Transcript: Aviad Harel | Team8 | How to Build a Thesis About the Future Worth Millions

Intro

Eyal David: [00:04] Hi, this is Eyal, you’re on Product Builder. We’re about to start the episode, but first, please click Follow on Spotify or Subscribe on YouTube and help us reach more ears. Let’s get started. Aviad, how’s it going? All good, how are you? Excellent, as if we hadn’t already talked here for a few minutes. So maybe you can tell us a few words about who you are and what you are. Sure. Or I can tell it.

Who is Aviad Harel: Sisense, Team8 and going from founder to investor

Aviad Harel: [00:30] I can, gladly. My name is Aviad Harel. I’m a Managing Partner at Team8, as part of the Enterprise group, a role I’ve been in for the last four years, give or take. The most significant thing I did career-wise, at least before joining Team8, was to found a data and analytics company called Sisense, which I ran for more than a decade, almost a decade and a half, actually. When we started it, my partners and I built the company’s technology core; we came out of our own market, and the company started to grow. I kept going and built many of the groups in the company. In 2012 I moved to the United States, to open the U.S. entity and build our go-to-market organization and all our activity there. I was there for about seven years, until 2019. And then I decided I wanted to do more things in my life. We founded Sisense in our third year of studies, my partners and I, so basically that’s everything I did in my professional life, and I wanted to do more things. When I left, Sisense was a large, established company in Israel with over \$150 million in ARR and around 600–700 employees.

The big lesson from Sisense: "not dying long enough"

Eyal David: [01:51] What was the significant thing you learned, or the most central thing you learned, from the Sisense experience?

Aviad Harel: [01:58] Wow, a lot. Here’s an interesting story. I remember the beginning of Sisense, like many startups, was hard. We were looking for where to strike oil and what we could build. And I remember that after we opened the office in the United States, we held one of the first board meetings in the U.S. The board came to us, one of the board members came to the office, and I was super excited and a little arrogant. I told him, “Look at this beautiful office, how successful we are. How is this happening?” And he said to me in a very, I think, smart, brutal way, I don’t know what to call it, he said, “Look, Aviad, the only thing you did well was not die long enough.” If you manage not to die long enough in a startup’s life, eventually you’ll see success too. Which was very grounding at that moment. The importance of resilience, for founders, I think it’s super important.

Eyal David: [03:06] What helped you maintain that?

Aviad Harel: [03:10] I think it’s a lot of character, but also a lot of my partners, each of whom I think is exceptional in their own way, and we were a strong, supportive, and connected team. I think that’s it.

Eyal David: [03:25] Interesting. Well, we’ve talked about all kinds of periods that are coming, maybe it’s worth really cultivating the, I’m still looking for the Hebrew word for resiliency. Stamina? Stamina, yes. We’ve all basically had stamina over the last few years. Absolutely, especially in Israel. At the national level, yes. So maybe tell us a little about Team8 before we move on a bit? Sure.

What Team8 does and why it defines itself as a builder

Aviad Harel: [03:51] Team8 is a venture group, a VC, founded about 12 years ago, maybe a little more. It focused on cyber, and with its success expanded into a few more areas, into software infrastructure, digital health, fintech. Today it manages \$1.8 billion in assets under management. Team8’s main motion is a motion we call Foundry. At its core, it is a motion that focuses on very early-stage venture. Pre-seed, ideation, validation of theses, working with founders at the very, very earliest stages. And accompanying them and supporting them in the building stages of the idea and the company. With Team8’s growth, of course today there is also Team8 Capital, which also does later-stage investing. But in essence, at Team8’s core, the work of the different founders, in the different verticals, is still there, and we see ourselves very much as builders, יחד with the entrepreneurs.

Eyal David: [05:14] So let’s maybe expand on that a bit. When we talked about it, actually you and I, it was a pre-conversation. So it was very clear that, first of all, you of course hold theses about the future, but you basically told me how the process works אצלכם, of maintaining and building theses.

Maintaining 4–5 theses in parallel

Aviad Harel: [05:34] Do you want to expand on it a bit? Of course, gladly. I’ll take the example of my small world within Team8, Enterprise. My partner Amir and I maintain, in an average year, 4-5 open theses. Every time we spin up a company or we invest in a company, it comes down from those theses, or we do a sunset on one of the theses, that goes down too, so each time we work on developing more theses, it gives us several things. First of all, intimate familiarity with real problems and with specific solutions. And that is extremely important in what we do, and we invest in it; it’s not just hand waving, millions of dollars a year in building theses and maintaining the theses.

Eyal David: [06:26] Really, let’s say we have a thesis, give an example, and there is also a team behind it working on it.

Aviad Harel: [06:30] Really, those are the millions of dollars. Team8 is a large group in terms of people working at Team8. Many of them are part of the thesis-building platform as part of the different founders. And we have all kinds of people we work with: product people and strategy people and biz dev and product marketing. And business operations that help us, or part of the group that does the ideation and validation for theses. It’s important for me to say that not all the theses, not all the companies we invest in, ultimately came from our theses. Many times, in fact in a significant number of cases, founders come to us with theses. Whether the thesis grows אצלנו or the thesis grows אצל הפאונדרים, we go through a very, very deep validation path, and I think it’s important for both us and the founders to know that we’re barking up the right tree, the right tree is a tree that is interesting and big enough, of course, so it doesn’t matter, I literally said to my team today, what phrase I really like, my theses, yes, normal gif this is fuck I like them, I need the world to like them or their specific market to like them, so we do this with entrepreneurs, without entrepreneurs, the validation itself we always do, a significant part of it, the lion’s share of it, together with the entrepreneurs, and to do that we need the professionals in each part, for example. Product marketing sounds a bit surprising, that you take product marketing people into such a play, but one of the things we learned is that we build theses and then we try to get friction with the field, we go talk to the potential buyers or potential advisors for these theses, and we discovered that when we work together with product marketing, we become much more efficient at it, the message even of the thesis that we could throw away is much sharper and much clearer and much more fluent when we bring research questions, or questions that we want to test with these people when we work with product marketing. Biz dev for the same reason, again before we even help our companies with the ideation and validation process, biz dev helps us meet the field.

Why product marketing and biz dev join at the thesis stage

Eyal David: [09:01] So let’s say, just trying to understand, okay. You go and basically already do a pressure test, actually I think that’s what it’s called, for some thesis of some company in some industry, and of course maybe you go check the marketing and partnerships aspects, let’s call it that for a second.

Aviad Harel: [09:22] Our technology, technologists inside, to see. The applicability of the technology, if it’s possible, also understand the market competitors in such nuances, everything needed to build.

Eyal David: [09:34] For anyone who doesn’t understand what a thesis about the future is, let’s say we’ll go now into the field of infra or security, for example. There are a lot of wars in the world, for example, there’s all this issue of explosive drones now, right, that’s an event. You have some kind of thesis about this thing, where is it going to go, right, where the world is going to go in this context, and now we put this thesis into the pressure room, right, right, and then you can check whether it’s price, where, and for how much.

The structure of a thesis: problem, solution and go-to-market

Aviad Harel: [10:03] We also support it, and maybe rightly so; all of us are trying to do everything we do in the most systematic way possible. Build—I called it a manufacturing plant for this; that maybe takes a little away from it, but the more structure you can put in, the more repeatable the process becomes in the work process on the tea. We have a few stages. There was the first part, where we talk about the vertical, yes, about the problem space: is this a problem space that’s interesting, what are its definitions, is it big enough. Here too we talk with relevant people from the field. The second part is the solution space: whether the solution—we think about these solutions and try to understand which of the solutions can be used to build a real business around this problem. And the third part is all the go-to-market worlds, because like any good idea, it’s not a complete idea unless you know how to build a business from it and take it. To market. So that’s really the high-level kind of structure we use now. It’s a loosely structured thing; we know we need to go through these processes. Every thesis has its own nuances and its own challenges, or strengths, and the founders we work with.

Eyal David: [11:16] Go through a slightly different process, but in general we know we need to deal with these categories. The world has changed, so we can even talk about this. So let’s open a parenthesis for a second for something else that interested me. When you approached Sisense back then, in your youth, what was your thesis about the world?

What has changed since founding Sisense

Aviad Harel: [11:33] Great question, because today when I meet founders. At a more professional scale in how companies are built than what we did, I think the methodology. Of what it means to be a founder, what it means to build a company, the thesis around that, and the knowledge has developed a lot in recent years, especially in Israel. I want to say that at Sisense we were very naive and green, without a deep understanding. One of my partners said. Listen, it doesn’t sound like a big problem to us. I’m not sure how I arrived at intelligence, we founded Sisense. And we looked at this area. Today founders do much more professional research work, much deeper. Than what we did. By the way, of course there are advantages to that; that’s the way to do it. I do say that the naivety we had solved a challenge I see with many founders and the ability. The digestion is a complex process, and adapting the scale, especially in a country like Israel where everyone you come to has an opinion. “Let me tell you why it won’t work,” and a bit of our lack of knowledge, our lack of experience—going for it, let’s put a ring on it and run with it. Kind of solved for us these challenges of beginners starting with tabula rasa and everything is open, and you spend two years in pajamas, as I call it, of AI edition. Again, not because I recommend disturbances; we also had a lot of luck in these areas, so the process is different.

Eyal David: [13:22] The treadmill, when the logic kicks in—I know it very well. Of course, רגע לפני שממשיכים לחצו על הקישור לקבוצת הוואטסאפ של פרודקט בילדר בתיאור הפרק והצטרפו לקהילה. There you can continue the discussion, ask questions, and be the first to receive recipes for new practical episodes. They’re waiting for you there, and now back to the episode. Thank you, Yelmina. It’s also just related to the fact that once companies aimed lower, right? I don’t think we aimed lower.

Aviad Harel: [13:53] Including us, I think the expectation of how a startup works. When we started Sisense, it was very different from the expectation of what would happen with a startup; back then they raised a lot less money. Than they raise today on average, but the expectation was also that it would take a long time because you build a product until you see the first revenue. Today the demand or expectation from startups. Especially our cyber companies, but also infra and this, is to show revenue already in the first year. The investors in Sisense. I promise you they didn’t have expectations like that, because it was very clear that it takes a long time to build technology, and you also hire fewer people; you spend less money over time, with the expectation of.

Eyal David: [14:41] Better results. So it’s a completely different world. I really hear this all the time; we just talked about it a second ago, but. I meant that maybe back then, at least I remember, there were more one-billion campaigns, and today already. The expectations are much higher, so maybe let’s really dive for a second into the founders themselves, okay? So what do you see today—what do they come with? That question was asked in our group, and we can roll it over a second. Basically, how exactly was it, Salma? What exactly are founders coming with today? Again, in a place where software product development is more affordable and easier.

How AI changes expectations from founders

Aviad Harel: [15:15] What is expected from the founder himself? So of course, just as AI has affected every field of our lives, it has also affected what we see from founders. I think many very good things. As mentioned, I really think founders today come into the conversation much more professionally. What I did in the partnership was at Sisense—let me put it this way, no core. In the AI era you see founders coming in with products; they come in with at minimum working prototypes, and that’s a paradigm shift, because you’re not just on slides after talking to a few customers; you’re giving. The person you spoke with, as a founder, as part of your discovery and validation, gets to touch things, feel them; it’s like in a supermarket, buying vegetables online and this and that, versus buying vegetables in a physical supermarket. The person they spoke with not only heard about it and not only talked about the problem, they began to feel it through what they are building for them. And that’s amazing. Second, the iterations of developing their theses are much, much faster; yes, they can also test and they can also build things much faster, or vice versa—build and then test things much faster. Which makes the cycles much faster, which is fascinating to me.

Eyal David: [16:35] So there are really two aspects here: on the one hand we say to validate, but on the other hand we say come with revenue, and significant revenue. And around that, it’s actually become much harder; I mean it’s hard in general to reach these customers, to cut through the noise, to generate enough interest at all, to generate revenue.

Aviad Harel: [17:00] Small tag: Team8 is an early stage fund. We also do later rounds, but certainly my area is where the vast majority of our investments are, that’s pre-traction. We have zero investments; we’re the first money into companies. We work with them on ideation and revenue, in the early stage where we are, the expectation today for slightly more mature companies, for later rounds in A and B, is different, the expectation for higher revenue is higher, the expectation for higher traction is higher, because the understanding is that developers move faster and can bring results to the field much more quickly, we see it also in our more mature companies that go into follow-on raises, their follow-on rounds, but Team8 as a group mostly also does later rounds, but mostly certainly in early stage pre-revenue.

Eyal David: [17:56] So the companies come with a product they’ve validated, for example; what else do you expect to see from them? We talked about go to market, what do you expect to see?

What Team8 looks for in a founding team

Aviad Harel: [18:04] So first of all, it’s very important to me, or to us it’s extremely important, to see that the founding team wears all the necessary hats for that team. It can be one person with three hats, or three people each with one hat, but there needs to be the technological hat, the product hat, and the go-to-market hat. So we’re looking for a kind of completeness in the team in terms of what it brings to the table. Second, they need to work in or deal with areas that we know, and where we have some degree of familiarity. By the way, whether they bring their own thesis that we can understand, in an area we’ve worked in, or whether they connect to one of our theses. It’s important to me, because we’re a relatively concentrated fund that does few companies, that I enjoy the work. I’m looking for a team I try to spend as much time as possible with, that I’ll enjoy spending time with, and that knows how to catch the ball from the other side, that they want to catch the ball from the other side. So team DNA fit with us is also important in my view. And the last thing is that there is founder-market fit. And that’s very, very important. You see that founders who came from a certain field, and there they have what I call linear familiarity, they know it beyond what you’d call simply reading about it somewhere, they have intuitions in those areas; that has power, and that’s important.

Eyal David: [19:47] What do you really feel—actually, this is probably a point—but what do you feel today? You see a lot of companies, a lot of founders; what do you feel is missing? Like, if you were to say now, we need to double-click on this thing now?

Aviad Harel: [19:59] I don’t know if something is missing; I’d say it’s different. We get, and I really like this by the way, founders for whom this is their first rodeo, who came either from the army or from some role like that, and they’re first-timers, and I think...

Eyal David: [20:21] You’ll say naivety.

Aviad Harel: [20:23] First of all, I like that naivety, each one of us was a first-timer, Steve Jobs was once a first-timer, I think that naivety, that hunger, can work in their favor, especially in the new world we’re in, in the ability to run lots of iterations very quickly and move very fast, I think it can work, of course we also work with founders for whom this is their second or third round, they bring a different kind of abilities to the table, they bring experience and connections, not just to solve a problem, but to build a company, which is כמובן a very, very big advantage.

Eyal David: [21:06] That’s very significant, exactly.

Aviad Harel: [21:08] Very significant. But in my view, everyone—I like the first-timers, they come with a certain motion, and I like the second-timers, they come with a different motion, and it’s not better or worse, it’s different.

Eyal David: [21:22] Different risk. Right. And if you’re just unpacking the types of theses now, I remember we were just going back to theses, and we talked about this before the conversation, do you want to tell us briefly about the two types of theses that exist? Yes.

Two kinds of theses: solving a problem vs. a vision of the future

Aviad Harel: [21:38] There’s, the way we see it—and by the way, not just us, this is a well-known approach to theses—there are theses that come to solve a problem. There’s a problem, we identified this problem, we validated it, we did what’s called a demand test, we know how to validate the problem, here’s a solution to the problem. One type of thesis is the kind where working around it is relatively very systematic. It’s not easy, but it’s systematic: there’s a problem, there’s a solution. Another type of thesis is one that tries to predict the future, to look at the world and say, I imagine the world is going here, let’s take the assumption that that’s what’s going to happen, and now infer from that what elements need to be built into this thesis. It should also be said that this is a longer play. Often it’s a longer play, and when it succeeds, often—of course there are gray areas, but often when it succeeds—it has the potential for very, very big success. Problem-and-solution also has the potential for very, very big success, and there’s also a lot of room for good success, just not enormous success, which is also good.

Eyal David: [22:59] Maybe a good example of that.

Aviad Harel: [23:02] For example, cybersecurity companies are mostly—though not always, but mostly—companies that say, okay, there’s a problem, we need to do data security in the organization, let’s build solutions for data security in the organization. Or a point solution to a problem. Other theses can be like Uber: I imagine, yes, that taxis aren’t the only way to get a private ride somewhere. One, two, people have cars that most of the time aren’t used, and that’s an underutilized asset; what if we connect the two? We can build a business here that will completely disrupt the taxi world. That’s a thesis of the second type: I imagined a new world, and one of the elements I need there is a marketplace between drivers and cars.

Eyal David: [23:58] For everyone who wants to get from point A to point B. By the way, I’m sticking with Elon Musk’s example for a moment, because maybe along the way...

Aviad Harel: [24:06] All the ventures he founded over the years, I think he sees the future very clearly; it’s very much implied that way, yes, both SpaceX and Tesla. I think I would classify them as theses of the second type: let’s imagine a new, wonderful world—he calls it moving humanity to become a multi-planet society. And these are the things that need to happen along the way: I need rockets that can be used, I need the ability to send large cargo into space, I need a network of satellites, all these things.

Eyal David: [24:45] And when he went after a problem-and-solution approach, he did this thing with that underground tunnel—what was it called? The Boring Company.

Aviad Harel: [24:55] But Elon Musk, and as I said, when this succeeds, now you can see what’s happening with SpaceX—it’s a huge success.

Eyal David: [25:02] So, if we transfer this for a moment to the world, the infrastructure world—we talked about that, right, so... We can transfer it. Let’s say we’re building something together, so you can probably understand that agents will soon be much more a part of the world of work, right? If not already, then much more. Today there’s actually some kind of synergy between humans and agents, right? We even see that the more agents companies introduce, the more we see in companies and hear about workflow, much more. Interesting, so we can try to project for a moment where this is going, until when—we talked about GenAI earlier in the prep call—until when, בעצם, will humans actually be, well, let’s start building, actually you and I’m sure you have a lot of places; I’ll take the opportunity and talk about a few concrete examples we have.

Agentic AI, trust, security and the new organizational knowledge

Aviad Harel: [25:56] I very much agree with the starting assumption, and the subcategory of agentic solutions is going. Their use is going to grow a lot, and probably very fast; we’re already seeing it, that’s a reasonable assumption in my view, and then you can look at it and try to derive all kinds of implications from it. I’ll start with a little agent security, yes, agents will—they create real risk for organizations, so manage that; that’s one area. Another area: agentic solutions. They are non-deterministic solutions. That has implications for non-deterministic solutions: how do I know that the answer I’m getting is good, or good enough, or how good it is. Let’s build platforms for trust in agents, not security—trust.

Eyal David: [26:51] There’s an existing category, AI able, it’s called, yes, so let’s talk about it again today. If we’re looking at the synergies between humans and what I said, then today... They’re bringing workflow into where it’s going, so...

Aviad Harel: [27:05] I’m not asking where it’s going; I’m saying let’s think—let’s think again, I’m not objective—companies in each of these areas. If, for example, one of the very hot areas of agents is back-office automation, big companies come and say, okay, the new world exists, we can use it to implement all kinds of processes inside the organization in a... Smart, truly agentic way that will be revolutionary in how we do things. What does that mean? Looking at all kinds of existing solutions and there are all kinds of approaches to doing this; one of the approaches we believe in is exactly that. Agents in processes, in order to work well, need... Two central things: one, to really understand the organizational process as it actually happens, not as it’s written in some manual, because usually when you get to an organizational process, maybe... Its manual, but when you look at how it actually works, there’s always some shortcut or something else; so one is the real mapping of the process, how it happens in reality and what happens when it’s bypassed and how it’s bypassed, in order to manage it—that’s one. And two is enabling exception handling. It’s very easy when the agent knows the answer, everything is very clear, there’s no dilemma, I need to go right or left—but what happens when it doesn’t know? How do you manage that event, and certainly when you’re managing that event at the scale of agents, the ability to understand when the agent knows the answer or needs to know the answer, and when it needs to raise an exception, and how it raises an exception to the workflow so it can help resolve this exception with all the context and information it needs. And after today, trying to make this part of the organizational process so that the agent knows how to improve and do this process really well — that’s one of the theses I think we learned from one of the companies here, or among them, that came to Timait.

Eyal David: [29:07] It’s basically a bit like in the real world; you can think of it this way: if I were to join a new company from the bottom, I’d be some kind of apprentice, learning the way up. I’d do some kind of reverse engineering of the path of, you know, how the people around me work, and I’d also know what things to bring up, and after some time I’d have enough sense to make the decision myself.

Aviad Harel: [29:28] Exactly. Now let’s compare and scale up. You can do it with ideas and with people, and you can do it in more sophisticated ways that are more scalable. Maybe start with some small idea, but then build some architecture that also learns on its own, learns fast, and knows how to follow the flow of information in such and such processes, and make that an inherent part of how the agent works.

Eyal David: [29:54] And it’s interesting, because in regular work with humans, after some time they’d leave and people would move on. We don’t think that someone did something like this; the organizational resident disappeared.

Aviad Harel: [30:06] With them, or at least parts of them, and therefore process mining — the ability to understand processes, how they run. You can, naively, talk to people, but really understand how they run by tracking the processes themselves in real time, and thereby automatically mapping them and then automating them. And as a result, build some kind of internal organizational knowledge that exists, not volatilized in people’s minds, as part of the platform.

Eyal David: [30:38] Absolutely, I’m with you, and I even know a lot of companies doing this today, but I took it further — suddenly another layer of hype is created. Organizational, and now it needs to be maintained, so maybe, like, this is the area — that’s what I said: someone would now get up and leave, and you’d take their flash drive, their knowledge.

Aviad Harel: [30:55] So now you also need to preserve this thing; there are a lot of catchphrases running around in this company or as context graphs, company knowledge graphs, and how you get there — this is a very, very hot field. I think many of us, and the listeners, read the article about the trillion-dollar opportunity that talks about... Not just about the system and the record that exists in all kinds of systems, but also about the system that tracks the decisions that were made as part of building this organizational brain, or the company, or whatever you want to call it.

Eyal David: [31:32] Interesting. Good, another thing came up while we were talking, but I don’t have to dive into it, just because it’s been occupying me a lot in the last few days. A lot of money is now going into many very strong public offerings. What money, what funding is left, if we can call it that, what funding is actually left for small startups that are now entering.

Where the money is going in the VC world

Aviad Harel: [31:49] Great question, because I think the world is changing, and there are implications for everything we do, just... Looking at the data itself, the raw or not-so-raw investment data from the last two years, it seems... The money going to startups has increased in the last two years, but in a very concentrated way; a lot of it is going to giant companies. I think I read in one of the latest articles, and I think 25% of all the wintermans went... To six companies — 25% of them, which is unheard of — and the remaining 75% weren’t spread out like they would have been in a standard distribution; a few years back it was concentrated too. Maybe in newer companies that are less familiar, but that received a lot, a lot of money, and this connects to various companies everyone knows that raised very, very large rounds at a very early stage. So I think the money in the VC world that gets deployed will continue to grow. What you invest it in is a complicated question, especially since there’s a tectonic shift in the world, of course driven by very, very major developments in the existing one.

Eyal David: [33:23] Yes, well, I have many more theses, but I think we’ll continue, for example, just people now probably... I think we talked a bit before about the fact that, in my view, many people are going to be laid off from tech, and then the question is whether they’ll actually go look for them now. Will they be hired into a new job? Will they go become self-employed? Maybe they’ll even go backward and start there, with everyone expecting that they’ll be let go a lot because they kept spending a lot of money — so am I actually making a wave here, yes? Will they even go and keep the money now on shopping and such, or even go invest? It’s possible, it’s possible. So I just took that as an example because I wanted to ask you. One more thing: how do you actually build a thesis, and what are the different stages along the way? What do you recommend? Tell me — I’m not behind the process of knowing that you know, your whole team, so...

How to build a thesis without Team8's machine

Aviad Harel: [34:11] So when we work on theses with our startups, we try to bring structure into this process. Now I’ll put an asterisk here because the structure... It’s loosely structured, let’s call it that, because it changes depending on the startups and depending on the theses and the nuances and so on, but there are a few chapters that clearly repeat themselves in the thesis-building process, in ideation and in validation. And that’s how we look at it: there’s the first part, which is the problem space. We look for a problem space that’s interesting. If it’s an area that’s interesting — a market that’s interesting — sometimes there are problems that may be very interesting, but the market in which they exist is not that interesting. What makes a market interesting?

Eyal David: [35:00] Maybe you’re also looking for something that, beyond being profitable now, is also large and has overtime growth.

Aviad Harel: [35:05] Growth is a very important parameter, so the first chapter in our ideation is the problem space. The second chapter in our ideation is the solution space, meaning we understood that there’s a good, lucrative challenge — yes, what is it? It’s a problem that is clear, defined, and large enough. If you can build a business around it, the second part is to come with a manifesto of solutions and see that they’re applicable to this problem. The third chapter is the go-to-market challenge. You can’t do without these three parts. Nobody wants to end up with a product looking for a market, so that’s why you need the go-to-market; nobody wants a market with a solution that isn’t big and interesting enough, and therefore. These chapters are essential, integral parts of building and working on our theses; what are the parts that are a bit looser that you actually mentioned? Along the whole process itself, even in the problem space, I can describe all kinds of problems in all kinds of ways that at times will sound very interesting to you and at other times very. Uninteresting, so there’s also a bit of an art here; you can’t take the ability to synthesize. Your understandings, the iterations in each of these chapters, to reach some kind of conviction, now. You make mistakes; it doesn’t matter how many times you do it, but the goal is at least to mitigate the challenges to some extent. The ability to understand who you need to speak with, both as an advisor and as a potential taker of the problem. It is challenging; the ability to have a conversation with them about a problem in order to synthesize the essence of the problem is a part that is challenging. The ability to see in a more abstract way, or to have a more abstract conversation about what they do, how they do it, where they think they’ll have problems, where they already have problems. How will they look in two years? These are very, very hard questions; everyone knows this concept, past horses. That you’ll talk to potential customers and discover a solution to a problem you don’t need to solve, so.

Eyal David: [37:30] These are parts that are a bit softer in the process; yes, here too we can put a thesis for a second on where soft skills are going to come into this, and you’ll say, do you have any rule of thumb for how many people you need to talk to?

How many customers you need to talk to for confidence

Aviad Harel: [37:47] There’s no number, in my opinion; it needs to be enough, now enough. Also, in what world, in what vertical you are and so on, but it’s very clear that if you spoke with one person, it’s not representative. And you don’t need two thousand people to talk to; you need a quantity that is enough to give you. The feeling that you’ve covered this, or received interesting insights about the market and not about the customer. And therefore it’s worth peppering your research group with all kinds of organizations; we talked about that a bit earlier. Israelis and non-Israelis, big enterprise, Fortune 500, and maybe also small companies if you have them; it’s probably very obvious in infra: one time you speak with the CEO, one time with the CTO, one time with the VP R&D, and sometimes you speak with developers. So the research group needs to be one that covers that area for you. In a way that you feel you received enough inputs that you can feel.

Eyal David: [38:58] Inf-confident that this is the area you want to focus on; understand? So you really have a document of questions that you keep updating all the time, and you try to close the questions properly. And you’d say, you didn’t touch on this, but like vertical and outside the vertical, you’d try to explain too; say now I’m looking at, I don’t currently have some vertical but. For example, now I entered the market of companies above a certain size or another; you touched on it, but they are actually targeting a certain segment of the market. And there are more generic companies that go after this segment, and I’m just saying, also for SMBs, would you speak with two types of companies, yes, necessarily with the thesis that we.

Aviad Harel: [39:43] That afterwards, we’re going after two types of customers in essence; I have to speak with two types of customers, but it could be a different kind of conversation where I’m trying to have the conversation in order to reach the conclusion that I need to choose one of them. This can be part of the research question I raise in this process; I can build a mid-market product and I can build an enterprise product, I need to make a decision at least on what I start with in the initial x-man. A very important question, and then you go back to them, of course, with something to show, and you start to understand whether you’re in the areas; yes, and also on a personal level, I really like types of theses. That on the one hand have a very big vision. But on the other hand, it’s very clear what the first wins are, meaning what they’re going to sell in their first sales year, now. There has to be a clear correlation between the two; meaning the initial wins must be a direct stepping stone toward the big vision.

A big vision vs. first wins

Eyal David: [40:47] Yes, and even yes, it’s probably beyond the technological vision, it’s also like, how should I put it. The foot in the customer’s door in order to start moving with them exactly, and why that’s so important.

Aviad Harel: [41:02] I’ll go back for a second to the approach of. We need to be humble, we don’t know everything; the truth is we don’t know much, the market is the one that knows best. And therefore the wins in many ways allow me to get to the real friction with the customers.

Eyal David: [41:20] And to continue building my thesis together with them; in my opinion this is incredibly important, a very important part that I always ask is also how much would you pay for this, I’m sure you do that. Even if we got in the door, let it be, of course, for money, because again, if we talked about spreading out and all that, then. I remember that with my startup too, if they don’t pay you from the start, that’s the lesson I took הכי, it’s very easy to get distracted in the d-azhan, very much how much time are you giving me for this kind of d-azhan.

Aviad Harel: [41:50] This really varies a lot by the type of thesis; I mean the categories of theses. Problem and solution are usually, of course, outliers; it’s usually faster to build new theses about the world, while that is usually much more complex and therefore takes more time. Second point. Sometimes theses get replaced, and that takes time. You start with one thesis and, for various reasons, decide either that it’s not a strong enough thesis or that it doesn’t fit the team working with it, and then you replace the thesis, and then... In theory you start over, so there isn’t any playbook that says we need to start now and finish at this point.

Eyal David: [42:32] And when you... Why am I taking a step back for a second? Gali, the invite is considered, people are coming, and that’s okay. We’ll come back to the issue of roadmaps and forward plans, okay, in a changing world.

Roadmap, planning and pace in a fast-changing world

Aviad Harel: [42:44] What’s your expectation? That’s a topic in itself. I’ll start with a disclaimer, let’s call it. I don’t remember who said this line: I have 6 hours to chop down a tree, I’ll spend the first four sharpening the axe. Planning, budget, roadmap — all of these things fall under the planning category. It’s super important. Every plan is a basis for change; they change all the time. We don’t... I don’t remember. Budget, planning, roadmap that didn’t change along the way. I talked about the importance of working with customers and our instrument, and therefore it has an effect.

Eyal David: [43:28] I’ll say, back then versus now, planning a year ahead, planning two quarters ahead — I was at those events too — but it’s so different.

Aviad Harel: [43:38] So different that when we founded Sisense many years ago, it was very common. You raise much less money and grow much more slowly because it’s clear that you won’t sell in your first year, or it was almost clear that you wouldn’t sell in your first year, and it takes a long time to build. The basic product, even just to take it to market today, even with the development of the entrepreneurial profession. And also with the expectations that the market pushes on us, the expectation is for much faster work, and therefore... Our founders’ fundraising and budget plans are much more aggressive, and because of that, the fundraising expectations for our founders are much bigger than they were when I founded Sisense with a partner.

Eyal David: [44:29] Say, and then... I’m going back for a second to the theses — good, you wrapped that up for me. I have a thesis, I’m happy with it, of course. Why do you have more rules? Lidiation? Okay, we’re already diving deep. Stating the obvious — who do you do the ideation with? We have a team, no, I mean if I don’t have a team, who do you recommend doing ideation with?

Who should be in the room during ideation

Aviad Harel: [44:56] Good question. Let’s talk about what elements are in ideation, and then anyone can infer from that which people to do it with. First of all, there’s an art in itself to asking the market about problems, and you need to know how to do it. It’s a game, or a delicate semi-dance between... I want to ask you open-ended questions versus I want to ask you questions in a certain area. I want to get information from you, but I don’t want to put words in your mouth. And that’s a challenge in itself, and the more you try to do it iteratively and systematically in a better way, the better. Second, there’s the challenge of outreach: you need to talk to relevant people. Anything that helps you talk to the relevant people is very, very important for this process. If you have someone with a very relevant Rolodex or very relevant access, that really helps, or if you have... Business development people, whose job is to create access for you to all kinds of conversations like these, that’s very, very productive. Second, market analysis — there are people whose profession is to know how to look at a market, how to model the market in order to understand the dynamics, the laws of physics of that market. Where all the products are, how you place them on a quadrant. Now that’s a joke, because everyone who comes to any investor presentation puts the quadrant and their idea in the top right. So it’s not at all challenging to put yourself in the top right. The challenge here is to know what they represent — to decide what the two axes in the quadrant represent. That’s a way to slice the market by two dimensions, and if you do it correctly and effectively, then all the market research... this is a profession; you need to know how to do it and do it objectively. And not fall in love with any solution that pops into your head, and not contaminate any conversation with anyone you’re speaking with with those solutions, in order to truly understand the problems — so that’s a profession in itself. Third... At the end of the day, we build technological products. A perspective that understands technology and can build something technological. That has some kind of differentiation. Now, the differentiation doesn’t have to be that we found the secret formula for Coca-Cola. Clearly we need to have technological innovation, but technological innovation, especially today, is not just in the product’s technology itself but also in the technology of... How you reach the market, how you price it, how you make sure your concept operations are very, very effective and precise. How you get the share or voice — all of these can be genuinely technological. In other words, innovation doesn’t come only from the product’s core technology, but also from the surrounding layer.

Eyal David: [48:11] Like, what you’re saying, and I really relate to this, is basically: if that’s what you’re looking for today in Azamim, the three hats. These are people who probably need something else in the room besides consultants, and I don’t have that knowledge inside, so let’s bring in the consultants, let’s reach the target audience, let’s understand as much as possible. If I sort of summarize this for a second without a budget, then basically I would have. I could maybe create the three hats at some level through a prompt that thinks with me, with a few experts, at the most basic level. Otherwise, you need to bring in those people, the ability for product types where the technical side is less important, and I can bridge over it for now and run with it. Maybe also a matter of. If I again, it’s a matter of experts, but if right now I’m in some very regulatory chick, then I’ll bring in, like, someone who knows how to do that work. And what do you think in terms of if I’m entering a very traditional market.

How to sell to traditional organizations

Aviad Harel: [49:11] Excellent point, or excellent points, so a few thoughts: one, as mentioned, the three hats you described — maybe there’s one person who wears all three hats, it doesn’t have to be three separate people. Separate, but there needs to be the business hat, the go-to-market hat, the technology hat, and the product hat, and as mentioned, that can be one person or three, but the team needs all three of these hats. That’s one thing. In the more traditional world, I think there are a few unique characteristics that matter for the team, and that’s the ability to create relationships with such organizations. The sales event or the surrender, the sale of a product, is not just technological or product-related. A lot of organizations, the more traditional organizations, look at the problem as a project — that you know how to do it with a product or large parts of it in the form of a product or. That you have people actually doing it, it’s interesting but not very much, so what matters more is the ability to achieve the outcome in these organizations. And here it’s built on trust; you see organizations. I’m obviously generalizing, but large organizations whose surrender is not necessarily the best product, but trust in the company, in the founders, in the company’s leadership, and in the product that can achieve their goals. Of that project or that problem, and that’s also a skill set — to build these relationships with the relevant people in the more traditional organizations, the ability to navigate the conversation with them. And to manage this process, that’s a skill, that’s a skill.

Eyal David: [51:02] So, like, we have a thesis that this skill is actually something that will remain over the coming years, something that has value, and I think yes, I also think, I think so. And I’m also seeing that these organizations are moving, second example of such organizations, and toward the end, how did it work well in real estate, which is a very traditional field of building, thank you, of huge projects. Who invested now, but the fact is that companies entered and did, even if it was about human lives and things like that, which באמת was still a problem, but a problem. A significant one on the table, so there are many companies that came in, learned the process, took design partners, and probably started at a very high level of human work, so this may be an example of that; there are many more examples.

Aviad Harel: [51:47] Even organizations that are more traditional in their port also see and hear the AI revolution, and they too are experiencing a directive from their board to achieve the gains associated with the AI revolution. In many cases — not in all cases, of course — it’s not trivial for them to bring in and adopt such technologies. As mentioned, here too the ability to build the relationship is very, very important. Whether it’s about automating back office processes in companies like Royal Caribbean, FedEx, the European or American railroad company, or whatever — and endless companies like these — they need someone they can connect with and trust. Someone who understands the traditional enterprise nuances in the organization and knows how to adapt their product. To those areas, but you can see it in companies that do back office automation for such companies; you can see companies like that that want to adopt. An agent of one kind or another and need something that will really make it work in the organization because it’s not plug and play, it’s not things that work in an organization — you can see this from every angle.

Eyal David: [53:09] I liked it, I liked it. I think a good place to start is maybe even to look at the Tel Aviv stock index and find, for a second, a few industries. It can really open up the mind. That was really interesting, Aviad. For me too, I want to ask: if people want to get in touch with you, want to ask questions, want to do it via LinkedIn, what do we do?

How to get in touch with Aviad

Aviad Harel: [53:30] LinkedIn, my email — I want to say it’s easy to reach me, but in terms of results, it’s always important. Aviad, you’re always the point, Yossi.

Eyal David: [53:43] That’s also a summary of the episode; good, we also gave basically the areas worth approaching around, really. Great, Aviad, so glad you came, so glad you invited me, thank you very much, thank you very much, bye-bye friends, thanks for listening, if you found this podcast valuable. You can subscribe and follow us, of course, for additional episodes on Spotify, Apple Podcasts, or any other app. Of course, if you didn’t find us on some app, I’d love it if you’d write to us. We’d really appreciate five stars on every platform and for you to follow us so that more listeners can be exposed to us and find the podcast. You can also find the previous episodes in any app or on the YouTube channel; we have links in the description, so until next time, go be efficient, and bye-bye.