Alex Kazerani is the co-founder and CEO of Openpath which offers a mobile and cloud-enabled access control system for businesses and landlords. The company has raised $30 million from investors like Unfront Ventures, Pritzker Group, Emergence, Sorenson Capital, Bonfire Ventures, and Fika Ventures. Prior to this, Alex Kazerani cofounded HostPro (acquired by Micron Electronics for $25 million), KnowledgeBase Solutions (acquired by Talisma for over $10 million), and EdgeCast (acquired by Verizon for $400 million).
In this episode you will learn:
- How Alex splits ownership and roles with his founding team
- Who gets stock options in his companies
- When you shouldn’t take VC money
- When to take venture debt instead of venture equity
- The trial and error of finding the right marketing strategy for your startup
- The one metric that’s a sign it is time to sell your company
- How to time your startup exit
- The type of work Alex does at his current startup
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Alex Kazerani:
With more than 20 years of experience creating and leading technology businesses, Alex Kazerani is Openpath’s CEO.
Prior to creating Openpath, Alex Kazerani co-founded EdgeCast Networks, a global content delivery network that sold to Verizon for $400M.
After the sale of EdgeCast, Alex Kazerani spent two years shaping the strategy of Verizon Digital Media Services.
Alex Kazerani also co-founded KnowledgeBase and HostPro, which were both acquired.
Alex Kazerani has received several awards during his career, including E&Y’s Entrepreneur of the Year award in 2014.
Alex Kazerani is an active investor in several venture capital funds and has served on boards of universities and private and public companies.
Alex Kazerani graduated from Tufts University and lives in Santa Monica with his wife and children.
Connect with Alex Kazerani:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today, we have a founder that has done it — has done the full cycle several times, and I think that we’re going to be learning quite a bit. We’re going to be learning about finding opportunities where others see problems, especially on industries that haven’t been experiencing innovation for at least 30 or 40 years. So without further ado, Alex Kazerani, welcome to the show today.
Alex Kazerani: Thank you for having me, Alejandro.
Alejandro: Originally, you were born in Iran, but you spent quite a bit of time traveling: 11 schools, 6 different continents, so I guess this shaped you quite a bit, Alex.
Alex Kazerani: Yeah. Actually, it was a streak contest, but yes, I spent about ten years in France. Then I went to boarding school in Pennsylvania. I went to college in Boston. You learn to adapt to different environments to understand different perspectives. It was an amazing journey.
Alejandro: For you, how would you say that it shaped you as a person? Because here you are, changing all the time, making new friends, and it was a little bit shaky, I would say.
Alex Kazerani: That’s right. It helps me when I interact with folks to understand where they’re coming from. What is their perspective? What is their pattern recognition for decision-making? It has to do a lot with their background, their environment, what they watch, what they see. Looking at it from a different perspective, if you switch countries, states, or schools, you get to see beyond that. That has been really interesting for me.
Alejandro: How would you say that this has influenced you and the idea of becoming an entrepreneur?
Alex Kazerani: One of the things that’s important is data, and not to be biased based on your own experience, your own opinion. I think your own experience might create the passion. You might see a pain point that you’ve suffered. Then, following real data and real analysis might help you assess the size of the market, the size of the problem, and how other people perceive it even though they have been from within the industry or from outside of the industry. It allows you to think outside of the box.
Alejandro: I think that one critical, I would say, event in your life was going to Tufts in the early ’90s, where you did your international relations and economics, as well. That was the time where you were exposed for the first time to the internet. How was that?
Alex Kazerani: I remember when we were one of the first people to get email accounts in college and start sending emails to each other. I was so excited because at the time, I had a girlfriend, and she was remote, and we couldn’t afford to call each other, but we could afford to email. We would write these long emails, and sometimes, the emails weren’t real-time, and one email would cross while the response hasn’t arrived yet. You would get them out of sync. It was a really exciting time. Unlike all my friends that wanted to go to New York and become a banker and get into investment banking or consulting, I thought I wanted to get involved in tech and get involved in the internet space.
Alejandro: And you actually did get involved, but it was as a job, and it only lasted a huge amount of time: three months. So tell us about this.
Alex Kazerani: Sure. There was an internet service provider in Los Angeles that gave me a job. I flew from Boston to LA. I started working with them, and I was doing sales. It was really interesting because I was learning about the internet. I was learning about T3s and T1 internet connections. I was learning about web hosting, how web pages are built, and everything that goes along. People were registering domain names every day. It was amazing. I was so passionate about it. It’s just that my boss didn’t always believe in paying on time. I never got paid my commissions doing sales work. It was quite frustrating, and there were arguments inside the office. After three months, I said, “You know what? I’m going to go and do a web hosting business, not so dissimilar to his high-speed business, but I’m going to do everything the exact opposite of his management style. Because that was my only experience with management besides some internships and college. It turned out that our version doing the exact opposite of what he would have done, worked really well. He ended up going bankrupt a couple of years later. Our company ended up growing fast and being sold.
Alejandro: What were the three things that you knew you were absolutely not going to do with this business, with HostPro?
Alex Kazerani: The first one was transparency in terms of how you treat your customers with pricing, advertising your website — if they like it, they can buy it. If they want to cancel, they can cancel. There are no long-term contracts, no swindling you into a deal that might not be beneficial to you. The second one was transparency and integrity with your employees. If you give them a compensation plan, and they make their numbers, you pay them. If anything, you up it with positive encouragement, bonuses, and rewarding your best performers. The third one is a relentless focus on product and product volume, like being extremely passionate about the quality of the service that you’re providing. That brings repeat customers; it creates virality; it is so powerful when your product works, and it has high quality built into it.
Alejandro: You guys were growing. You were doing the good stuff that you learned that you were absolutely not going to do, and obviously, that paid well for the business. You didn’t raise any outside capital, but why did you decide to go for an acquisition?
Alex Kazerani: There are a couple of reasons. One is, we were looking at some analytics, and literally, all the cash that we were spending on advertising, we were making 140% an average return on cash-on-cash basis a month. So we were really excited about the business. We’re like, “This is unbelievable.” Around the ’99 timeframe, we saw that percentage start coming down: 140 became 130 became 120. At the time, we didn’t know it, but that led to eventually becoming the 2000, 2001 bust of the internet boom. As we saw these things starting to come down, we started getting a little bit concerned. Meanwhile, everybody wanted to be in the internet space — the VCs, top investors, and traditional companies wanted to acquire dotcom businesses. Combined with the fact that we were 25, 26 years old at the time, we were living in a very frugal environment. When you get some incredible offers, and you’re going to turn around and become a millionaire overnight — after three or four years of building a company, of course, but still by doing a deal. That’s when we decided maybe it’s the right time to take our chips off the table.
Alejandro: You did this for about four years, and the acquisition was 25 million. So not a bad outcome for you guys.
Alex Kazerani: It was a great outcome. We were very excited. I ended up buying the boat, the house, and everything that goes along with it. But later, I realized I’m a bit of a workaholic, and I’m an entrepreneur. I need to go and build. I can’t just sit on the beach. That doesn’t work for me. So after about six months, I was back and building the next company.
Alejandro: And the next company is KnowledgeBase. Let’s talk about KnowledgeBase and how you came up or how you saw the opportunity where others saw problems, and how you went about it.
Alex Kazerani: The difference in wages was incredible between different countries, and outsourcing was becoming the new trend. We looked at this, and with call centers being outsourced to the Philippines, to India, to all over the world if you will, we saw an opportunity to manage the knowledge that you need to take from your product development teams all the way to the call center agents that are taking calls. We built a company called KnowledgeBase, and it was a great company. It was cashflow positive. But it was a niche play. It wasn’t going to grow big. There were only so many call centers that had this kind of a need for our product, and there was only so far that this product was going to go. We decided that maybe we swung the pendulum from a commodity business web hosting way too far to a very proprietary knowledge management business for the enterprise. Maybe we need something more in the middle where we can have differentiated technology, but for it to be something that we can have mass adoption and to grow something big. When the right partners came about to buy KnowledgeBase, we absolutely wanted to sell, wanted to get out, so that we could go and do the next business.
Alejandro: This was an outcome in the double-digit millions. One thing that’s really interesting here. I know that you’re not a big fan of taking outside capital if it’s a niche-type of approach. Why is this?
Alex Kazerani: It’s a really good question, Alejandro. I have a friend named Jay. He was building a company in San Diego. They got to four or five million dollars a year in revenue. They went to raise money from Sequoia, the top-tier VC firm. They start putting money to work to try to grow, grow, grow. Sequoia was like, “We’re right behind you. Keep doing it. After the money ran out, the revenue had grown barely to 6 million. It was also a niche business that was going to be 5, 6 million dollars a year, and it wasn’t a VC-quality business. So the end result was, because they had grown their infrastructure and the call structure so much and the business hadn’t grown, nobody wanted to fund the next round, and it eventually had to be sold in bankruptcy. It was a sad story for me, but it’s something that happens where either the VCs might misread it or the entrepreneur’s trying too hard because the entrepreneur thinks their idea is the best and it’s going to be huge. But if your business is not the right business for VC, and you bring in outside capital, and you want to create that growth, then it’s possible that might actually backfire.
Alejandro: What would you say, Alex, that separates the category or group of companies that are VC fundable types of companies from those that are non-VC fundable companies that absolutely should not go after this type of investment such as the type of example that you were aligning?
Alex Kazerani: I think the good research on the total addressable market is really, really important. I’m not just saying, “This market is billions of dollars, according to Gartner. No, there’s still bottom-up analysis. Let’s analyze how many people would need this? How often would they buy this product, and what is the total addressable market. So you want to nail that, and that is the primary indicator for a company to be a good candidate for VC funding. VCs that are putting in money, they’re expecting, especially at an early stage, 10x. They’re expecting 5x. They’re expecting 20x of their money. They know that some of them will make it, but that is what they’re going into. A good marriage, a good partnership is when you truly believe that your product and your service and the market you’re going after, the problem you’re solving is something big enough that you can do 5x, 10x return for your VC. That is really important. Otherwise, you get into a bad marriage, and it’s just not a great outcome for anyone.
Alejandro: Got it. Going back to your story, after you did the exit of KnowledgeBase, I know that one day, you came across YouTube, and this opened your mind and perhaps led to your third company. So tell us about this.
Alex Kazerani: Sure. We were watching YouTube, and I was looking at these at the time in 2006, these small thumbnail videos. I’d been working on the internet from web hosting and trying to deliver videos since ’96. But in 2006, I was like, “Wow! They’re going to make video online a reality. You literally can watch good content for hours. This is becoming real.” We thought to ourselves that the big difference within an internet-based video is that it’s bi-directional. You can ask for what you want to see, and the system will deliver it to you. The minute you have bi-directional, now if you compare this with the old paradigm of broadcast TV, where you have to flip through 500 channels, that’s painful. Now, you can think of a new interface where you can search for videos, you can watch what you want to watch, when you want to watch it, on the right device without having to flip through 500 channels and having missed out on the movie. We thought that this was going to be a gamechanger. This was going to change the way people consume video and entertainment online drastically, and this is a very big business. When we looked at that, we analyzed whether we should go to a user-generated content space or MyVideo space, create content, and have core expertise from our web hosting days was infrastructure. We decided that we’re going to create a content delivery network. Towards the end, we had 47 locations in so many companies where we were delivering. That’s 7% to 8% of all internet traffic, with customers like Twitter, Pinterest, Tumbler, ESPN, ABC, Hulu, Disney. So we made that bet in ’06. We built the infrastructure. We realized this is a big addressable market. We raised outside capital. Not only did we raise VC funding, but we also balanced it with venture debt. The reason we took venture debt is interesting. We looked at our business. We were buying millions of dollars of servers, shipping them all over the world to Argentina, France, Spain, Japan, Australia. Then our customers that were using our service globally were paying us a little bit of a monthly fee. Our business was heavily cashflow negative, although the fundamental was really strong. So by raising venture debt, we were able to balance out customer payments with our payments to the bank and fund our expansion and our growth of capital needs.
Alejandro: It’s interesting that you’re touching on venture debt because there are ways of raising money that you can defer later into equity, such as the convertible notes that you can do at an early stage, or maybe if you need a bridge. But venture debt, I find that it makes more sense if your past a Series B financing. What would you say are some of the pitfalls and things to keep in mind where, when you’re thinking about venture debt as a potential route to finance your business?
Alex Kazerani: It’s a really good question. Sometimes, banks dangle it in front of you. I think a good venture debt or general debt strategy is one, as you pointed out. After your business has been proven, your product/market fit has been proven because you don’t want to use debt instead of equity and take that kind of risk for the bank. The bank is not going to want it. It’s not going to work out well for you. If your business and product/market fit have been proven, and there’s a reason to finance certain items with venture debt to increase growth, then that totally makes sense. Let me give you some examples. If you are a hardware company — at OpenPath, we make some hardware along with our mobile-based accessed services. There is a debate whether we should give the hardware to the customer for free as long as they subscribe to the service. The only way to economically align the cashflow of that is with debt. So if the business makes sense, if the lifetime value is there, if we can make more money and acquire more customers by lowering the barrier to entry, then debt will be a good effective tool for that. Where at EdgeCast, we would use it to buy servers, but then our customers would pay us every month, we would pay the bank every month. It was a perfect alignment for that. But I don’t recommend using debt instead of equity to prove your business model because I think that’s way too risky.
Alejandro: Talking about proving the business model, I know that for you, and especially your experience as a founder going through that phase of being in the desert, just trying to find the water or trying to find that product/market fit has been one of the toughest challenges for founders, but I know that for you, it was definitely some of the experiences that were the most challenging for you. So tell us about this.
Alex Kazerani: Sure. In our first company at HostPro, everything we tried would fail. We were losing. I was literally cold calling; it would fail. We tried banner ads; it would fail. We couldn’t make it work. I’m not going to bore you with the details, but long story short, after a lot of trial and error and banging your head against the wall, we found out that if we buy paper ads in magazines like Wired, PC Magazine, and all the tech magazines at the time. If you negotiate to get a one-year subscription deal where you do 12 ads, but you get it at half the price, and if your ad is on the righthand side of the page, and if it’s in color, and if it has an 800 number, and a call to action, combined with a sales team that is sitting there, inside sales, low-cost sales team that are order-takers, sitting there taking orders from 5:00 a.m. to 11:00 p.m., that combination was working magic. We would put in $10,000 in advertising. We would make $14,000, 140% that same month. In KnowlegeBase, we were dealing with enterprise sales. It was a completely different challenge. It’s not about paper advertising or things like that, but what we realized is these big call center managers, when they want to make a purchasing decision, they’ve got to get two to three bids. How do they go and research for that bid to see who else is doing it? They would go ahead and use Google and Yahoo. At the time, literally Google’s Pay Per Click, we were sending them checks because they didn’t have a portal for us to subscribe to do keyword advertising. So we were advertising within Google and targeting these people when they knew they wanted the product, they were just trying to get two additional bids to check the box. Our strategy was, let them get exposed to us, and we’ll convince them why our solution is better. We combined that with enterprise sales staff, and we killed it. At EdgeCast, it was a different story because our customers cared about performance. At OpenPath, we worked through channel. We don’t even sell direct. We sell through a list of certified channel partners that install our mobile access solution. For every company, we had to figure out that go to market, and it’s a lot of trials and errors and keeping your finger on the pulse to figure out what combination works.
Alejandro: My next question here is, for the first time now, we’re going to be able to set the record straight because there have been different amounts that have been reported on the media about the acquisition from Verizon and so forth. What were the terms of the deal here?
Alex Kazerani: The terms of the deal, I believe was 360 or 370 million in cash, and about 22 million worth of incentives for the founding team and the senior executives and our key employees in the company. So, all in, when we added it all up, it added up to a 392-million-dollar purchase price.
Alejandro: Wow! Three out of three companies, Alex. Quite a good outcome for EdgeCast. Here, you guys had a little bit over 300 employees, and you started to see things growing. Probably, now, being the third company and the third acquisition, was there like certain questions that you would ask yourself to know if it’s the right time to sell or not? And if so, what were those questions, or what was that question that you would ask yourself?
Alex Kazerani: It depends on your mindset. Some people like to go long, go take the company even public, and go to different phases. Some people want to get out early. Your personal situation, how it impacts your family, your financial, there are a lot of different moving pieces. But from a pure company perspective, as long as your company’s growing, and if the rate of growth is increasing, you’re going to get incredible multiples on your revenue. If your rate of growth slows down, or you start flatlining, the valuation of your company comes way down, exponentially lower. If you suddenly start declining, that’s when nobody’s going to want to buy a company that pretty soon is going to go to zero. The whole difference is around your rate of growth. I think that sometimes, if your goal is to sell — for example, right now, we’re building OpenPath. Our goal is not that at all. But if your goal is to sell a company, you might be better off selling a little bit sooner, and you might make more money actually in the acquisition price because your growth rate is growing faster, and you’re going to command a higher multiple. Then if you wait a couple of years, even though you’ve grown the business, but if your growth rate has flatlined, and you can no longer command a growing company, and now your valuation just drops.
Alejandro: Here, with Verizon, one thing that I thought was really interesting, you actually stayed there for quite a bit without the need of having that locked-up period or the vesting for that long, but you stayed for quite a bit, like two years. I think here you had the opportunity of seeing a larger corporation being able to operate with thousands of employees that you were used to seeing in the hundreds. But why did you do that, and what were some of the biggest insights that you got from seeing a company at this level of operation?
Alex Kazerani: I look at Verizon as a Fortune 10, Fortune 15 company — a company with a 200-billion-dollar market cap, 120 billion dollars a year revenue, that at the time we were spending. When you think about that and when I think about the journey of my life and as an entrepreneur building companies, I was like, “This is one of the few chances I get to experience what is it like on the other side? What is it like to be in the Verizon executive team running a big company?” There are about 300 vice presidents there that run the entire, all the various divisions in the infrastructure. If you’re one of those, you’re at all the critical meetings. It was an amazing experience I stayed there for two years. I wanted to see how decision-making is done. What is important? And your perspective changes. How they talk, how they have meetings; how do they do budgeting and allocation? What are their pain points? What are their weaknesses, and what are their strengths? After about two years of being a student again, I really enjoyed the experience, by the way. I decided it was time to move on and start another company.
Alejandro: Talking about being a student, what was the one lesson that you took away from being with Verizon for two years?
Alex Kazerani: Ah! Let me give you a few quick ones. If you have a meeting, and you discuss anything that is under 10 million, you shouldn’t be in that meeting as an executive. If you are trying to make decisions around long-term products and projects, that is not always what helps you in the company at the time because the company might have reorgs and changes in management and strategies every quarter or every two quarters, so it becomes a challenge. It made me think that large companies are much better set if they require emerging technologies because building them inside a big bureaucracy is very challenging. Politics is interesting, and it can work to your advantage, or it can frustrate you totally. But a lot of times, large companies compete within themselves as opposed to competing with their competitors because it’s about the executive getting the next level promotions of brand operate. It’s not about how well did you do against AT&T?
Alejandro: Got it. Here, you had the opportunity of seeing some inefficiencies that were happening with badges, going from room to room, and things like that. Obviously, this led you into an industry that hadn’t experienced any type of innovation in 30 to 40 years. So how was this for you? How did you go about validating that idea and knowing, or perhaps having some sort of thinking around the fact that you may be able to do something about it when others were not that successful?
Alex Kazerani: I was carrying eight badges, and any time I would switch and go to a different office or certain parking lots, elevators, I would have to use these badges. If you forget them, you’re locked out. It’s disaster. You’re wasting hours. If you carry them, it weighs on you. It’s like water torture if you will. Then dangling more than a few badges in front of a door until you find the right one that opens the right door was a pain point. So we started looking at this, and we thought there must be a better way. We have a supercomputer in our pockets that is doing credit card transactions. How come that can’t open a door for me in a more secure, frictionless way where I can have a delightful experience. That is what we set out to do, and we built the entire hardware, software, and the cloud infrastructure companies to synchronize with their directory service, with their active directory or G Suite and load in thousands of employees, send employees with more click credentials so they can walk in and out. You can have 1,000 credentials on your phone, and it doesn’t take any space, so you can get into 1,000 different buildings if you must. We saw ways where we can improve security. We can delight the user, and we can improve the overall experience. Once we did that, the result has been phenomenal. The adoption rate, the virality, the customers that buy again and again for all their branch offices — it has been amazing. We thought, “This is huge. This is a big market opportunity,” and that’s why we went and raised again outside capital because we think we can impact the landscape.
Alejandro: How did you go about putting together the minimum viable product and validating?
Alex Kazerani: We spent about two years in stealth mode building the product. As a CEO, I have three objectives. Do I have a vision for what we want to do? Do we have the right people to execute on that strategy? Do we have cash to fund that strategy? Those are my three objectives. What we did was, we combined the founding team. We’d been working together, some of us, for 10, 20+ years. Plus, outside folks that are familiar with hardware and specifically within this industry. We are, indeed, the product. We grab beta customers. We start testing it for close to a year. We’re getting feedback from users about the mobile experience like what happens if you’re phone is locked? What happens if your phone is shut down, or if your app is shut down? All of these different things, we started testing and improving until we were ready for public release. Then we released a year and a half ago.
Alejandro: Got it. This was now the fourth company. Around the block a few times that you’ve been. Probably, this time around, you knew again that it was all about having the right people seated in the right seats. So how did you go about that?
Alex Kazerani: Yeah. It really helps because all of our companies, like EdgeCast, every single employee had stock options, from the receptionist, all the way to the top. When we do well, we win, and everybody wins. Then they want to join us earlier. We have so many people that wanted to join, which was helpful because right now, with the unemployment rate, it’s quite hard to track quality talent. When you have people that you have been to battle together, and you’ve had great outcomes, it creates a different level of trust and passion and excitement by doing it again. We brought people that would share the same pain points and share the same passion around this and have experienced the same pain points. Then we worked really hard at it, and we’re still working very hard at it. I think we have some exciting products that are coming out in 2020. We’re going to take this space to a whole new level.
Alejandro: Very cool. How much capital have you guys raised?
Alex Kazerani: We’ve raised close to 30 million dollars for OpenPath so far. In time, we’ll probably raise even more down the road. We’re really excited about it.
Alejandro: Very nice. Now, your fourth company, and the three other ones you’ve built, scaled, done the acquisitions, so now you know what it takes to do the full cycle. I’m sure that you’re well aware of the fact of how you’re able to raise money today is going to impact how you’re going to either raise money tomorrow or to do the exit as well. Once you change the corporate structure, there’s no turning back. How did you go about onboarding those investors and making sure that you have the right type of investors with a similar and aligned agenda to yours?
Alex Kazerani: Our first institutional round, we are the founders who led the round. We put in most of the round, and then we gave a small allocation to all of our local VCs in the LA area because we believe in the LA tech ecosystem. We want to support them. They’ve been with us in the past. We’ve done well together, and we want to support them going forward — Bonfire, FCA, Pritzker, and Upfront, and all these guys, Bryant Stibel. They all got up allocation, and they got to join for the journey. Our second round was interesting. Emergence Capital pinged us. Emergence is one of those B2B SaaS VCs that has done it again and again. They have multiple 10x funds in a row. Their latest IPO was Zoom, which was phenomenal. Santi, who’s on the board of Zoom, called us. For the first 45 minutes, he told us about our business. We were shocked. We were just listening. We were like, “Oh my gosh. He’s doing the pitch to us instead of us doing a pitch to him.” He finished the conversation by saying, “Guys, I’ve had a thesis on this for two years. I’ve looked at everything that has come and gone. You guys are approaching it the right way, hitting the right market, and you guys are the right team behind it. What can we do together?” That was on a Friday night. On Monday, we presented at their partners’ meeting. By the following Friday or Saturday, we had the term sheet signed, and a week and a half later, we had a full round done for 20 million dollars. The reason we were so excited is because Emergence is a B2B SaaS company. If you’re in our world where you’re selling to businesses, and you have a subscription-based revenue model, getting inside into how they look at things, metrics, numbers, subscriptions, and everything else, it’s so helpful. The second thing about them is, we did reference checks, and we called so many companies. The review on these guys was just phenomenal. They’re so entrepreneur-friendly. They take a long-term approach. They are not after a quick flip. They’ve had so much success that they don’t have a chip on their shoulders. They want to be supportive and do the right thing for the company. It was super refreshing, so we’re excited about doing the deal with Emergence. We’ve been heads down just growing the business, adding customers, adding resellers, and it’s been quite exciting.
Alejandro: That’s amazing. Now, four companies, you’ve seen a lot of people, you’ve seen different teams, and also, you’ve been able to understand what works and what doesn’t work when it comes to culture. How do you think about culture, Alex?
Alex Kazerani: The culture is really important to us, and it starts at the top of the founding team. The partners and I built a flat organization. We don’t like big hierarchies. We like everybody that rolls up their sleeves. When they ask me, “What do you do at Open Path?” I say, “Mainly janitorial work.” And it’s indicative that we are all in it together. It’s not like me ordering somebody to do something. We work together as a cohesive team. The second thing about it that’s important to me is, we have experience, we’ve been around the block, we know how it’s done. We will fail if we rely on that. We have to have grit. We have to be hungry. We’re competing with 22-year-olds that don’t have a family and kids and can work 24×7 for months straight without sleeping. We have to aware of that. Literally, we have to work really hard, not take anything, any advantage that we have for granted and execute by listening to our customers, but not deviating from the vision we have for where we want to go.
Alejandro: One important thing of culture, which definitely comes across speaking with you, is that you always talk about we rather than I or me. Obviously, not only do you do the talk, but you also do the walk, Alex.
Alex Kazerani: I’m glad you noticed that. For me, it’s natural, but I believe in the power of we. With my founders, when we start a company, we divvy up the loot equally. We say, “There’s four of us. We get 25% each. Let’s all put in x.” It’s not like a mindset where I get 80%, and everybody else gets 5%. That is how we approach things. From equity to ownership, decision-making, we like to have folks involved. I actually get frustrated if we’re moving fast, making decisions, and somebody hasn’t been heard. So we like that. At some points, we try to divide and conquer so that we’re not bogged down by committees. My partner, Phil that runs the entire sales infrastructure or my partner, Rob, that runs the technology, or Kieran that runs marketing, or James that runs all of our biz dev initiatives and helps on marketing, we divide and conquer so we don’t overlap and overstep on each other’s toes. I think those are the best partnerships if you have a complementary set of skills. But at the end of the day, it’s a team effort. It’s all about us. We’re all doing it together, and we all depend on each other.
Alejandro: Absolutely. One of the questions that I typically ask the guests that come on the show is if you had the opportunity — we’re talking now about four businesses, three exits, a ton of money raised, as well, from outside investors, if you had the opportunity to go back in time and have a chat with your younger self, maybe that younger Alex that was about to touch the third month before giving the notice to go at it as an entrepreneur. If you had the chance to speak to your younger self and give yourself one piece of business advice before launching a company, given what you know now, what would that be and why?
Alex Kazerani: I always regret selling all three of my companies. Regret is a waste of time. You’ve just got to learn going forward. When you look at my little competitors at EdgeCast, they’re still smaller than when I left EdgeCast, are now public with multi-billion-dollar valuations. Like Fastly and Cloudflare. When I look in the web hosting space, and it turned out to be AWS, Azure, and the big techs started dominating it, that’s what we were doing ten years before these guys. I think that what could have been the opportunity if we had helped and gone long and raised the right capital with the right partners? But at the time, I didn’t have the experience. I was 26 years old. Our management experience was very limited. Our M&A experience was limited. Our financing experience was limited. I think the question would be different if I, today, were to go back in time or if I could just pass a note to that guy back then. Overall, I’ve regretted selling even though it has worked out amazingly well from a lifestyle, comfort, and accomplishment. But that’s why at OpenPath, we want to go really long. We want to disrupt the space big-time.
Alejandro: Very cool. Alex, for the folks that are listening, they’re probably wondering what is the best way to get in touch or reach out and say hi? What would you tell them?
Alex Kazerani: OpenPath.com. My email is [email protected]. My Twitter handle is @akazerani. You can reach us any which way you prefer. I’m happy to chat. I do help out entrepreneurs. I do not invest in companies. I no longer do that. I only invest in VC funds that end up investing in tech companies because they know their job a lot better than I know my job as an investor. My whole focus is about building OpenPath.
Alejandro: Amazing. Well, Alex, thank you so much for being on the DealMakers show today.
Alex Kazerani: Thank you.
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