Startup Interview with Mel Rosenberg

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D: How do you see the current situation for startups?

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M: The current situation for startups is that, there is money available. There is lots of space available. People now fight to bring good startups to a new space. So, for example for our space here in Shankar we are trying to bring good people just to sit here and to mentor students. We don´t charge any money. So, you can come and sit here and once in a while you will be a mentor and a resident and student may walk by and ask you for help or make a connection in Germany. Basically, I think that the startup situation has never been better. That´s my opinion. Incubators are fighting over good startups. Now, that´s the good news. The other news is, that less than 1 in a 100 startups succeed. It might be 1 in a 100 or 1 in a 1000, but it is not more than 1 in a 100. People come together, they have an idea, they work on it, they buy a domain for a few dollars. Some of them bootstrap. Some of them gets some money from their family. But at some stage, they have to face  reality, which is, that you have grow. And to grow you usually need money. The money is not stupid money. The money is clever money, so for example I have a track record as an inventor, but as an entrepreneur now with my startup I am having trouble raising money, because I don´t have a good business Model. So, it´s a wonderful environment for starting out, but then it´s like a funnel. To be a successful startup, what does that mean? Raising some angel money and then it runs out? Than you go into the trough and you have to raise more money. And that´s when most startups, that have succeeded, to get past the first hurtle, failed the second the second hurtle. And some of them raised the second round and they have money and sometimes it´s VC money, sometimes a few million dollars and that money runs out also. Unless, you have over the second; let´s say it´s like a rocket, unless you have; except each, it´s the opposite of a rocket, because each time you have a thrust and you need a bigger thrust, you need to raise more money, you have to hire more people. At every stage, the air becomes thinner and most of us are ending up failing. So, I think that the question is not a success culture question, I think it´s a failure culture question.

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D: How do you deal with the failures, basically.

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M: I think that, this is a country, that has a culture in which people can fail. I´m not gonna say, it´s ok to fail, I´m not gonna say it´s not embarrassing to fail, but people don´t commit hara-kiri, because their startup felled out. They are upset, they are pissed off, but they brush off their knees and get back in the game. Or they get a job at a big company. When you are a startup player you have to do everything. You are the CEO and the CFO and you sweep the floor. Funnily enough these skills, that the world economic forum has put forward as the top skills in 2020. A lot of these skills are the skills, that you develop as a good startup player. Critical thinking and be able to work with people and creativity and the ability to present yourself. These are all skills you have to know as a startup player. So even if you don´t succeed and most don´t succeed, you are among the people that Facebook is looking for and Microsoft is looking for and the big players will more likely to hire somebody, who has tried and failed instead of somebody who has never tried. What I found out from “Y Combinator” is that the kids, and they are kids, who fail end up getting top jobs in the successful startups, such as Facebook and Google.

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D: That´s make a lot of sense and that´s I think really the common sense around here, what you were just saying. Good place to start, a really good environment.

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M: I can tell you a few other things that I think. People talk about the army, right? We are under danger and we have to come up with great ideas and we have a feeling, always that we are David against Goliath. We need to be clever, there are more of them, there is less of us, we have to be faster and smarter. So yes, army is of course very important. But there are two other things. One is, the ability of Jewish people to tell stories. And there are different opinions of this. A friend of mine Max Shatner wrote a book a few years ago, that the success of the Jewish people is because they are great storytellers. And this starts from the bible, which has the most wonderful stories. And in our culture, the oral tradition is very strong and this is one, the ability to tell stories. Because everything is a story. A startup is a story. Listen to my story. I was walking down the street and bird shit on my head and then I had this idea of an anti shit hat. It´s all about the story. You pitch that bird hat to an angel and he or she might say “Oh, that happened to me yesterday, so I will invest in your company”. This is ridiculous, but just as an example. But I think, that there is something else about Jewish people. It´s not only, that for 2000 years we didn´t have a country and in many countries and eras we couldn´t own land and we couldn´t do this and couldn´t do that, so we had to find ways to survive. But I think, there is something in the Jewish mentality about also dealing with God and the religion. Judaism is a difficult religion. So, for hundreds of years, Jews have negotiated with God. On Sabbath, you are not allowed to walk around caring things, unless there is a wall around the town. But then the rabbis said: „Well, it doesn´t have to be a wall it could also be a fence and it doesn´t have to be a fence it could be a wire. Or, “So, you can´t get into an elevator and push the button on the Sabbath, right? But, if you get into an elevator and the elevator automatically goes up, floor by floor, then it´s ok”. So, we have this whole thing of negotiating fine print with God. Negotiating with God. I really think that helped us.

And the other thing is, that we are a coffee house culture. Lots of coffee houses and you have to experience this. You go into a coffee house and somebody from one table hears somebody form another table talking; „Oh, I know you, aren´t you the guy, who has launched…; or, “Excuse me, I heard you talking about bananas. We know, how to import bananas. We can help you.“ So, there is a culture of more helping each other than competing with each other. Yes, of course, people are competing for resources, but this is a country, where the startup nation is a nation people helping one another. There is an expression, [כל ישראל ערבים זה לזה], which is, that we all have a stake in each other lives. All Jewish people are responsible for all other Jewish people. I find this a real important aspect, that people are willing to go out and help. This is so important, it´s all about networking and it´s easier to create a network here, than anywhere, except in places, like Silicon Valley. These are the places we compete with.

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D: Yes. Still, it´s a place where it is possible, very possible.

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M: Yes, this is called “hutzpa” it´s like having a lot of nerve. You go up to a professor and you argue with him. Israel kids will go up to Sergei and Larry and Mark and Jeff and just speak to them. In other words, our young people really have nerve. If they are in an elevator, they will pitch. So, I think this is very important, this culture of sharing and approachability. I´m a professor, but I walk around campus here and I speak to students and they speak to me and it´s not Herr professor, it´s Mel. My mobile number is on the door of my office.

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D: Wow, that´s great, this kind of ability to talk freely to your professor. It´s like about your motivation. What was your motivation to found your company?

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M: I had several companies.

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D: Oh, ok. So, speak in general, what was your motivation.

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M: because I have written a lot of e-Books about this. I was always different. I wasn´t able to do anything the way other kids did, including tieing my shoes. So, it´s wasn´t something, you know, I got up in the morning and said: „Oh, I´m going to be different, I´m going to invent things, I´m going to write stories.“ It was just me. When I was 5 in kindergarten, they forced me to write with my right hand, I´m left handed and they forced me to pray to Jesus and I´m Jewish. So, I understood at the age of five, that you can´t trust authority. I´m always gonna be different. I´m always gonna be left handed and I´ll always be Jewish and I can appreciate Christian teachings but, ,hey,  I´m not gonna pray to Jesus. So, I went through school, realizing that you have to bow down to the seniority of teachers and you have to get marks and you have to go to class, but you don´t have to trust them. I have been doing things differently since the age of 3 or 4 or 5. It´s not something I can take credit for. I was never able to be normal. I learned in a very young age, that I´m different, I´m left handed and Jewish, I was in [audowar] an anti-Semitic city with few Jews and persecution against sinister left-handed people. And I realized just that´s the way I am. I was born different, I always gonna be different. It´s not even a choice, it just was. So, I was always doing things different. I don´t remember times when I was the same as other people. I just wasn´t me.

So, Ourboox is a story, because I´m a children’s book writer and I couldn´t find a platform that was easy for me to create a picture book online. My wife, Shulamit Sapir-Nevo is a poet and she writes books with poetry and photos, that she takes. So Ourboox grew out of our frustration in creating online books with pictures. So, you can go to Amazon, you can go to CreateSpace. It’s very difficult for a normal person to upload a book on one of these platforms. And then we said: „Ok, we want books to be free anyway. We want books to be available anyway. “So, we found a great partner, a great web-developer, Ran Shternin and we started to work and the first book came out. The first book was a book of Shuli’s poetry, with photos that she had taken. It was on the screen and the pages flipped and we called my wife over to see it and she went bananas. She started dancing around the house and said, that we gotta do this. So, I´m lucky, because I´m not young, at least chronologically and we have enough money, so we can invest in our own project. And for us, the issue is not and it still isn´t, will we make money? The questions we cared about were:  will it work?  Will people use it? And I think that was our main hurdle. And this is what I teach the kids – do something good for a community. We didn’t worry about the money. We don’t know the answers and perhaps we never will.

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D: Oh, wow.

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M: Yeah, but you never know. I´m good in helping people think about their ideas. Come up with creative ideas, I´m not so good at making money. I made money only when I had partners, who knew how to run a business.  When they didn´t cheat me, I made money.

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D: Ok, well, so it´s like one hand washes the other..

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M: Daniel, what do I tell my students? I tell my students, the following: The chance of success is one in a 100, tops. Make something out of the process about of the journey. You have to believe in it 100%, there is a dichotomy here. On the one hand, you know that the chances are slim, but if you don´t believe 100% in it, nobody else will.

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D: And if you make the one of 100 equals zero, if you don´t believe in it.

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M: If you don´t believe in it, it´s zero for sure. If you believe, you believe you still have one in a 100 chance, but you have to believe, like anything. So, learn, experience the journey, do as best as you can. Have fun, do something important, make you minimal viable product, something, that helps people. Something, that helps the world. And hope, that someone is paying for it.

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D: Yes, tell your story, basically.

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M: Make your product and hope people will use it. Instead of concentrating from the start on making money. I think, if you concentrate on making money from the start, your chances are not as good, because your story is not as good. The human side is not as good and you all the time concentrating on the other side. Offer it for free and at a later stage see whether you can charge for it.

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D: And see, if you get business partners.

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M: yes.

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D: And maybe let´s stick with this one. How do you see the density of investors here? So, business angels and VCs here in Tel Aviv?

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M: Yes, there is a good density, but you need to have a good business Model. They are not stupid. Here is the thing. Even VCs, people come to VCs after they raised one or two rounds usually and they have customers and they have a business Model and they have something. So, the VCs may look at 100 companies and will invest in 10 of them and if two succeed, they are lucky. So, this funneling is very severe. So yes, there is money for good ideas, that business viability. I don´t think that is the problem anymore. I think the problem is, that the people, who are investing money are smart and they want to invest in things, that are gonna bring them success.

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D: yes. That´s always how it goes.

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M: They are judged by the returns on their funds. I think there is money, but it´s smart money, it´s not stupid money. And they are looking for good ideas and they know the good ideas for them are rare. Not everything is Waze.

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D: Yes of course. Waze, that´s 1 in a 1000 startup.

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M: I think it´s one in 10.000.

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D: Ok, let´s come back to your story. Have you had any prior experience, when you started your company?

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M: yes.

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D: Like market experience, entrepreneur experience or technical experience.

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M: Ok, what is an entrepreneur?

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D: Someone, who brings his idea into reality.

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M: That´s right and I´ve been doing this my whole life. Have I done it in a classical way? Yes, I had a startup, called „Innoscent“, which was an early (1990s) startup, funded with government money and a bit of my own and by Tel Aviv University and the RAD companies. So, I have had many years of experience as an entrepreneur, but my main success was as an inventor, not as an entrepreneur. You might say, these are separate. But you are not separate, because as an inventor you have to pitch your invention. You have to run around to a dozen and sometimes many dozens of companies and trying to get them interested. In my case it wasn´t selling up a company, because the inventions belong to the Tel Aviv University, but going on the road and to sell the technologies. As a university professor, you can´t wait for university to sell your ideas, you have to run and sell them. And I did. Then, after we licensed to technology I would often stay on as the scientist, but not as the business person. So, I´ve been an entrepreneur for decades, but not in your classic sense. I your classic sense I had several companies. The company before Ourboox, or the website was meltells. Meltells.com, was just my stories for free on the internet and I thought everybody else would follow suit. I was completely naive and that led to ourboox. So ourboox is a company but in the meantime everything is free there and I’m just losing money. I would love to make money and there are ways to make money, but I´m questioning, whether those are the ways we want to go. Or maybe we’d rather team up with publishers, with other businesses and we are going to pursuite both routes. Because if you want to raise money for an internet company, there are very few ways to raise money. One is advertisement and one is premium services and that´s about it. There are not that many avenues. And what happens, if you don´t want the advertising? And if you want your consumers to enjoy as many benefits for free?

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D: Than you need external money, obviously.

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M: Yeah, but external money, but who wants to invest? So, this is exactly what we are trying to deal with right now.  We have a growing company, used all over the world, very exciting. And now we have to decide how we want to advance it. Do we want advertising on our books? We don´t. Do we have to to get investment? Maybe.

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D: That´s a step you need to discuss.

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M: this is what we are doing right now. But, we couldn´t reach this stage, if the product wasn´t good and if people won´t using it.

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D: Well, these further thoughts are waste of time, if nobody is using the website.

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M: Yes, we are in a good place.

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D: That´s brilliant to go from this one. Yes, of course.

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M: From a point of few of being a successful startup, we are on the way in an emotional sense. In the sense that an entrepreneur is somebody, who changes things, who does things, also yes. In the money sense, not yet.

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S: So, maybe you are not in the product market fit position at the moment, but eventually you will go there.

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M: Perhaps, but you see other people creating products for free and they are sharing them for free and I´m happy in this space right now. As long as search engines love me and almost 80% of our customers come via organic search, that´s a good sign.

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D: Yes, and if it´s growing and people will know it, then maybe you can do something with this community.

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M: Yes, and even now, after almost 4 years we still have maybe 10% chance of financial success. 100% of emotionally success and 10% of financial.

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D: But still there is a chance…

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M: Yeah, I´m a happy camper.

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D: that´s beautiful, that´s brilliant. Ok, so how did your initial idea become than a viable company than? Can you maybe tell about this story? At some point, you had this idea about ourboox and how did this become than the company, what you are having now?

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M: ok, I pitched the idea at an un-conference, where there was an informal pitch competition. Where the winner got some kind of PlayStation or something. And I didn´t win, but I almost won. And people came up to me and said they will help me with this. This is a really good idea, bringing writers together with illustrators. The original idea was to bring writers together with illustrators, you write a story, somebody will illustrate it and that exposure caused me to say: „Ok, well this is an idea, that maybe this is something I should do.“ But than it had to wait until I had the right web developer. When I found the right web developer, we did what everybody does. We played around with it, we created a mock up. I showed it to Jeff Pulver, he thought it was a good idea. And we just processed from there.

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D: ok, beautiful. The classic way, basically. Have there been any events, to which you went in this whole process or still going to events for basically networking?

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M: So, I´m a big believer in networking. I´m working part time here at Shenkar, having networking events like right now. I think, that everything is networking, but it is not only networking at a networking event, it´s networking for me 24/7. In a taxi, on the bus, watching television, reading, internet, looking for people that you didn´t know existed. The actual networking events are very important, but for me networking is something you do all the time. It´s always on you mind. Who do I have to meet, that I don´t know, that I have to meet? Usually, you go to a network event and meet 60 people and if you lucky one will be a future contact who might be important over time.

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D: Might give you a lead. And staying on the topic of networks. How do estimate the visibility of networks and then the accessibility of networks? What I mean is like, if you are new here in Tel Aviv, how easy is it to find networks, which benefits you and then the next step, who easy is it to access.

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M: Ok. So, for young people it can be sometimes difficult, to access the right people. The trick of networking is very simple. And this is to try to identify the key people, you have to meet them, do most of the listening and find out what they are interested in and what they are involved in. And startupists, they don´t understand that. So, if you want to interest me, then you have to be interested first in what I´m interested in.

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D: you need to find common ground.

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M: Yes. I give my students a class on networking. And I say, that the trick about successful networking is not to tell the other guy what you do, but to find out what he or she does. To speak 20% of the time, not 80%.

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D: Let the other one tell and listen carefully, that´s an asset you might want to develop. Listen to people and understanding them.

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M: this is something difficult for me, because I like to talk. This is something I have had to work on. I´m a university professor, I give lectures. I love talking. So, I´m not a good listener, but I recognize that I´m not. So, I work on it.

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D: well, it´s your profession to talk, to give lectures, so it would wondering me, if it´s the other way around. If you a good listener, but you have to hold lectures.

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M: Yes, but when I´m speaking with somebody, I get really excited about what they have to say and then I can´t shut up either.

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D: Well, you need to find a balance of this. But I´m not here to tell you what to. I´m here to ask you about special laws and taxes, which benefit startups here in Tel Aviv?

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M: I don´t think, that we have a beneficial tax situation, but we don´t have a painful one, like in Greece. So, there is no big tax benefit, but there are also no horrific tax burdens.

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D: Alright, that´s fair enough. How is been the physical infrastructure here in Tel Aviv, so internet, water, electricity, transport? How is this?

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M: It´s not a burden. We have good internet, we have lots of water, now. We didn´t have for many years. People can get around, that´s not the issue. And even, if you would say to me, that´s an issue. All of these companies, ICQ, twenty years ago, there was no great internet infrastructure here. Entrepreneurs make their own luck happen. They make their own infrastructure, they wire up their own internet, they find ways to do it. If you really believe in your idea, you will knock down concrete walls.

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D: So, what were the major growth accelerators for you company?

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M: Google! We started out with 10% of our traffic from search and now, we are 70%.

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D: And it´s all because of google?

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M: Because our website is HTML and WordPress and everything is; Google reads every word and understands every picture. And this was our idea at the beginning, to make it free and accessible. Google likes free and accessible. So, it likes reading and ranking our stories, Google likes understanding our pictures and it rewards us, by good natural SEO. There are individual words, especially in Hebrew and Arabic that will lead to books when searched.

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D: Like highlight words, which pop up.

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M: Yeah.

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D: Ok, sweet.

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M: And 70% of the people, who are visiting the website are not looking for a specific book form a specific author. The look for a book about potatoes and onions. Or something about potatoes.

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D: Great, perfect. How do you estimate the labour market for qualified people, here in Tel Aviv?

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M: Difficult, expensive. It´s very hard to hire talented people. You heard this before, we have to now, train, like crazy. People to go to web development and Applications and cloud and all these areas, because we can´t compete anymore. People come out of the army and get paid better than professors.

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D: Yes, I heard some numbers for developers, which are…

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M: …crazy.

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D: Crazy! That´s the right word. If you have the experience and the qualification that´s crazy.

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M: So, this is a huge stumbling block, but it´s also an indication of success. It´s like, how can apartments cost as much as in Manhattan? A lot? Oh, because people want to live here. So, it´s a price of success.

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D: Yes, I reckon it´s like, or we compared it, it´s like in Munich. The prices are like in Munich in general. Really expensive.

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M: Yeah.

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D: And how do you see, again, the visibility and accessibility of mentors, advisors and institutions here in Tel Aviv?

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M: Lots of them.

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D: ok.

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M: Next question.

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D: Alright. the last is.

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M: The question is finding a good mentor.

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D: Obviously, yes..

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M: Daniel, I failed in the past, by listening to clever people, give me the wrong advice. And I have given the wrong advice to other people. It happens, it happens all the time. You know, you have your experience and your know-how and you think something and sometimes it turns out you are wrong and you send young people or investors down the wrong avenue. We all do this.

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D: I think, that´s natural. You don´t know the future, but you tell your experiences, you give these advices to people, yes. And then already the last question. Which obstacles have you experienced or are you facing at the moment? Out of your startup perspective, now.

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M: Which obstacles?

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D: Yes.

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M: Well, we have to grow. Because we need, according to this model of content, the more content we have, the more new content, the more search engines are going to love us and the more our community is exposed to the world, the more people want to access quality books on our platform. We want to help our community grow, improve all kinds of technical aspects. We want the author to be able to make money for their books. We have all kinds of ideas we are working on. But I think the main thing is, attracting good quality content. Ourboox want to be a kind of YouTube for people, who want to upload content in picture book format. The same Model, we know, we gonna have a lot of mediocre stuff, but we want to have a lot of people adding quality content and if they add quality content and if they feel that people are going to discover and read their material. So, beyond anything else, beyond investment we need good writers and we need readers and we need the search engine to help us bring the community of readers and community of writers together.

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D: Ok, that´s good. Well, these are some challenges, which you are probably about to solve then, or?

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M: You never know.