Emil Eifrem is the CEO and Co-Founder of Neo4j which provides a graph platform that helps organizations make sense of their data by revealing how people, processes, and digital systems are interrelated. They’ve raised $160 million to date, including an $80 million round in 2018. Some of its investors include Eight Road Ventures, Heartcore Capital, Dawn Capital, or Conor Venture Partners to name a few. The company is rumored to be valued at over $1 billion.
In this episode you will learn:
- Emil’s advice on what not to name your company
- The advantage of having kids as an entrepreneur
- The one question they kept running into with investors
- How different founders deal with just getting to work and pushing it forward
- The willingness to fail in order to succeed
- How to go about problem-solving in startups
About Emil Eifrem:
Emil Eifrem sketched what today is known as the property graph model on a flight to Mumbai in 2000.
As the CEO and Co-Founder of Neo4j and a co-author of the O’Reilly book Graph Databases, he’s devoted his professional life to building and evangelizing graph databases.
Committed to sustainable open source, Emil guides Neo4j along a balanced path between free availability and commercial reliability. He plans to save the world with graphs and own Larry’s yacht by the end of the decade.
Connect with Emil Eifrem:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. I think today we’re going to learn a lot about data. So, without further ado, I want to welcome our guest today, Emil Eifrem. Welcome to the show, Emil.
Interviewee: Thanks, Alejandro. Great to meet you.
Alejandro: How was life being born and raised in Sweden?
Emil Eifrem: Yeah, it’s great.
Alejandro: You came to the Valley a little bit later. What was your story before you made it all the way here? What was life like there? The culture there because as a European, myself as well, it’s quite a culture shock coming here.
Emil Eifrem: Yes.
Alejandro: So, you did a little bit after your studies, which you ended up being in 2007. You did perhaps corporate, and then before you went at it as an entrepreneur. In university, before that, at what point did you get this love for computers and technology?
Emil Eifrem: That was always there, I think. Growing up it was, of course, video games. That was kind of the key thing. I was the classic geek. When I wasn’t reading fantasy books, I was playing role-playing games. When I wasn’t playing role-playing games, I was playing video games. Like none of which would put me out into that nasty thing called [1:25]. Right?
Emil Eifrem: Classic that type of kid growing up. Then after a while, I just started becoming more and more interested in how those games were being built rather than just playing them. I was always like a math kid, and interested in tinkering and engineering-type stuff. What really made the whole thing about software and computers was that I realized that once you know how to program these things, you’re only limited by your own imagination. That, I thought was pretty amazing because I was always interested in creating stuff, but I’m really impractical with my hands. So, I never could build stuff. I had an engineering mindset, but I could never translate that into physical inventions. Of course, once you enter the virtual world like cyberspace rather than meet space as we used to talk about it. Then all the sudden the possibilities were endless.
Alejandro: Then as an engineer, I think it’s really all about problem-solving. How do you think about problems?
Emil Eifrem: Yeah, that’s a good one. To me, one of the more interesting things about problem-solving from an engineering perspective, actually subsequently translates into entrepreneurship, although I didn’t think about it at all that way. I think it is an openness and a willingness to fail, which means that once you understand that failure is just like you’ve tried something, and you haven’t yet found out the successful approach. That is what failure is. Then all of the sudden, you’re willing to take a lot of risks. You’re willing to open up your mind and really traverse the problem-solving space in a creative fashion which actually translates very well into entrepreneurship. I think that’s an interesting kind of synergy between the two.
Alejandro: I see that before you went at it as a founder yourself, you were first the architect of Windh, and then you were the CTO of Windh again. Can you tell us what was this experience? Because you did this before you went at it as a founder, so I want to understand. What was the drive or the intention of going into these couple of gigs, and what were your takeaways from those?
Emil Eifrem: I guess I’d broaden it because I was never the kind of entrepreneur who would have a lemonade stand, and always be selling stuff, and things like that. That’s kind of one classic type of entrepreneur, I think. But what I always did though even as a kid is, I always had projects. Whether that project was to write a book, or that project was to write a school newspaper from scratch, or I created one of the early online internet games like when the internet was really, really young in the early ’90s. We created this online text-based role-playing game, and I was 14 at the time. I learned a lot. I always had these kinds of projects. They were never for profit. Never ever. It was just because I wanted to create stuff. Then growing up, I ended up doing a lot of programming. Then in Sweden at the time, we just talked about how we’re both fellow Europeans. In Sweden, at the time we had mandatory military service when I was 18 or 19. So, all men had to enroll in that. I did that. After I got out of my military service, it was like October or November. It was late enough in the fall that I couldn’t start college. I had basically a year when I was like, “Huh. Now, what am I going to do?” I ended up studying philosophy or something. I took some random classes, but then basically what I did was I spent my evenings and nights programming. Then just through a random thing, like through a friend or something, someone introduced me to this job at this small company, even though they didn’t describe themselves as a small company. They used another term that I had never heard of: startup. Startup, I thought? They seemed to be doing interesting things technically, so I joined them. We ended up building an enterprise content management system. That was the first time I ever got in touch with this whole high-growth, venture-funded. They were angel and venture-funded. This is late ’90s, early 2000s, and raised the total of probably 5 million dollars or something like that. I ended up becoming the CTO. That’s actually where I ran into the problem which made the small team that I was embedded in where we invented what now is Neo4j, the company that I’m founder and CEO of today.
Alejandro: We’ll talk about that in just a little bit. For this company that you were working at, was it based out of Sweden?
Emil Eifrem: Yeah. They were all in Sweden.
Alejandro: But I mean the concept of startups, now in Europe, it’s quite green, but it’s starting to be developed and less monopolies on the four or five VCs that are there, just like putting funny price tags on companies. I think that’s changing now, but I guess back in early 2000s or late ’90s where you were joining this company, and it was almost non-existent the concept of startups. Is that right?
Emil Eifrem: That is absolutely right. Then, of course, what ended up helping to popularize it was the IT Bubble. This is the late ’90s. We had our own version, so whatever was going on in Silicon Valley here in Scandinavia. That ended up even getting mainstream press. That is really when like common people, the common man if you will, normal people started hearing about startups for the first time. But by and large, it was a very, very immature space compared to for sure to what it is today.
Alejandro: Let’s shift gears a little bit here, and let’s talk about your first company. It’s kind of nerve-wracking taking the leap of faith. How did you incubate this idea? What was that problem that you finally tackled that you said, “I’m going to figure this one out.”
Emil Eifrem: Yeah. It’s working at this enterprise content management system company right there in Sweden. We were doing what we would today we would call the multi-tenant SaaS application. It was called ASP back then, Application Service Provider which some of the more greybeard in your audience may remember. Basically, what it was, it was like a SaaS application which was multi-tenant, so we had multiple customers all sharing a slice of the same system. We were doing enterprise content management which you can think of as a big file system on the web. The pitch was that, “Dear Big Company, rather than storing your files on your local hard disk or on some kind of shared hard disk shared file server internally, you should upload it over the web” which was crazy enough in the early 2000s, but “to our system, and then you’re going to get all kinds of benefits.” For example, some of the things we did were very media-focused. So, if you uploaded maybe some PDFs, maybe some photos, we would do crazy things like—and sit down when you hear this. We would not just show file names, but we would show “thumbnails” of those files and folders. It’s crazy stuff. Right? Which, of course, today, our phones do that. Actually, in the early 2000s that was mind-blowing to people. But we also did some—well, even today, think of some actually cool stuff. For example, we could search across all your content visually. Let’s say that you’re a marketing team at a big company, and you’re changing your logo. It would be very handy if you could then say, “Give me all the assets that have this version of the logo.” Then whether that’s embedded deeply into the PDF file, or whether that’s in a Word document, or whether that’s just like logo.jpg. Give me all that back. We did that based on visual search, like not in the file name or anything like that, which 20 years ago, that was pretty cool. But what ended up happening, though, was that because we had to keep track of all these things, that this file is embedded inside of this file, and this whole file is then all in this folder which belongs to this folder. A lot of that is how things are connected. It’s not just the individual actions, the individual files themselves, but who they are related to and what they are related to. So, we ended up with a lot of data that was connected. It turns out that you can store that in the standard stack at the time which was included a relational database, so this is an Oracle database, or Microsoft SQL Server, or something like that. You can store how things are connected; connect the data in that, but it’s cumbersome, and it’s awkward. I was the CTO, had 20 people or so working for me. I noticed that half of my team spent the majority of their time just fighting against the relationship database. This is surprising to me because, in all my previous experience, all my previous projects, the database had been an accelerator. It took us a while to figure that out, but ultimately as we double-clicked and triple-clicked on that problem, we realized that the key friction point was that there was a mish-mash in the shape of the data that we had, which was very connected, and the building blocks that were exposed to us by our standard data infrastructure, the relationship database. A little bit of a square peg, round hole thing going on here. That’s when we realized that, “Wait. What if we had a database that looked and felt exactly like the relationship database? Exactly like Oracle, but rather than having a tabular extraction, because relational database works like Excel, rows and columns. What if we had a network model instead so that everything could be modeled with the building blocks of just a node that you can think of as a ring or circle and relationships between them. Just arrows connecting them. With those building blocks, you can model everything. That was the spark. That was the initial thought that we had that, “Hey, that would be amazing.” Then we said, “You know what? Someone should build that.” We started looking around. We starting not even Googling around. This is early days. We started AltaVista-ing around, and Yahooing around, or whatever the search firms were at the time.
Alejandro: When you say “we,” who is the we?
Emil Eifrem: Yes, this is the engineers. This is the technical team at that enterprise content management company that I was working at in Sweden. So, we didn’t find anything. Ultimately, we said, “Forget it. How hard can it be? Let’s just build it ourselves.” It turns out 15 years or so later, it was pretty hard to build a database. I know that now. It’s really hard to build the technology, and it’s also really hard to take a new type of database to the market. But luckily enough, I didn’t know that back then. So, we were young enough and naïve enough to just say, “Let’s build it ourselves,” and that’s what we did.
Alejandro: Oh, my gosh. I love it. It reminds me of the movie Risky Business. Have you seen it?
Emil Eifrem: No, I have not.
Alejandro: It’s the movie of Tom Cruise. At one point in the movie he says that there are times in life that you need to say “What if?” and basically what if gives you opportunity, and opportunitie gives you freedom. So, you said “What if?” at that point.
Emil Eifrem: I did, and by the way, I’ve always thought that in the inevitable movie about the database company, because we all know that database companies are the most interesting and sexiest businesses out there. I always felt that my character would be played by either Tom Cruise or Brad Pitt.
Alejandro: I love it. I love it. So, let’s talk about the day where you finally say, “Hey. We’re going to build a business around this thing. Leap of faith is in, and let’s make it happen.”
Emil Eifrem: Yeah, it’s a good question. What ended up happening after we got to that moment where we said, “Let’s build it,” is that we did build it. It took us a long time, several years. That’s one of the things about a database; it takes a while to build. But, ultimately, we were successful, and we used it just internally because it was a competitive advantage if you will. It made us build enterprise content management systems faster than anyone else in the market or so we thought. But we always felt that this was more generic. This is more widely applicable than just for our internal thing. If we had this problem, surely others would too. Then we also had this fairly naïve and simplistic, but I think a pretty powerful view of the trends which was if you imagine a chart with a Y-axis and an X-axis, and the X-axis is time, and the Y-axis is how connected the world is. For ourselves, right now, it’s just an arbitrary point. As time moves on, are we going to go up or down on that chart? Once you ask that question, of course, we’re always going to go up because the world is just becoming increasingly connected. Because data models ultimately the real world—if the real world is becoming more connected, obviously, data will become more connected. This was our analysis pre-IoT, pre-social media, pre-multiple cellphones and your watches being connected and all that. At that point, we said, “Time is on our side.” Like we’re on the right side of history kind of thing. We felt like one day we’re going to be able to open this up outside of our existing company. That time happened in 2007. In 2007, all of the sudden, people started talking about big data. Amazon published a research paper talking about how they had to invent their own database from scratch. They didn’t want to do that. “We want to sell books, but we had to build our own database to cope with scale.” Google said the same thing. All of the sudden, the discourse in what I call the Alpha Geek Community, so the really, really early technology adopters were that, “Hey, you know what? The relational database isn’t the only type of database that we’re going to be able to use ever. So, that’s when we decided to actually, “You know what? Let’s take this piece of technology that we’ve built internally, and let’s spin it out into a separate company.”
Alejandro: Then when you made that decision, and you were “We’re going to make this a business,” what was the founding team that went at it with you?
Emil Eifrem: That’s a good question. When we invented it a few years earlier, there were three of us. There was myself, my co-founder Johan and my co-founder Peter. There were the three of us that invented the model and all that good stuff. When we decided to spin it out and start a separate company around it, it was just the two of us, myself and Johan, so there were two co-founders. We ran it alone for a couple of years when we were fundraising. Then when we landed the first seed funding in 2009, we started hiring full-time people.
Alejandro: What was the profile of Johan? I think his profile was engineering as well?
Emil Eifrem: Yes.
Alejandro: Typically, what they say that you want to go at it and find a co-founder that has different skill sets. So, in this case, you guys had similar skill sets.
Emil Eifrem: Yes.
Alejandro: So, how did you guys go about that?
Emil Eifrem: That’s a good question. I don’t know if that is the right advice to have different skill sets. I think when you’re doing something as deeply technical as a database, it is really helpful if both of you—if you’re two co-founders. If both of you are deeply technical. Now, we had very complementary personalities, so Johan was always a great builder. I used to joke that his mentality was that when in doubt, code. When he woke up every morning, he would just start coding. If there was nothing burning like almost literally burning around him, he would start coding. That is fantastic because, at any point and time, the product always moved forward, which is so valuable in the early days. I’m much more of an extrovert. So, I would wake up and even though I loved coding at the time, and I’d been coding my entire life, I would also be out a lot, meeting with people, talking to potential users, and so on. We ended up with complementary personalities probably, which over time translated into complementary skill sets.
Alejandro: It’s really interesting, Emil, because your background of being an engineer, you are quite the star. I’m sure that when you go into a room, you light it up like a Christmas tree. So, how has it been for you going from the engineering side to the business side?
Emil Eifrem: It’s been very, very easy actually because I was always curious about many different things. So, for example, I studied economic history in college just because I was very curious about that. I’ve always been kind of cursed and blessed I guess with having a broad range of interests. I’m really, really happy that I got my spike. I guess you’re talking about this T thing where you want to be deep in one area and broad in a bunch of others. My spike is in deep hardcore programming because it’s very hard to become—in fact, it’s impossible to become world-class at that without decades in the basement. I spent those decades in the basement writing database kernels and writing Linux drivers, and Telnet implementation, all that stuff which means that I’m pretty good technically. But then, as the company started growing, and really the high-order bits were the more important problems were to solve were non-technical, at that point, I always found it very intuitive to figure that stuff out. I don’t think you need and be able to sort that out. You can learn that on the job especially in a technology startup.
Alejandro: Really cool. When we’re thinking about databases and what you guys have built, I think that monetization is a real pain to figure out in many, many instances. So, how did you guys go about the business model and making money?
Emil Eifrem: A great question. One of the things that we started out with was that I always felt that in order for us to really make this take off and become a really big business and have massive impact, I felt that we really needed help on the marketing front because we had chosen to take on two almost impossible tasks which is very stupid, but we didn’t know any better. The first one was single-handily write what’s called an Acid Compliant Transactional Database. There are only a very few and a handful of companies in the world that have been able to pull this off. They’re called IBM Db2, Microsoft SQL Server, Oracle, so on and so forth. That’s almost impossibly hard to do technically. But the second thing we took on was on the marketing side which is we chose category creation as our go to market strategy. What that means is that—the name of our product is Neo4j. So, category creation then is Neo4j is an X. What is X? Volvo is a car, so the category for Volvo is car. What is X for Neo4j? It’s a graph database is what it’s called. We were the first team to put those two words together: graph database. Graph as in social graph, for example, that Mark Zuckerberg talks about. Then database, we all know what database is. That is ultimately one of the most rewarding or at least maybe the most rewarding go to market strategy that you can embark upon because if you end up owning a category or becoming the leader in the fast-growing category, you get this proportion of the rewarded for it. But having said that, it’s also really hard to pull off. So, what we decided to do then was “We need help here.” That help is not going to be from hundreds of millions of dollars of funding, at least not initially. But we’re going to open source our product which means that we’re going to get this massive adoption through developers which then will create if we build a good enough product, and in fact, an amazing product that people love, we’re going to get that viral word-of-mouth to spread, and that is how we’re going to get the word out. So, we very early on chose this open source approach to distribution. That, I think in turn, leads us to some interesting discussions around monetization. Does that make sense?
Alejandro: Yeah, and I think that approach is very interesting. I think that Facebook, Twitter, and other companies, the way they opened up their APIs and worked with developers really helped them to thrive as well. From a distribution perspective, you’re right on, and that’s really, really intriguing. At what point did you decide to come to San Francisco? Did you guys start the business in Sweden, or was this in San Francisco?
Emil Eifrem: We started in Sweden. We formerly formed the company in ’07, raised a small seed round in ’09, but it was really in 2011 that it started taking off. That’s when I moved to the Valley. That’s when we raised our Series A, and 11-million-dollar Series A. We flipped the company to become a Delaware Corporation. Even though we kept engineering in Sweden and Europe broadly, we moved the headquarters to San Mateo outside San Francisco.
Alejandro: Why did you move?
Emil Eifrem: Because we felt that when you’re doing such a deeply technical thing, and you want to impact the world as much as we want to. We had very high ambitions even in the early days. It just makes sense to be in the Valley because, at the end of the day, it’s the center of gravity for our industry. I have this strong belief that in this day and age you can run a company from anywhere. You can run it from Sweden. You can run it from Spain. You can run it from Australia. There are certainly successful examples of all of that, but the way that I think about it is that you should—it’s at least easier to be in the center of gravity for whatever industry you’re in. In finance, it’s New York and London probably. If you’re in fashion, it’s Milan and New York. I don’t know the center of gravity for fashion is, but that is not my area of expertise let’s say. But for technology, it certainly is the Valley. The way that I liken that with is that if you’re at the center of gravity, everything is just going to become easier. It’s like running uphill versus running downhill. You go through the same motions, but it just takes you further. That’s why we ultimately chose to relocate to the Valley.
Alejandro: That’s really interesting. The other thing, for example, I went to give a guest lecture at Wharton in Philadelphia. One of the professors there mentioned to me that there was a study that came out that said that by being in a major hub, your chances of success increased by three.
Emil Eifrem: Interesting. I had not heard about that study, but that makes intuitive a lot of sense to me, and it’s certainly been amazingly helpful to us to be in the Valley and be tapped into that network. Or, as we like to call it, into that social graph.
Alejandro: One thing here, Emil, that I see left and right because I’ve been here for almost 12 years in New York City, but there are a lot of founders that I see trying to cross the Atlantic from Europe because the problem that you have in Europe is basically that the largest fund, probably I can talk for Spain right now, is like 100 or 150 million maxim. So, we’re talking about an early-stage fund here in the U.S. They cannot go, or follow one pass the Series A and really give you the money for Series B and beyond. That’s a problem. The main issues that these guys are pushed to come to the U.S. to find a round of financing, and then they find themselves either their corporate structure is already completely messed up by systems of sophisticated people that invested in their business, they are completely ignorant of the dynamics and the culture that they’re going to face when coming here. How was that process for you guys?
Emil Eifrem: It was actually very natural. I’ve always been very value-oriented, even as a kid when I ran that online game on the early parts of the internet in the ’90s. I always started building out more relationships with people in the valley for some reason. I was going there a lot in the early 2000s, and so on. I was always very value oriented. When we moved over there, I moved there specifically. It was very easy for me to start forming those relationships face-to-face if you will. I never saw that as a big problem. We also had a very authentic connection back home. We kept our engineering HQ in Malmo, Sweden. Of course, since the co-founders were all Swedish, we could all very easily and authentically tap into that market. Actually, I never found it to be a problem.
Alejandro: When you say that it was quite natural, what were the critical ingredients that made that shift natural for you?
Emil Eifrem: That was my second time living in the U.S. I also lived in the U.S. as a teenager, as an exchange student. I certainly think that was one part of it. Sweden is also a very Americanized country, so our cultures are very similar. Then I think also that one of the things that now we’re a 250+ organization spread across multiple continents. We talked a lot about differences in culture and countries. One of the things that is becoming abundantly clear after a while is that there’s actually way more similarities between people hired in tech in the U.S., and in France, and Sweden, and Spain. They have much more in common across geographies than people hired that work in tech versus non-tech in the same country. So, I think that all just helped. It was really my group of people. There are startup people, tech people, and I think that made it all very natural and easy.
Alejandro: In this case, talking about fundraising like we were, a business like this probably requires a fair amount of capital to get things in the right way.
Emil Eifrem: Yes.
Alejandro: So, how much capital have you guys raised to date?
Emil Eifrem: We’ve raised 160 million dollars to date. We raised an 80 million dollar round last year. It’s a total of about 160.
Alejandro: If we were to break down the 160 in different financing milestones, what has been your experience or your takeaways as you were jumping from financing stage to financing stage?
Emil Eifrem: What I find, when you talk to other entrepreneurs, I don’t know if this has been your experience. My experience has been that there is frequently one big question mark that is always—maybe it’s several sometimes, but usually, it’s like one big question mark that is the high-order bit if you will for each startup when it comes to fundraising. Like, “Hey, you know what? I don’t know about that team. Something is falling about that team.” Or “Can they ever get that product to work?” For us, that was very much the market. There’s always, “Love the team.” Or at least, that’s what they told me. “Love the deep technology. Love the customer base. Love X, Y, Z.” But what really is ultimately the size of the graph database market? That is always the question that we got asked. Just by the way very natural. When you choose category creation, you don’t know ahead of time because you’re not selling into an established market because you’re creating it as you go along. You are Levi Strauss who are just producing pants. No. “We’re producing this crazy new thing called jeans.” So, you can’t go to any analyst and ask what the size of the market is because you’re inventing it as you go along. It’s very natural. Now, for us in Series A, that is the big question. In Series B, that is the big question. In Series C, that is the big question, but that actually changed last year. When we were apt to raise our Series E, there was some amount of discussion around, but the dynamics had just changed because what happened in our space in the last couple of years is that we’ve gone from zero competition because we define the category, and we were pretty alone in the category into Amazon launching a graph database, Microsoft launching a graph database. Oracle launching a graph database. IBM launching a graph database. SAP launching a graph database. Basically, all the big enterprise software vendors have now launched competing products to us. Then you can look at that and get scared like, “They’re all coming for us.” There’s certainly some amount of that, but by far, it is the beneficial thing because, at the end of the day, our biggest enemy is people’s unawareness about the fact that we even exist. When I say we, I don’t mean specifically Neo4j, but even the concept: our category, graph databases. A lot of people have problems that are caused by having convicted data trapped in a database that isn’t fit for that purpose, but they don’t think of that, that they’re paying in those terms. They think that my fraud detection algorithms aren’t good enough. My recommendation isn’t good enough, or my database is slow, or my developers are stupid, or something like that. But they don’t think of the root cause. That is what all these competitors, the Amazons, the Microsoft’s of the world are helping as well.
Alejandro: Look, I think that that reminds me of what happened with Instacart, and I know it’s a different segment and a different industry, but it’s like the same idea. I think that competition is healthy. In the case of Instacart, I remember when Amazon, you were talking about Amazon, acquired Whole Foods. Everyone was like, “Instacart is going to be bust as result of this.” Funny enough, that incentivized all the other local supermarkets to really say, “Hey, we’re missing the boat. We need to implement technology.” The fastest way to do that was to go to Instacart. So, the other actual thing happened when Instacart just skyrocketed. Really interesting that you say this. You were pointing to as well, Emil, at certain times where you felt like being scared over these competitors. We know, Emil, that entrepreneurship is a tough journey. So, I want to ask you here, what was or what has been so far in these 12 years of work because building a startup is going to work. What has been your darkest moment, and how did you bounce back out of it?
Emil Eifrem: That’s a great question. Darkest moment. The point where it felt the most hopeless was probably really, really early on. It was in early 2009 when we had been out fundraising for about a year, and the first time got completely shot down by the financial crisis and followed 2008. We bounced back from that and got one of the best VCs in Europe to give us a term sheet. We ended up signing that, and we got through all the motions, post-term sheet, which probably more of your listeners are familiar with, but all the due diligence, looking through our books, through patent Free to Operate investigation. All of that stuff as well as translating the term sheet into final legal documents. We got through all of that. As you well know, the company pays for that. We were completely running on fumes. We had 18,000 Swedish krona which is about $2,000 left in the bank account when finally, we all agreed, “Yes. This is now signable.” That is when that firm told us, “No, we’re going to pull out.” The GP, the partner, was leading the deal had decided to leave the firm, and so they decided not to honor the term sheet. At the time, I had six employees, including the two founders. It was a week from payroll, and we had $2,000 in the bank account. I actually thought to myself, “This is going to be a great story one day if we survive it.”
Alejandro: So, how did you survive?
Emil Eifrem: We hustled, man. We hustled. That’s what we do. Right? So, we were six people. I got word on a Tuesday, sat down with the team and just said, “Alright guys, this sucks, but here’s the deal. Therefore, I’m going to ask. I’m not going to tell. I’m going to ask you all for a favor to just go out and do consulting, and not even related to our product. Just go out and do any kind of software consulting.” Happily, and I’m still today eternally grateful to them. All of them just said, “Yes, of course. That’s not why I joined this company to do consulting, but I’ll do it because I believe in this idea so much.” On Wednesday, I had them all out with customers doing consulting. On Thursday, I had convinced those customers that I could send an invoice early. I hope I’m not incriminating myself here because I think what I then did was in the grey zones because on Friday, I took those invoices and I sold them to a factoring firm. I think you’re not really allowed to do that for consulting. I’ve now learned because I think you need to actually perform the work before you send in the invoice. I think technically, but I think this is old enough that I’m hopefully not going to incriminate myself.
Alejandro: The statute of limitations has passed.
Emil Eifrem: That’s what I’m saying. Right? So, Friday, I sold those invoices to a factoring firm. Got cash on Monday, and made payroll on Tuesday.
Alejandro: Wow. That’s unbelievable. What a journey, Emil. One thing that I’m sure you’re going to be able to really provide some color here for everyone that is listening is there’s just so much BS around AI. Everyone and their mother are saying that they’re doing AI and machine learning and data being the new oil. Where do you think things are really heading in the space, Emil?
Emil Eifrem: That’s a great question, and first of all, I really agree with you. I think there is a lot of BS going on. A few years, we were all talking about cloud washing. Anyone and their mom would, at least in the Valley, would pitch a startup. They called it the Cloud XYZ. It was called cloud washing. For sure, we have AI washing going on now. Whatever they do, it’s like AI this and that. Or an ML back this and that. Of course, you probably know the difference between AI, artificial intelligence, and ML, machine learning which is that machine learning is written in Python, and AI is written in PowerPoint. I think that’s just one of those things that ends up being true, especially in the Valley when things are really high. Just everyone throws it into their pitch decks. Having said that, I actually still believe it is underhyped. I think that the impact of this, it is just by far the biggest we’ve ever seen in the history of technology, and I don’t think I can emphasize that enough. We are looking at a completely new way of producing software. It used to be like what we’ve done to date is that we sit down, and we compute heuristics. We try to articulate that ourselves like, “If this happened, then that.” Now, we can infer that based on patterns in data. The impact of that is going to be really, really even more significant than what people say today. So, I’m actually a big believer in this, and I think there’s a very authentic connection to what we do because ultimately like all these AI systems, they need context. What is context? Context is how you relate to the world. My context is I was born in Sweden. I work for a company called Neo4j. I’m married to my wife, Madelyn. I have three daughters. That is all my context. That is what gives me color. That’s how I relate to the world. That’s all captured in graph systems and in graphs which is ultimately what we do. So, I think it’s a huge trend for software and technology, and it’s a trend that we are really, really looking forward to participating in.
Alejandro: That’s a fun fact. I have three daughters as well.
Emil Eifrem: There you go.
Alejandro: Probably we have a similar context, and we may need to compare notes whenever the boyfriends start showing up.
Emil Eifrem: I was going to say, man, once they all hit teenage years, that’s going to be hectic. I will probably look back on running a high-growth startup as easy compared to managing three teenage daughters.
Alejandro: I hear you. So, we’re talking about trends and where things are heading, where do you see Neo4j is going to be when you’re able to fully realize what you guys are up to?
Emil Eifrem: I don’t consider myself a serial entrepreneur. I’m not in love with startups as a concept. I’m in love with this startup. I think what we do is just amazingly interesting, and I think that we are doing something that is very foundational and very fundamental. I think connect the data is a fundamental piece of that data landscape. It’s a central building block. No one has done it well today. No one has done it well. So, I think that if we work really hard and are really lucky, then I think that we have an opportunity to build a big independent company around managing connect the data. That’s absolutely the goal, and the hope, and the dream.
Alejandro: I love it. One question, Emil, that I always ask guests is—you’ve been at it for over 12 years now. You’re full of startup war scars sort of thing. So, if you had the opportunity to speak with your younger self, Emil, and give yourself one piece of business advice before launching a business, what would that be and why?
Emil Eifrem: Don’t name your company after a password. Don’t put a number in the company name would be one thing. Neo4j. Right? That’s probably tongue-in-cheek. No, that’s a good question. I think that like a very early advice that I got from my COO who joined as a very experienced executive and joined me very early when we were just 14 people. He told me that—this was pre the three daughters, pre-kids. He said, “Dude, you need to get kids because you’re working way too much.” And I was. It was like 18 to 20-hour days, 6 days a week. That, I think was very sound advice. I think that I never agreed with the dichotomy of work smart or work hard. I think you need to work hard and smart. But having said that, I think it is helpful to take a step back sometimes and breathe a little bit. Then you’re going to end up making smarter decisions. That would be one piece of advice. I think the second one would be just the importance of communication and over-communication. We are a highly-distributive company. We’re 300 people spread across many continents. Probably 40% in North America, 40% in Europe, and 20% elsewhere, something like that. So many time zones. So many Slack messages, and making sure that everyone is on the same page. It’s just becoming exponentially harder with distribution. So, just the value of over-communicating and forming those authentic human relationships as much as possible through face-to-face I think would be the other thing that I would emphasize to my younger self. I know I cheated and gave you two things when you asked for one, but hey, that’s how it goes.
Alejandro: Hey, we got the bonus. We’ll take it. So, Emil, for the people that are listening, what is the best way for them to reach out and say hi?
Emil Eifrem: It’s probably on Twitter. @emileifrem. But you can search for graph databases, or Neo4j and Emil, and you’ll find me. I’m very findable on the internet. But probably the easiest way is on Twitter.
Alejandro: Amazing. Well, Emil, thank you so much for being on the DealMakers show today.
Emil Eifrem: Awesome. Thanks, Alejandro.