This article was transcribed from The Family Offices Global Panel on February 25th, 2021, featuring the Founders of Riskified (Assaf Feldman), GoodData (Roman Stanek) and 23andMe (Paul Cusenza). This panel was moderated by the Founder of The Family Offices Global, Ashmoret Mishal.
To listen in to the podcast recording, click here.
Ashmoret Mishal: Roman, you founded GoodData in 2007 with a mission to disrupt the business intelligence space and help companies monetize big data. These days, your company is a market leader with over 300 employees and over $150 million in funding. Prior to GoodData, you started two startups which were sold.
What makes you such a successful serial entrepreneur? What is your secret sauce? And how do you envision the future of the data value chain? What will be your role and responsibilities in shaping how companies will use data insights to move forward?
Roman Stanek: It’s always about hard work and dedication. What’s consistent among all of the companies that I started and built and ultimately exited is that we were always kind of looking at disruptive changes in the industry and made-up assumptions about what these disruptive changes will lead to and how we can build products not for today but for the world 5 years ahead. So, when I started a company called medBeans, which is still today one of the leaders in the Java development space and Java definitely is a technology that changed the world and medBeans was voted one of the top 25 applications ever written in Java.
I look back and see the fact that we started the company when Java was 6 months old, when no one actually predicted this effect. I see that willingness to take the risk and start a company early and solve for 20 years in the future. My second company was the same story- it was sold to an iconic Israeli company and consisted of fun transactions to make. We actually co-invented the whole microservices architecture, everything that moves the world today in terms of scalability. Anytime you actually go and use any application that has some scale, some sort of flexibility, some sort of the use of microservices and SOA. That was what we co-invented in the early 2000s when these things were just an idea.
With GoodData, it’s very similar. I’m actually trying to solve the big problem of analytics today. The power of analytics is only available to the top 5% of the population of any company. My goal is to change this and enable the tooling, platforms and literacy, so that ultimately, in 20 years every single decision made will be a data driven decision. It’s a big challenge to go from 5% to 100% but that’s what we are set up to do.
Ashmoret Mishal: I would also like to welcome Assaf Feldman to our panel. Based in Israel, Assaf co-founded Riskified in 2012, a successful cyber security company eliminating chargebacks and fraud with the most advanced enterprise, ecommerce fraud solutions. Your company has over 500 employees and about a year ago, you completed your Series E funding round of $165 billion.
Tell us what your career path and inspiration around Riskified was. Also, what do you believe makes Israel such a leading country in tech innovation and startup exits?
Assaf Feldman: I had a very different career path; I didn’t start any company until Riskified and it is by far the biggest company I’ve ever worked in in my life. My career was basically in engineering, moving from one company to another, usually in tech and as a founding member not a founder. What I mainly collected through the years was a lot of internal conclusions, “what not to do”. Riskified allowed me to do it my own way and prove it; but, at the end, it’s about timing- if you’re doing the right thing at the right time. Riskified had great timing- we are not cyber security, rather e-commerce enablement and it was just an amazing time for launching a solution like ours. We changed the approach to payment fraud in e-commerce and tackled it more as an enablement not a protection at the right time. Everyone was understanding they needed to gear up and drive growth- our message and business model really resonated. Instead of giving them a tool, we actually gave them a solution and increased sales. At the end of the day, because we took more risk, it was super effective for the time we went in and the maturity that was in it.
Doing it in Israel is an enablement across a lot of other startups. The amount of talent you have, and unstructured atmosphere make it really welcoming for building startups. I think a big challenge Israel had throughout the years was actually getting startups to become big companies. Riskified is definitely not the first one, but it is part of the wave you see in the last decade of Israeli companies managing to do that and managing to overcome that first startup hurdle. Innovation and chaos are very natural for Israelis and they are able to actually establish the structure and discipline that is necessary to actually get into the growth stage. These companies, such as Outbrain are change agents, making it easier for other entrepreneurs who want to keep on building companies and take it into a growth stage and make it into a multinational operation.
Ashmoret Mishal: Paul, you were the co-founder and co-president of 23andMe. As you all probably all know, 23andMe is a personal genetics company which Time Magazine identified as is the best invention of the year in 2008. It achieved Unicorn status in 2015, and earlier this year, 23andMe went public via SPAC with a valuation of $3.5 billion. Currently, you serve as the Chairman and CEO of Nodal Exchange and Nodal Clear, a commodities exchange listing futures and options for trading and acts as a central counterparty clearing house.
Please tell us more about the story behind co-founding 23andMe. How did this concept come about and what are some of the wildest or uniquely surprising stories and facts you could share with us about the applications and implications of this phenomenal genetic testing company?
Paul Cusenza: I was a strategy consultant for a decade and then some of my partners had left to co-found Capital One Financial. I then joined them as part of the Senior Management Team, and we had taken the company from a billion and half market cap in the mid-nineties to nine billion by the end of the 1990s. At that point, I was deciding what else I was going to do with my life, it was a great four-year run. One of my classmates from Harvard Business School had been tapped to create a company called Perlegen Sciences. They were the first company to be looking at doing the scanning of 50 genomes, after the first genome was scanned. By doing that, you can find the pieces that make people genetically different from each other to create a Haplotype map, without getting into all the details. You’re able to do whole genome association studies, look at certain places on the genome, and compare them to find the markers that are associated with differential responses to drugs or disease, etc. My classmate was tapped to create this company, Perlegen, and the question was how do you commercialize this?
At that time back in 2000, I helped him think about this issue and there was the business side where you can do pharmacogenomics and drugs and you can come up with new therapeutics, etc. But there was also this very promising consumer side. I looked out 30 years and realized we should have this as part of our electronic health records, it’s something we should know about, ancestry should be interesting. Ancestry.com was a top 10 internet site back in 2000 because people cared about their ancestry. I knew that would be an important thing because we all cared about who we are more, so the issue became doing it right. I came up with the consumer strategy then, but as Assaf mentioned, timing is everything. The ability to do this at a reasonable cost was not there in 2000, so I realized timing wasn’t right and we didn’t move forward with the consumer business. I helped with Perlegen and did lots of association studies. We actually read more DNA than the rest of the world combined cumulatively by the end of 2005, partnering with big pharma and universities around the world. But the price of reading the DNA had come down two hundred-fold by the end of 2005. There was new technology that was coming out that was going to make what Perlegen was doing easier for other companies to do because the technology now was more basic, and you would find research on the same markers.
It became time to revisit the consumer issue and Perlegen wasn’t interested in that dimension, so I ended up partnering with Linda Avey, who was working on my team at Perlegen. The two of us came together and met with the founders of Google, they were very interested because of the big data dimension and also, we met them because Sergey Brin, in particular, was interested in Parkinson’s Disease. We had done a study with Michael J. Fox to find markers associated with Parkinson’s when we were at Perlegen. At the time, Sergey was dating Anne Wojcicki. Anne is wonderful, she is a biology major from Yale and has her own story about how she was thinking about these issues too and Anne came in as our third co-founder. I am very proud, by the way, that I had two female co-founders. That’s fairly unique as we are one of the top 3 female co-founded companies by Market Value. The idea was looking long-term and we wanted to do it right, focused on setting the right groundwork because we knew it would happen sometime over the next 30 years. We wanted to make sure we did it ethically, we were concerned about privacy and all these other dimensions.
In terms of how the company has evolved, a lot of it is very consistent with the original vision and the research dimension is very important. At Perlegen, I was doing research and one thing we found was with our genetics, it’s typically many things with a small effect rather than a few things with a large effect that are related to disease or differential drug response. As a result, you also need big numbers to be able to do research that is statistically significant to find markers that are associated. For example, I’m very proud of how the company has put its attention to its unique resources looking at COVID-19 over the last year and were able to identify very early that Type O blood is protective against COVID-19, for example. That’s the kind of research and health matters we care most about. There are definitely fun elements to Ancestry.com, but the real mission of 23andMe was about accelerating healthcare and finding solutions that can accelerate people’s health, even if it’s 6 months sooner.
To your other question relating to what was surprising or wild, it’s intriguing when you’re a consumer genetics company because everyone seems to know about it. Eddy Murphy did a skit about it on Saturday Night Live and Lizzo was singing a song about it on the Grammys so it’s fascinating. But the cool moments are the personal stories that you sometimes hear and people reach out to me. For example, even one of the people on my team found a half-brother he didn’t know about and that whole relationship and how happy he is to be connected is just awesome. Another person I used to work with was adopted and found out he was the oldest brother of seven and now has six siblings he didn’t know before.
We always knew the company was going to be successful, but we started it because we just thought it was the right thing to do. Whether it made money or not, we wanted to set the right groundwork. When you’re starting a company, it’s really important that you have a strong vision upfront, that you feel passionate about it and the ownership, and that you preserve because there are going to be all kinds of hurdles you’re going to hit along the way. I’m inspired by you, Ash, you’re an ultra marathoner. I can’t even imagine signing up to do a 125-mile run. What drove you to be able to complete that is your will, your perseverance- it’s that kind of attitude that’s necessary to make a company a long-term success, to know where you’re going, feel comfortable, and own that passion with a long-term direction.
Ashmoret Mishal: Speaking of ultramarathons- luckily, a 125-mile race ends- for me, after 39 hours. But being an entrepreneur is a constant long-distance run or endless marathon, so I think it’s really remarkable to pursue your ventures for years and sometimes decades to achieve your goals.
It is such a rare accomplishment to be among only 500 listed Unicorns worldwide. There are actually many more billionaires than founders of billion-dollar companies.
What are some of the important lessons you have learned throughout this process? And were there any major risks taken, especially at your company’s onset? Can you think of anything you might have done differently or a decision you are especially proud of? Finally, were there any points along the journey that made you want to quit and give up? What made you push through these difficult times?
Roman Stanek: I’m very pleased to see that Paul and Assaf also come from humble beginnings. I was once on a Founder’s Panel, maybe 20 years ago, when I was building NetBeans, my first company, and I am from Prague, a communist country. I was on a panel with the founder of easyJet, Stelios Haji-Ioannou, and the first question he was asked was the same question about how he became an entrepreneur. His answer was when I was 15 my father gave me my first Hangar- so I realized he was in a different category as a founder. Haji-Ioannou built easyJet and was able to leverage his family into something special so people come from different angles.
I agree with what Paul said about being ready for difficult times and realizing it’s never a straight line. I always say that a startup is like one big giant mood swing. You can get five pieces of good news and five pieces of bad news in one day. Never check your email in the evening because you might read bad news and not sleep all night. When you work for a big company like IBM, it’s like a ship, it never changes and there is no good or bad news. In a small company, it takes a lot of mental strength- dealing with all of it and not becoming depressed or too excited and handling both good and bad news. I never wanted to quit but we did have examples where we had bad news and I had to go in and solve, understand and shield the company to make sure my people are productive. Being a founder is the most difficult and loneliest job because you have to deal with many things, sometimes without peers. It is all about mental strength, dealing with issues and being able to overcome them with a good team that can support you.
Assaf Feldman: To Roman’s point, the team part is essential. I’m lucky enough to be one of two founders and I never felt like it was a lonely place. I assume it’s kind of rare that two founders get to where we are and are both still in the company, running the majority of the operations of the company. That was another piece of luck that we had- we were two guys from different generations and it somehow worked. The fact that that type of relationship ended up as a good partnership that lasted eight years was one of our strengths. We really managed to find the space to collaborate where we need and play to our strengths. It took us a bit of time to get there but that’s a huge parameter for startups- how the founding team gets along together and manages to evolve with the company is critical. That’s also what keeps me going because I keep on learning and for me, that idea of enjoying the ride, not focusing too much on the liquidity event, learning personally and making sure we’re producing the best product we can at each stage is a much more sustainable driving force at the end of the day.
In terms of things that I regret, one thing was due a lot to our ignorance. Very early on, we took on verticals in industries in e-commerce that we probably wouldn’t have if we had experience. As an entrepreneur not coming from the field, you take risks that experienced people would not take; however, they propel you at the end of the day. We went into crazy industries like the sneakers industry in e-commerce and gift cards- we just didn’t know and learned so much because of that. It really helped us progress the product and become way better than the market. Sometimes it’s good not to know the risks out there.
Ashmoret Mishal: Now we all know why you call the company Riskified.
Assaf Feldman: Yes. It’s a bad name but it was mainly around us wanting whatever was available and saving time picking a name as it matters less in a B2B market. Whatever was available we would take, and we also wanted to convey the idea that it’s all about taking risks. Although, I’m not sure how good it was to externalize that to clients.
Roman Stanek: First of all, I’m a big fan of 23andMe as a company name. But my story with GoodData is actually interesting as well and just shows you how much the perception of data has changed. When I started my company, I just bought GoodData.com because I could have bought anything-data, it was all available. And now, you don’t get to buy “BadData” or “AwfulData” because everything data is taken for the last 10 years as the world has shifted from the anecdotal to analytical so this just shows you how different it is now than it was 10 years ago. But 23andMe is an iconic name, huh?
Paul Cusenza: Thank you for saying that, Roman. Yes, speaking about the naming issue, we were bouncing around different ideas like DNAandMe, MeAndMyGenetics. It was actually Anne who came up with 23andMe and I just loved it because I love the rhyming. I love that it’s a few digits, we were going to go for something with small digits and the other piece is that we wanted to demonstrate that we were innovative and different, so I love that we start our company name with a number. The other big advantage of that is when doing listings like in a phone book, 23andMe was always at the top of the list because numbers go before the alpha. All of those factors played into it, so we were excited about that as a name and Anne came up with the ultimate name we went with.
I was lucky to have two co-founders with Anna and Linda- it was great, and I think the three of us got along very well. I still have great relationships with both Anne and Linda, and I think it’s good to do that. I’d rather be part of a rock band than a solo artist, so there’s an element to that team dimension and I think we also brought different skills to the mix which was good. The only reason why I’m still not with it is location, in the end. It just made sense to move on to other things, but I still have a lot of passion about the company. To a point Roman made earlier, in pandemic times it’s a whole different world today. I definitely could have actively stayed on and been remote.
In terms of risks and the founding of the company, I think perseverance and ownership are critically important. And it’s also about willingness to do what you ultimately believe is right and in the right way. There was pressure even when we were starting, it was important to believe strongly in the research data. Being able to do shared research was very useful but there was a lot of push back in the academic community in regard to knowing if the phenotypic information people give is accurate if not clinical. I said most people aren’t going to lie and we can prove it with other genetics such as those related to eye color and later ask people about their health concerns. But you’re going to get results even if they are not 100% accurate, they’re pretty good and can be clinically verified later. The process will be accelerated because you now have over 10 million people and 80% opt in for further research. But it was going against the grain and there were others such as societies of doctors involved in genetics that were upset you could have consumer access to genetics rather than just doctors. Our thought was if it’s accurately described, you should have that option and choice to have that private access, as long as we do it ethically and correctly.
We knew there would be those trying to take advantage of people by selling them things they don’t necessarily need based on their genetics. But we also knew if we did this right and get ahead of the game, we could set a standard that would prevent people from taking advantage. It was fascinating, even in the early days, people would say our testing was inaccurate, but it was mostly due to a lack of scientific understanding of how things are done, and which markers are there, etc. Genetics is only part of it so it’s a very complicated message. I had learned at Perlegen that before you go to pharmacogenomics and try to help people better understand even choices based on relative risk, a lot of Education was going to be required about probabilities based on the information you have. We were having to work against a system, it was disruptive from a standpoint of established entities questioning it. But there were also very supportive people who were deep workers in the field, such as those at Perlegen.
Perseverance in terms of willingness to proceed and do what you believe is right, but also checking yourself. We have to be conscious of our responsibility going forward and also recognize that it would go forward, regardless.
Ashmoret Mishal: What are some of the tips you could share with our investors about spotting the right talent and emerging innovative leaders to invest in and partner with- what do you personally look when you hire for your C-Suite positions? Because, at the end of the day, all investors agree they really invest in the founders and I think that’s something you resonate with.
Paul Cusenza: I’ll jump in. You want to look for smart, nice people. People who are capable, know their element, but are also very nice and people you want to work with. I say smart in the sense that you want experience, but you also want intelligence in another way because you want to be innovative and changing. You want people who quickly pick things up and think well on their feet. The other thing is to have degrees of ownership in passion about what they’re doing and, depending on the role, vision and strong ethics because that must be there as a grounding in any position. Ultimately, if you get people who can encompass a lot of those skills, they can be very responsible and then they can be people you trust who can ethically run their area with ownership, caring that it gets done right and smartly and they’re also nice to work with so you’re happy in the end too.
Roman Stanek: For founders and investors, there are three main characteristics to look for. The first is to be visionary, the second is high tolerance to risk. Most people are not willing to take personal risk and family risk. The third is the ability to communicate and defend the vision. For the leadership team, there is a concept called The First Team, which stresses the fact that the leadership team defines the success of the company. Sometimes in big companies, people go to fight battles and pay politics, but there’s no room for that in any fast-growing or startup company.
Last question I have for Paul- Given that 23andMe is a consumer product, how many consumers actually understand the name of your company?
Paul Cusenza: You know, it’s possible, that’s all part of the educational process when they go to the website and start to dig into it there is educational material. But one of the earliest things we did was put in educational dimensions.
Ashmoret Mishal: For today’s final question, let’s talk about your present and future.
What keeps you busy these days and what’s next? Your next ultra-dream or goal you would like to share with us. Or a way our investors could learn more and potentially engage.
Assaf Feldman: For us, Riskified is in a really interesting industry right now. Especially with everything that’s going on, it accelerates everything really fast. Adapting to that is a huge challenge and we’re investing a lot into moving into new regions in the far east which is an interesting challenge.
Paul, how did that work with DNA tests outside of the U.S?
Paul Cusenza: That’s a whole separate issue and discussion because you have to become educated and look at all the regulations including individual state regulations and local laws.
Roman Stanek: E-commerce is a bit less complicated than that. It exists everywhere, but there are different payments necessary in every place. In this industry, it’s easier to see the path and another big challenge is becoming a multi-product company. How do you start building from basically a little startup that you’re just starting? How do you leverage your existing customer base? Are you over-extending your available market by doing that? Are you still staying focused by enlarging the scope of the kind of problems you’re solving and the value you’re bringing? So, these are super interesting challenges that keep me going.
Roman Stanek: For me, it’s actually almost exactly the same as DNA testing. Data, data privacy, data regulations, data governments, and so on. The second angle is as the data is moving to the cloud, what kind of ecosystem does it build and how do we actually become part of that ecosystem. We have investors and partners like Visa, so we have to make sure that we help them to understand how this transition to the cloud happens and at the same time keep the data regulated, safe and private.
Paul Cusenza: I’m not running 23andMe today, I’m running Nodal Exchange, an electric powered cloud exchange that can do a variety of things. I am currently focused on what’s going on in Texas. I’ve got lots of meetings this afternoon with lots of different people because the prices went in for the month of February for Texas at $26 and they are now at $1,800, or a seventy-fold increase. That has implications, it’s all about risk management too and what I’m doing so I’m focused on Texas power, right now but going forward we’ll see what’s next on the horizon there are a lot of problems that haven’t been solved.