Ido Susan is the co-founder and CEO of DriveNets which is a fast-growing software company that is revolutionizing Communications service provider (CSP) networks. The company has raised one of the largest Series A financing rounds to date which amounted to $120 million. Prior to this, he founded Intucell which offered a self-optimizing network solution that enabled radio operators to better utilize their radio access networks. Intucell was acquired by Cisco for $475 million.
In this episode you will learn:
- The question that Ido goes out to ask customers before launching a business
- His top piece of advice before beginning a startup
- How to pick cofounders
- Ways to reduce the steep learning curve as a founder
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. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
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About Ido Susan:
Ido Susan is the co-founder and CEO of DriveNets which is a fast-growing software company that is revolutionizing Communications service provider (CSP) networks. The company has raised one of the largest Series A financing rounds to date which amounted to $120 million.
Prior to this, he founded Intucell which offered a self-optimizing network solution that enabled radio operators to better utilize their radio access networks. Intucell was acquired by Cisco for $475 million. DriveNets cofounder and CEO Ido Susan grew up in Israel with a love for technology. Thanks to good timing a love for experimentation, he was able to succeed as an entrepreneur. In 2008, he started his first company, Intucell. In 2013 Intucell was sold to Cisco for $475 million.
DriveNets was founded in December 2015 and has remained in “stealth mode“ until very recently while they developed the technology. It was created to enable Communications Service Provider (CSPs) to shape the future of their networks, realize greater profitability, and maximize operational efficiencies, by using similar capabilities to hyper-scale clouds to achieve the enormous performance and scale levels required by new and future applications.
In February of this year, DriveNets raised over $120 million in Series A funding from Bessemer Venture Partners and Pitango Growth, along with several private investors.
Connect with Ido Susan:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. So today we have an entrepreneur from Israel. I think that he’s going to teach us a thing or two about the hyper-growth mode, about building and scaling companies, and also exiting them. So without further ado, I’d like to welcome our guest today, Ido Susan, welcome to the show.
Ido Susan: Thank you, Alejandro. Thank you for the opportunity to be with you.
Alejandro: So originally born in startup nation, in Israel. So how was life growing up there?
Ido Susan: It’s hot. You know, Israel is desert, but as you know, the technology and innovation is coming out from here, so we love our country, and we try to do the best.
Alejandro: That’s amazing. And you actually started very early to develop this love for computers and electronics. How did that happen?
Ido Susan: I started as part of high school. I always liked to work with computers and to play with that and to do things. Then I decide I want to do it in the high school as well, and I continued up until the army until I’m dealing with this today.
Alejandro: Wow. Really cool. Problem-solving as well. That’s the engineering. One of the big problems was also going into the army. I mean, some may see it as a problem; someone else may see it as an advantage. How was the experience for you of going to the army?
Ido Susan: In Israel, it’s mandatory, so it doesn’t really give you any choice. But in Israel, you get in – the beauty in Israel is the selecting or screening, and [3:01], and they choose the people that can fit to the intelligence unit. For me, it was amazing, generally, because I got all the tools, and I got the experience that I never was able to get outside. Once you finish and you complete your four years of mandatory army, you’re really ready to go into the field with huge system, with future operation, and to be honest, this is my best experience, and it’s really helped me to succeed in the life after the army. So, if I were to summarize it, it was amazing, generally, and an amazing school for me.
Alejandro: When we’re thinking about this being as a school and lessons that you learned, what were some of those?
Ido Susan: Yes. After I left the army, I started to learn, and one of the best in Israel, computer and science. After a few months, I decide that I’m – don’t get me wrong, but I decided that I’m wasting my time because I got all the tools and all the knowledge in the army as part of the army. So I just jump in, as you said before, to go and solve big problems or big challenges, and to create my first company called Intucell.
Alejandro: Very nice. So let’s talk about this first company. How did you come up with the idea? How did the incubation process go?
Ido Susan: The objective: in the beginning, we created the company to create an LBS solution – Location-Based Solution for advertising. After we developed the technology, we found that the LBS business is not [4:50], but we have something that can monitor the cellular network in real-time and really can operate it and manage it in real-time. So we decide to take this idea and solve a big problem to our service provider customers and to really create a technology solution that after a few years, we were able to reduce the dropped calls by almost 20% to increase the network capacity. The bandwidth [5:22] end-user by almost 15%. This allowed us to succeed with more and more customers until we had an offer from Cisco to acquire the company. I think, for me, everything was new for me. Okay. It was my first startup. I was young; I was only 23 years old. I had just gotten out of the army. I learned a lot from the business side. I know about the technology, but I didn’t have any experience in marketing, on sales, on finance, and everything that you need – all the tools that you need in order to succeed. The rest is history. Of course, we also had some luck because you always need a good idea. You need to solve a little problem, a big problem, and you need some luck. The timing was very good for us because the iPhone had come out, and we really helped our customer to solve the data crunch and to improve the user experience. After four-and-a-half years of investment of 6 million dollars, Cisco acquired us with almost half a billion dollars. So everybody was happy.
Alejandro: Yeah, I can imagine, and also, you guys didn’t raise much money. How much money did you guys raise?
Ido Susan: In the Intucell days, we raised only 6 million dollars one round. We were able to generate revenue from the second year that helped us to grow the company.
Alejandro: So, how was the process of building up the business? What did that look like? Walk us through it.
Ido Susan: First, we did a lot of work to detect a problem, real challenges that exist today and was going to grow in the next five years. After you understand about the problem that is part of a trend, then you are able to solve it with a very unique solution. This is, I think, one of the keys to create a successful company. The second, you must come with a business model that will be win-win for you and for your customer. It’s going to be reducing cost of bid or creating a new revenue to increase the bottom-up, but at the end of the day, you must focus on the combination between technology and business. If you solve only the technology and you’re coming with your next business, or if you will solve only the business without any technology, we’ll solve a real problem, or real challenges, or we’ll have [8:12] I think you will fail in order to create a big company. This is my personal experience.
Alejandro: During this journey, did you have a moment where you thought you guys were not going to make it?
Ido Susan: Oh, a few times. So yes, and you know, a startup is like a trend. You are up and down all the time – all the time. And it’s monthly based. You close a big deal with a customer, but you have a challenge to deliver the product, and you’re up and down all the time. And you need to stick to your plan and to hope and to be optimistic in order to succeed, but you must build your organization and culture for those up and down generally as part of the startup. It’s very, very important.
Alejandro: So as you’re looking back on those up and downtimes, especially in the downtimes, what was that downtime that you recall was probably the hardest out of this journey?
Ido Susan: It was after two years we split. Two of the founders decided that they wanted to go outside of the company. You know, maybe I was young, but I learned this early and very fast that everything in life is about the people. So you must put yourself with good people that are much better than you that together you will create 1+1=3. For me to separate from the other two founders was tough. This almost drags the company, but Ronnie and I speak the plan, and we were optimistic. The technology was good. The idea was good, and the rest is history, and I’m so happy. You know, we fight every day, and in the day we were very successful.
Alejandro: Of course. And I guess out of the experience and what you learned, what does it look like now or how would you recommend going about structuring efficiently a relationship between other co-founders?
Ido Susan: First, any company that you build, it’s all about the people. You must select people, but it’s like your family. Each of you brings his own comfort zone that together, you create a complementary solution, a complementary picture. Okay – I bring in technology. My father brings in business. He already runs some company as CEO. He knows how to raise money. So you must be able to build a team of founders that are complementary to each other. This is one of the keys. They must be like good friends, like a family, and you must build it not as personal – it’s not only a business, it’s also personal. Between founders, everything is personal even if you’re talking about business. So if I were to summarize it, bring the people that will be complementary for you, that will be able together to cover technology, sales and marketing, and management and raising money. This is the topic that I would commend you to bring around the table of the founders.
Alejandro: Got it. And for example, in this case, obviously you guys ended up having a very nice exit. So it was a positive outcome and a meaningful one. Right? Because we’re talking about almost half a billion transaction, so it’s really meaningful, very solid, with a really large player like Cisco. Can you walk us through how this deal happened from beginning to end?
Ido Susan: Yes. First, don’t play for exit strategy. Okay? I remember that when we started the journey, we had some investor presentation that one of the chapters was exit strategy, and we just deleted it because you need to build a company that will be solid, that will solve a real problem, create and generate revenue, that you will grow based on your revenue or based on funding, but you must build a solid company that is a good business. This is what we did. We just focused to get more customers, to bring more innovation, and to get more deals, and to help our end-customer to solve their problem. You know, Cisco tried to increase the [13:34], the digital market. Cisco, today, is the king in leading all the IP, the switching, the routing, also the WIFI, and they tried to expand their business to the [13:48] with Iran. Like Ericson, like Nokia today, etc. We were one of the keys to go and expand the digital market to those rounds. Cisco built a team that was required of a few companies, and they contacted us. They really liked our business model and the idea because we were selling a few software and Cisco wasn’t provisional but tried to move from hardware to software. We were focusing on the radio access network that is the same area that they want to grow. We solved the problem in a very unique idea that was what today people call AI. We developed AI for the radio access networks. It’s your feat to build strategy on their need, and it was complementary for their solution and the offering. So in the beginning, nobody was coming and saying write you a check. So they come and say, “Hey, we want to partner. Let’s do something together.” Then we had some meaningful discussions, a meeting, and then they told us, “We have strategy to go to Iran. What do you think about it?” We gave our feedback, etc., and then they said, “We want to buy the company.” And of course, we start the negotiation. However, we did it on very secured level because we didn’t want – because the negotiation can fail or can succeed. If it failed, you still need to run the company and not to take the focus from the real business of the customer and creating innovation and new product. So we needed a very small group that my partner, Ronnie, was leading basically with Cisco, and I was continuing to focus on new customers, new revenue with the rest of the management team. And you know, at the end of the day we were able to agree about the terms, and I was happy to join Cisco. For me, it was amazing, generally. As I told you in the beginning, I always said that my degree is coming from Cisco. I’m not forgetting where I’m coming from, and I really appreciate the people, the company. I always said that Cisco is my second family, and I never got a chance to complete my computer and science study from the university, but I always said, outside that, I have a degree from Cisco.
Alejandro: We’ll talk about the Cisco experience, but before that, who established contact with you from Cisco? Was that via email or via a phone call that you guys received for the acquisition to happen?
Ido Susan: No, it was in a meeting. We met in the SVP of the business unit of Cisco in one of the events. Then the CTO of the deal was in contact with us, and then we set up a face-to-face meeting.
Alejandro: Because at this point, what was the business model of Intucell so that people that are listening really understand it, and why was Cisco so attracted to that business model? What really got them attracted to that business model?
Ido Susan: So, you know, in Intucell, we were a pure software company selling a professional license with high margin, solving a problem with AI mechanism of monitoring the network in real-time, detecting where you have a bottleneck or where you have congestion, and solve the congestion in real-time, doing some load-balancing in the network. So everything was dynamic. Everything was with full feedback and closed-loop. For Cisco, this is exactly what they looked for. They looked for software, high-margin, to go into adding to a new area, and they were looking to invest more and more of their money in the mobility area. So it was like 1+1=3.
Alejandro: Make us be insiders here, Ido. What was that day where you sat down, and you put a signature on the paper that sold your business for 475 million? Walk us through what happened right before that signature was on the paper.
Ido Susan: First, it was exciting, and it was in the middle of February 2012. Until I was adding my signature to the agreements, I was sure that it would never happen. I was sure that we needed to continue to focus on our main business, customers, product, and not wasting too much time with them. But in the same day that I worked in the morning, and we met in the state, and we signed about the contract, I realized that it was real. For the listeners who are familiar with Israel, I grew up in Kibbutz. My parents are farmers. We never had money. Money was never my drive or objective when I founded the company. I always was driven by new challenges to solve. For me, it was a game-changer, for my family and for me.
Alejandro: So after the transaction closed, what was going through your mind then?
Ido Susan: You’re going to your bank. You see your account. You have good things and bad things that happen when you sell your own company. The good thing is that you don’t have any financial problem. Now you can take to your family and the people that you love. The bad things, for me, is that everybody knows about you. Everybody knows your name. Everybody knows exactly how much money you did. People start looking on you as different, as a rich person, not as Ido as a technology person. Of course, I was excited. I was happy. At the company, I was so happy that I was a help to my employees to succeed, and to be rich, and that I never failed them. It was a big success to all of us. So I was happier for other people more than me. Of course, for my family and me, it was a big chance. I’m happy, and I still appreciate Cisco and to my friends in Cisco.
Alejandro: Very cool. You were talking about the bank account. Any indulgence? Anything that you were really excited that you were finally able to buy?
Ido Susan: Not really. After two years, I just bought an apartment in Israel, but I’m not the man to go out and spend money on some fancy car or something like that. I did some trip with my wife to Europe, but nothing special.
Alejandro: Got it. Then you went into Cisco, and this was a couple of years, so I would assume that this was part of the deal – the famous vesting and resting. So you were talking about this being like your opportunity to finalize that degree that you never were able to really finalize. So when we’re thinking about this being your schooling years, what was your biggest lesson from working – and here you are now in such a large organization, and you were used to building and scaling your own thing. What was it like for you, and what was that big lesson?
Ido Susan: It was Wow! First, vesting and resting, it’s not working in my place. I’m young. I never rest. People that know me have always told me, “Ido, you need to sit down. You need to relax.” I’m walking in by 7:00. I woke early, and I like it. But for me, it was Wow! I joined the company, amazing people, and it was a machine that generated 1 billion dollars every week. It’s a big machine. For me, the technology was exciting, but what was more exciting, it’s the sales organization. The metal that they’re walking with, the channels, their 40,000 salespeople that are walking with almost 200,000 of salespeople, and they can sell everything. It’s a sales machine. I learned how to take an idea and build a product and to put the product in the salesforce and to put everything in and they will go and sell it all over the world. So, for me, it was a big Wow! I learned a lot and also to understand how big companies work. The acquisition outside, bringing innovation outside, bringing new talent outside, a leverage and uniqueness of the sales organization there. For me, as I said before, it was the best school that I could ask for.
Alejandro: Yeah, and you stayed here for a couple of years, and then you went at it again. So how did this happen, Ido?
Ido Susan: Yeah, so I spent almost three years at Cisco. My vesting time was two years, just to let you know. When you’re going outside again as an entrepreneur – you know much better than me because we are the same. Basically, if they check our DNA, we’ll find we’re more or less the same, I believe. We drive by challenges, by change industry, and my drive was to go and change the network industry because this is my comfort zone. When I look on the computing industry, the storage industry that was changed dramatically by the hyperscale at Google, Facebook, Amazon, or by VMware, in the networking, it didn’t happen. In the computer, they run mainframe that moved to 836, the generic hardware and then to utilization. In the computer, it’s moved from dedicated [25:23 – 25:29] with software-defined storage. In the networking, it’s still hardware-based solution. Chassis, [25:33], software, and hardware is bundled. And I told this is opportunity because the traffic is growing, the challenges are to solve the traffic demand, and our customers don’t create new revenue, but they need to support on their growth of the traffic. In order to be able to support it, you must convert the network from hardware to software. I decide to jump and to try my luck and now to go in to build a big company.
Alejandro: So tell us about the founding team on this one. You, obviously, learned your lessons from the last time around, so what were you looking, on the people that were going to join you early on?
Ido Susan: As you said, I started with selecting the team, so I put around myself people that were much better than me that together we can create 1+1=3. Each of them coming with his uniqueness, his knowledge, his expertise for a specific area. Together, I bring people that will have experience and already had experience with big companies like AT&T and Cisco. People that started on startups and also on the big operator executives. This has helped me to build the company in the right way. To build the structure. To focus the company in the right area. To target to real market or big market that will have a big outcome. More importantly, what’s in my comfort zone is the technology, it’s how to solve it with very unique and leverage our uniqueness to the business model. It’s all about the people. I select very carefully the best team that I could ask.
Alejandro: How did you leverage the network in order to get the best team that you could ask?
Ido Susan: It’s a big story. You try, for example, to find your best world-wide service guy. You try to find somebody that has some experience in startup and experience with another company because you need the mix of both of them. If you would bring somebody that was only in a big company like Nasdaq, it will not – I’m not sure it will survive the startup generally, and I’m not sure that they would understand what it means to join a small company that’s growing very fast. You know, everybody in a startup when you build a company, you’re doing everything. I can be the CEO, but I can be the Product Manager, and if we need, I will go and will sell to the customer because you’re doing whatever you need or whatever the company needs. So I just started scanning my network. I talked with investors. I talked with friends and peers that worked with me at Cisco, and then I just pick and choose. I had a lot of interviews to executive-level, and you get a lot of feedback from people that work with them, but you just work with your internal feeling and some accommodation with people that you trust.
Alejandro: And when you’re thinking about internal feeling, and an absolute must in the people that you’re looking to onboard, what was that absolute must?
Ido Susan: I think it will be two things. First, it will be [walked-in 29:19]. People that will know – everybody has ego. However, if you’re able to control your ego and you understand that you are not here alone and you need to walk as a walk-in, this is how you create [29:33]. Second, people that already did it, not the first time, not second time – the third time. They already failed, they know about the challenges, all the issues, and they can teach you and guide you not to fail where they had failed in the past.
Alejandro: Got it. Very interesting. What ended up being the business model of DRIVENETS?
Ido Susan: In order to build a big company, I learned three things. First, solve a real problem and a big problem in the industry that will go and grow in the next five years. Not some of the future problems that you guessed like where the market still does not exist – solve a little problem that you’re facing today that will grow in the next five years. Second, solve it with a software solution. Not hardware, not appliance – software solution and if it can be run from centralized as a cloud, do it. The third, and the most important is, verify that your business model is a subscription business model, then it’s a win-win for you and for your customer. So what we did with DRIVENETS – first, we separated the hardware from software. We’re selling all the software license, and we sell this with the subscription business model that it’s a win-win and really changed the core structure to our customer. I think if you want to build a big company, you must have those three.
Alejandro: Yeah, absolutely. What is the vision? In a world where the vision is fully realized for DRIVENETS, what does that world look like?
Ido Susan: My vision and mission are to really disrupt the network industry. It’s to do what VMware and the hyper-scale did for computers. To do it for the networking industry. I can tell you that from the feedback, the meetings that we have with our customers, the need is clear. They really must have a new technology that will help them to change the core structure, and generate a new revenue. No doubt that we still have a lot of work to do, but I think that we’re in the right direction. But as you know, much better than me, we will face a few bumps along the road, as we told you before, it’s all about the people. I have the best team to work around it and to be able to be successful.
Alejandro: Of course. And it’s all about fastening the seatbelt correctly, Ido. So Ido, in the last business, you raised under 10 million. On this one, you raised over 100 million. Why?
Ido Susan: First, we built the company as a bootstrap. We bring money from home to build the company. We did it because we structure – I’m the CEO at forcing my team to bring innovation in any area. If it’s the sales cycle, if it’s technology, if it’s a business model, you must be innovative in any area. So we built the company in a very innovative way. We brought our own money, and we allocated almost 40% of the company to be in [33:16]. It’s an option company that we’re targeting to bring talent outside. This allows us to bring the best talent from the industry. We were not able to compete with very high salaries with people coming from big companies. However, we gave them a lot of share and options, and this is because of the technology, the vision, and we allow them to get a lot of options. This allows us to get the best talent that we can ask for in Israel. We started working, and we generated revenue. We built the company, and when we had the round, the round was targeting mostly to speed up the sales and the operation organization. We already had the tens of million dollars of revenue before the round. You know, when we did the round, it was really to maximize a [34:11] and to leverage the technology and the innovation to get more and more customers and more deployment. So these are the reasons.
Alejandro: You guys have only done a Series A. Right?
Ido Susan: Yes, it’s the first round.
Alejandro: And what a Series A. How big was the Series A?
Ido Susan: It was 120 million dollars.
Alejandro: Wow! It has to be one of the biggest Series A’s that at least I’ve heard this week. It’s unbelievable! Unbelievable! So really cool. And you got really great investors. You got Bessemer, Pitango, and a bunch of others. What were you really looking after in those guys? Because, obviously, at this point, you are a successful founder. You’ve done it before, so people were probably throwing money at you. What was the requirement for you to let them in?
Ido Susan: First, as you mentioned, it’s the best investors that I could ask. The reason that we select them before they select us, and don’t get me wrong. I don’t want to be [35:19] or something, but we had a few options on the table. We selected them because of people. When you select investors, it’s like you’re adding a new member to your family, and you must verify that this member knows that you have good relationships, that know how to startup and the industry is working, that know how to deal with challenges that you’re going to face. And more importantly, it doesn’t give you only the money; it gives you value behind the money. It’s so you can open the door to a new customer, it’s to get more talent, to guide you from their experience, how to do it right, and of course to support you if you need the next round. So at the end of the day, I decide to go with those investors because of the people behind them. My experience with Bessemer – they were my investors in Intucell as well, and now in DRIVENETS, it’s amazing. If you have a chance to get money from Bessemer, don’t think twice. Take the money.
Alejandro: Very nice. Then how big is the operation today of DRIVENETS, Ido?
Ido Susan: We are almost 200 employees. Most of the employees are in Israel. We have another office in New Jersey, and we’re working in APEC and Europe as well.
Alejandro: Very nice. For the folks that are listening, there’s one question that I typically ask people that come on the show, and that is knowing what you know now – obviously, it has been a journey. This is your second time around. You’ve had your fair amount of ups and your fair amount of downs. If you had the opportunity to go back in time and have a conversation with your younger self, Ido, what would be that one piece of business advice that you would give to that younger self-knowing what you know now before launching a business?
Ido Susan: Good question. I think I will tell myself: verify that you’re selecting the right people around you, and verify that you solve a little problem and a big problem. In Intucell days, I failed with those two in the beginning, and luckily, I was able to improve it and to adjust on time. Don’t get me wrong. The people that were with me in the beginning were very sharp, very good people, but it didn’t work. We weren’t able to create 1+1=3. So like anything in life, it’s all about the people. Verify that you select the right people around you.
Alejandro: That’s very profound, and I fully agree. One follow-up here that I have for you, Ido, you were talking about the problem. How do you know if the problem is big enough?
Ido Susan: Try to get with your relationship and to get the feedback with potential customers. The way that I did it in DRIVENETS, I met a few CEOs and CTOs from big enterprises, big service providers, and I asked them the following question: Please let me know what your three problems are today that you believe that you’re going to face them and they’re going to increase in the next five years. Try to be the least of generic problem, and then go and check the industry and what’s the potential, and the total digital market. But you must verify and get the figure from the market before you really go and do that. And this way, you win in both ways. First, you know that the problem is generic. You know that it’s a real problem, and it’s not one time, and that’s all. It’s something that’s a trend that’s going on and going to increase. The third one: once you have the solution, those guys will be your potential customers.
Alejandro: Very nice. So for the folks that are listening, Ido, what is the best way for them to reach out and say hi?
Ido Susan: Just send me an email. I’m always happy to help without any return. My father taught me that somebody gave me a lot of power in my hand to do good things. So whenever I can help, just reach me at my email: firstname.lastname@example.org
Alejandro: And are you on any social media platforms like Twitter, LinkedIn, or something like that?
Ido Susan: LinkedIn is good as well. You can reach me at LinkedIn.
Alejandro: Wonderful. Well, Ido, thank you so much for being on the DealMakers show today.
Ido Susan: Thank you very much, Alejandro. To everybody in the show, really good luck, and don’t be shy. Contact me. I will be happy to help you.
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