it's actually easy. Um, because it's not that I have this amazing talent of, okay, I do have a good talent of being able to find people that uh that I think will be successful because usually what I do is um I notice that I have a way to find people who are smarter than me and who are more talented than me. Okay, that's something that um it's it's actually hard to to to do. Um but I think when you're very modest and and uh you're very and you and you you basically, you know, uh interview hundreds of people because that's you know what I basically did. Um then you kind of realize how to really pick up when someone's very very smart and and very very good at being a founder, right? Um, so it's definitely something that um, you know, I've done and I I know how to do and I also have friends who help me do that because we kind of co-invest sometimes. So I think experience is definitely something that helps. Um, it's literally a model that you train in your brain, right? It's just like a machine learning model. Um, doesn't really have a way I don't really have a way to uh, explain it how it works, right? But honestly and what I wanted to say earlier is that I do have an unfair advantage. So let's talk about Eon. Okay, Eon is a good example because to me, Eon is I would say, you know, the next uh width in terms of how the Israeli ecosystem looks at it because Eon was founded by a friend of mine called a fear and a fear um is probably is today known to be the best um founder in Israel. Right? If you would have to pick a founder, it would be him next to Assaf, right? Would from Whiz, the CEO of Whiz. I mean, the ne the second best would be Ofir. I think that's the that's that that was my point. And and when you look at people like Ofair, I mean, he has a very good name in the in the ecosystem. He himself met over 500 um companies um you know, he he made more than investments. He made probably around 35. Um, and he's definitely a veteran in the industry and everyone ev literally everyone's wishes to invest in it, right? Because I'm his friend, right? He lets me invest in this company. So obviously if I know that everyone wants to invest in a fear, it doesn't really matter whether or not he'll be successful. Although I do believe that he will be extremely successful, the problem becomes whether or not you can invest in his company and not who to invest in. >> Yeah, he can get in the deal, right? >> Yeah. It was the I remember I mean Yan is a very good friend of mine uh from the army and Yan was the C co-founder and VP product. he still is a co-founder in BP product whiz and I I basically begged him to let me buy his uh his options when they were worth $1 billion right because I honestly believed that they were the best mark company in the market and I knew that I had to you know be in in that deal but of course he didn't let me because it's hard to to uh uh sell stock when when you're found right but but the my point is that it's I have an unfair advantage uh when some of my friends my best friends are the best founders in the ecosystem because you know I'm I'm 40 I'm I have a lot of experience I've kind of collected a lot of friends from the industry along my my uh years and and and was one of them and and definitely being able to invest in this company is what makes me money right and it it is kind of like a a self-fulfilling prophecy in that sense I mean everyone wants to invest in himself So my stock is worth more because of that, right? It's not because he actually managed to do something yet, right? I think it's uh you know on once you have that win imagine you know if you didn't sell crosswise when you sold it and maybe something didn't work out and like how your networks and access would have changed or evolved and like the compounding value that you'd then be able to create to have this optionality this track record to kind of say you know go out and do a geocentra uh and kind of getting that early win in your career opened up all these doors. uh and you kind of said it on the call like you had the intention to build something to sell to kind of get that access at notoriety and uh you know you made it happen not yeah you know it's one aspire to it but to to actually deliver on it uh is pretty amazing. So Rob, before we we wrap up here, if you just had one kind of takeaway or maybe something we didn't cover today that you want to share to founders out there that are looking at their next transaction, what would be your words to listen to them? >> Well, by transaction you mean M&A or by transaction you mean uh even raising money? >> Those are transactions. This is how you whatever you uh want to prioritize. >> Oh wow. Um, so I Okay, I I mean I think what I can really help with two things. First of all, when you raise money uh as a a first- timer um you know going I have I have a good good saying friend of mine also also an investor in Israel. He said something that I will never forget. He said that when you go and raise a money, like when you go go and raise a seed round and you say congrats to someone, it's like telling u a chef that just managed to buy his groceries on the store, congrats because it doesn't mean anything. It literally means nothing. >> Ah, you're just getting started. >> Yeah. And you're just getting started. And it's very true. And I think when when you're a first-time founder, don't get excited. Don't think that you have you've been successful if someone wants to invest in you. Think if this is the right thing for you as a person. Don't drive your decision based on how much money you can raise or or from, you know, who you can raise or what you you need to think if this is right for you. You need to think of the you know the because you need to understand what you're doing. You're basically getting married with your co-founders and your your uh uh investors. You want to make sure that you're working on something that you want to work on. You want to make sure that you are working with the people that you uh that you uh work with. You want to make sure that the people who invest in you can actually help you achieve that goal. And don't worry if you say no to an investor who wants to invest in you because because if he wants to invest, he will still want to invest in you in the future and other people might want to also invest. So, I wouldn't uh run and and uh get the first check that I can um get just because I'm afraid that I'll lose the opportunity. Um and and for you know selling a company, I think my my advice is you know when companies get bought and not sold. Okay. When if your dream is to sell your company, you have to understand the market and you have to have some statistical assumption that someone will buy you because he needs you. And you have to really build and base this assumption based on understanding your market, right? And don't don't try to just assume that people will buy you. Never build a company uh in a way that assumes that people will buy you because that will actually create the opposite. that will create a situation where people would realize that, you know, they can buy you for cheap. Um, you know, good example would be not raising another round because you want to keep your valuation low and then getting to a situation where you don't have enough money and then you get bought for nothing, right? So always think about you that fact and and you should build a company that this number one goal is to generate revenue and not to generate a company that is on the shelf for someone to buy. >> I think it's wise and sage advice. Ron, I really appreciate you coming on the show with us today and sharing the story, sharing the kind of intimate moments of the stress that you went through the first company and how you let a very different outcome for Centure thus far. So, looking forward to to sharing this with our audience. >> Thank you very much. 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