Before Israeli entrepreneur Naor Weissmann founded cloud AI startup Heili, in April 2015, he was consulting other startups on their storage issues. The data industry had gone through a dramatic transition: where there were a handful of databases, servers and programming languages, now there were suddenly dozens–if not hundreds.
“It’s a lot of data to accumulate, and systems got bigger: instead of buying one bigger server you could slice one however you wanted it, but it makes it harder to understand when things go down,” CEO Weismann tells Red Herring, sitting on antique East German furniture at Berlin’s hub:raum, the Deutsche Telekom-funded space in which Heili won a spot in November 2015, at a Cloud Bootcamp.
Almost a year-and-a-half and considerable financial backing later, Weissmann says he has finally figured out what his company’s product is. That might seem a long time. But his journey epitomizes challenges most startups never hurdle.
Coming from almost two decades of consulting, Weissmann, who is relaxed, charming and almost raffishly avuncular, was confident people would buy immediately into Heili, which is a self-learning, AI-driven cloud infrastructure management solution.
He was wrong. “We were consultants, data developers,” he says. “We didn’t have full realization on how to build a product.” For the first time, Weissmann adds, he was selling something other than himself. It was a painful revelation. Making it was vital.
“I would do a lot of things different,” he says over the noise of tech-based chatter in the cafe of one of Germany’s most exciting startup centers. “There were three major revelations.”
The first of them, Weissmann says, was related to the technology itself. These days it’s almost impossible to avoid the subject of artificial intelligence–whether it’s connected home devices, self-driving cars or elderly care robots. Heili was doing AI “before it became a buzz,” he adds in a rare humblebrag, “and I’m almost embarrassed about AI now because everything is.”
But being a freelancer for so long had embedded a starving-artist mentality that was tough to shake. “You have a temptation to build ‘demi-products’,” Weissmann says. “You grow them and you try to sell them, instead of integrating offers in your portfolio. And then you crack because you have a lot of small products that require a lot of maintenance, and little revenue. We had to rewrite everything, and now we are concentrating solely on our proprietary technology.
“At first we focused on our consulting too, and it was too much for a small team to handle,” he adds. “It was a painful lesson. Concentrate on the secret sauce, and develop that.”
Today Heili is rated as one of the hottest startups along Berlin’s ‘Silicon Allee’, providing a full stack infrastructure whose “killer feature” is the ability not only to alert users when a system fails, but to fix them. “We don’t feed machines with human blood,” the company’s motto goes, referring to machines’ ability to repeat tasks far better than humans.
Coming up with a tagline like that was, in part, due to the second of Weissmann’s revelations: understanding Heili’s value proposition; why someone should pay for your service. “At the beginning we thought, ‘We want it, so probably others will as well,’” he says. Maybe some would be interested but we didn’t understand why people would pay for it.
Weissmann adds, “It’s a vast difference that completely escaped us. I was speaking to a VC who asked me what our business model was. I said, ‘We’re a SaaS-based company and you pay us X-amount per month.’ It completely fails to explain why someone would pay.”
At some point, he says, chuckling, “the founders need to get off the stage. Founders really feel that they are helping people, and want to explain how they did it. But it’s not yourself you’re selling.”
Weissmann’s third revelation has to do with tech ecosystems–specifically, figuring out that, as he puts it, “not all ecosystems are created equal…not all ecosystems are created similar.
“The size doesn’t matter,” he adds. “What matters is whether that ecosystem can support you as a company, and your idea.” Comparing his home market of Israel, which has lurched towards staggering tech dominance in recent years, and Berlin, which is geared largely towards e-commerce, Weissmann says, “When you come here with technology ideas it’s very hard to understand who will listen to you.”
Wooing Deutsche Telekom was, Weissmann admits, a massive coup for Heili. The company moved into hub:raum in November 2016 and the CEO is clearly loving his time among a host of other talented tech professionals.
Doing that–and learning his own company–has, Weissmann says, set him up for plenty of future success in the $195 billion-per-year cloud infrastructure management market: “We finally understand what data is used for. We see really good ideas–finance, health–ideas that are really moving. We will not participate in those, we will probably help them.
“You should never move too far from your competitive advantage.”