Iyad Tarazi On Raising $140 Million To Take On Google

Iyad Tarazi is the cofounder and CEO of Federated Wireless which develops a spectrum controller for wireless networks and communication intended to revolutionize the wireless industry. The company has raised $140 million from top tier investors such as GIC, Woodford Investment Management, Allied Minds, Charter Communications, American Tower, Arris Group, SBA Communications, and Pennant Equity Partners to name a few.

In this episode you will learn:

• From refugee camp to successful entrepreneur
• Iyad’s approach to leadership and managing his teams
• How he invests his own time running his company
• What social media platform he’s most active on

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About Iyad Tarazi:

Iyad Tarazi is a known thought leader in spectrum and telecom technology and has led massive transformations and pioneered new technologies in spectrum, machine learning, 4G, small cells, and cloud software development.

Iyad Tarazi joined Federated Wireless as CEO in August 2014, at that point an early stage startup with significant intellectual property in spectrum management. Iyad Tarazi is leading the commercialization of the technology, tapping the emerging $1B+ market in shared spectrum.

Previously, Iyad Tarazi served as Vice President of Network Development at Sprint Corp where he led large-scale R&D and technology modernization programs in cloud software, spectrum, wireless radio, transport, applications, and subscriber devices. Responsibilities included overseeing the development and integration of new products within Sprint’s networks and managing Sprint- Nextel’s technology integration labs and fiscal management responsibility of over hundreds of millions in annual investments.

Prior to the Sprint-Nextel merger, Iyad Tarazi led Nextel’s Network Engineering organization, managing network planning, integration performance engineering, testing, and core deployment initiatives. Iyad also held positions with MCI and served as a Board member for CafeX Communications, which specializes in collaborative software development.

Iyad Tarazi has a Masters in Engineering Management from Southern Methodist University and a B.S.in Electrical Engineering from the University of Maryland.

Connect with Iyad Tarazi:

• Linkedin
• Crunchbase
• Twitter

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I think that today we’re going to really enjoy the guest that we have on the show. We’re going to learn how he actually learned the VC game in literally three months. That’s what he had to make it happen. I think what he’s built is remarkable. I don’t want to make anyone wait longer, and without further ado, I’d like to welcome our guest today. Iyad Tarazi, welcome to the show.

Iyad Tarazi: Thank you, Alejandro.

Alejandro: So you were born in Libya, and you moved quite a bit there, given some of the circumstances, so tell us about your life growing up.

Iyad Tarazi: Sure. My dad was an expat. He’s a CPA. He worked as a controller for a European car dealership out to North Africa, and we were expats in Libya. Then, when I was 12, we had to move back to the Gaza Strip is a refugee camp area. My mother is a refugee as well, and we were there for about five years just dealing with that environment. When I was 16, my brother and I packed our bags and got on a plane and came to the U.S. with $500 and started working toward an engineering degree. I finished an engineering degree and did my Master’s. It’s been just wonderful so far.

Alejandro: There are times in life that you are dealt with certain cards that shape you and shape your personality and how you view life as well. How would you say that this experience of being in a refugee camp has shaped who Iyad is today?

Iyad Tarazi: I think a lot of people underestimate what is inside them and what they can do. The harder the experience you’ve had growing up, or overcoming the odds, or learning a new culture in weeks, or picking up a job in two weeks of landing in a new country – the more of that you do, the more you trust that you can do just about anything. So anytime we run into hard times here – the starter business is notoriously high highs and low lows. So when you get the low lows, I always step back and say, “Wait a minute. This is not quite as low as I’ve seen before, and a high will always come after the low, so persevere, and hang in there.” The more of that you do, the better you feel. At the end of the day, the more adversity you lived through, the more you can count on those wins, and you can build on it. 

Alejandro: Absolutely. And in the refugee camp, you were there for five years, and you were about 16. So, how did the opportunity of coming here to the U.S., which is the American dream, the land of opportunities, something that everyone around the world would love to experience have the access to? So how did this opportunity fall in your lap?

Iyad Tarazi: You have to study hard for it for about two years to make sure you have enough grades up. I think most people don’t realize this, but if you’re from a different country and want to come here, not only do you have to be good at your studies, but you have to be in the best of the best unless you have an abundance of money. You have to be in the best of the best in order to get qualified. For two years, I’d set the alarm at 4:00 am to study all day. I came in #3 in the 10,000 graduating class in the Gaza Strip for the year I graduated from high school.

Alejandro: Wow. So, this opportunity comes knocking, and definitely, you were very interested in everything related to engineering, so how did you develop that love for it?

Iyad Tarazi: Engineering – my grandfather was an engineer. He was one of the first, if not the first engineers in Mandate Palestine, at the time. I used to spend a lot of time with him sitting at his drawing table going through his designs and his engineering programs. So, I was quite proud of being an engineer.

Alejandro: And this led you into the first experience in a startup. How was that?

Iyad Tarazi: Startup – my first job after college, I worked for a very small startup, 20 people. It was a direct competitor of Oracle. At the time, the relationship database programs were just beginning when Oracle was a tiny company. What I learned there is that you have to be everything in a startup. I had my own piece of the code that I was managing in C++. I was responsible for all tech support. I was responsible for marketing, and that included all the tradeshows, and I had to pack the boxes and take them with me to these tradeshows. I also was responsible for building all the accounting systems and a couple of other things. So you learn quickly a) you don’t make a lot of money, and b) you have to wear multiple hats. 

Alejandro: So it seems that this had an effect in your because here you are, again, in a world of startups. What got you so hooked about this experience?

Iyad Tarazi: You learn at a million miles an hour. If you like learning, which I do, and I fundamentally believe that startups are learning machines. We get paid to learn. If all we do is replicate with other companies, you never win, you never have resources and scale. The best places aren’t always in a startup in terms of background, and experience, and connections. So you have to win by learning, and it’s the opportunity to learn. As I’ve gone through my career, I have vacillated between startups and big companies. After that startup, I went to MCI, which was in a growth phase. My first job was in a job that was all data entry. But within the first couple of months, I optimized the whole department. Some of my colleagues were not happy with me, but it was certainly the beginnings of the merging between computer science and engineering and data entry. That got me started in there. I did that for a while, and then it became a big company, so I left and went to another startup, which was Nextel. It was a really tiny wireless company, at the time – 100,000 subscribers. The phones were so heavy you needed to buy an accessory bag to put your cellphone in it. The battery was four-times the size of the phone. Then, we built that from scratch. When it was 25 million people, we sold the company to Sprint, which was another massive company, and I stayed there for a while. There, I wanted to see the phase of not just growth, but also the phase of decline, of a company decline in the sense that you’re squeezing efficiency out of a business. I did that for quite some time. I did a lot of the strategy. I was responsible for all of the R&D. That was a really big job: 1,000 people, 3 to 4 billion a year in capital. There, I learned evangelizing. I’ve learned a lot of things, but one of the things I did while I was there that was quite crucial is that I knew I wanted to be in a startup again, and this time, I wanted it to be my startup. What I did was, I sat on the board of a company with a friend CEO, and I sat there and helped him for 3-4 years. The whole idea behind it was to learn everything about a startup you can without actually running it. On a board, you don’t quite learn everything, but you learn what matters. I did that for a while, and then when it got to a point where I had done everything I could do at Sprint, I left, and I joined this really tiny startup called Federated Wireless – two people at the time. The founders or scientists, who are very accomplished, but they didn’t want to be the operators. So it was, “Would you like to take this off our hands. We have a lot of IT developed, and we have good ideas, and we’ve created this new model. Would you like to do something about it?” That was intensely appealing for me because I’ve been trying to solve the in-building wireless problem for about 15 years, and it was very hard to do it as a carrier because just the problem is way too distributed, so this was an opportunity to solve that problem, and ultimately to do something that was more important to me. I really wanted to create a model where everybody can be an operator. Everybody can take control of their wireless coverage of their wireless experience that brought that experience. I was very intrigued by the model, and I took the job.

Alejandro: We’re going to be talking about that in detail. Iyad, you mentioned a couple of things that are very interesting. The first one is, you worked for so long. You were in Sprint – what is Sprint now after the type of transaction that happened there with [11:03]. Then before that, you were in Nextel. We’re talking about 15 to 16 years that you were an employee, and one gets very comfortable with receiving that paycheck, with the 9 to 5. So why did you come to the conclusion that it was the right time for you to take that leap of faith and go at it with another startup?

Iyad Tarazi: Because as long as you’re an employee, you have plenty of run room until you reach the point where you can no longer get your ideas done inside the walls, so to speak. Right?

Alejandro: Right.

Iyad Tarazi: I had to reach that point. I could see myself getting quite frustrated with not being able to move fast enough, to make enough change happen, tried new ideas. At the beginning, I thought, “Maybe I need to talk to a small company.” In fact, I talked to some small companies, and then for a different job. But then, you reach a point when you say, “Look. You have to do it.” You have to do it yourself. There’s no other way but doing it yourself. I talked to my wife and a couple of my friends, and I said, “I’m just going to do it. If it works, that will be great, and if it doesn’t, I’ll try again.”

Alejandro: What did that day feel like when you gave your notice, and you were going to be dealing with a very uncertain future?

Iyad Tarazi: Phenomenal. It was great. As a matter of fact, whenever somebody calls me about leaving a big company, I send them a very elaborate congratulation note at this point because they typically don’t know at that point and time when they actually begin to take control of their own future. What a liberating model that is. With all of their craziness and all the uncertainty, the amount of satisfaction that I get out of my job every day. The worst day, today, from job satisfaction is better than some of the tough parts of being what an employee looked like. It’s a wonderful environment.

Alejandro: Here you are. You give your notice. You take that leap of faith. You join these two individuals as a co-founder. What happens next?

Iyad Tarazi: We start building; we start creating a lot of opportunities; we start meeting with people. Two things happened that surprised me. The first piece of it is – you know the world wasn’t as welcoming of change. That is actually quite obvious now, in retrospect, but wasn’t at the time. You have a big ecosystem. You have a lot of industry connections. You call and say, “Hey. I’ve got this great idea. It will help you.” Ultimately, you begin to quickly run into the people that are actually afraid of change at the end of the day, and you have to make change friendly. The way to make change friendly is holding hands, building relationships, and be slow and methodical. The first thing I learned is that the amount of contention that comes from change and disruption. You’d have to laugh at it. Literally, laugh at it is what I did a few times. I was in one meeting with really, really big chipset makers, and I was called. “Come fly to the west coast so we can talk to you.” I sat in this big conference room. This is about six months into it. I showed them the potential benefit to them of having this new model. 

They looked at it and said, “Yeah, I think this is great, but who are you guys? You’ll never really be able to make it happen.” Right in the middle of the meeting, one of the executives, quite high up, got on the phone and started yelling at the top of their lungs, saying, “You guys are idiots. Who do you think you are? You shouldn’t put ideas out there unless you vet them by big companies like us.” Right there, I started laughing. I just couldn’t do anything but laugh because getting on the plane back that day, I felt that “Okay. We have something really valuable here. If it wasn’t, they wouldn’t be yelling at us.”

Alejandro: That’s interesting because, typically, people get discouraged. So what happened there for you? What was present for you that made you take this more as an encouragement to continue pushing hard?

Iyad Tarazi: Your immediate reaction is always emotional, so I’ve learned to let the emotions marinate because when they’re done marinating after a few hours, you get the different result. That day, after the meeting, I went for a long run. I’m an avid runner, and I’ve run in about 15 marathons in my life. I ran, and then I let it marinate, and I came back, and I said, “If we truly were worthless, nobody would yell at us. So, this is good. Let me go back and find out what it is about what we did that they yelled about. This is what we’re going to double-down on right now.” Then a year-and-a-half later, we were in that same company’s office with a very different model with full partnership, and that company ended up being our best partner and promoter for quite some time, and they are quite good friends. It’s just that you have to prove to yourself, along the way. That’s the first piece that I learned.
The second piece I learned is that there are no rules in startups, which is a really nice thing. In a big company, you expect some structure of finance or process or any of that. In startups, you have to make it up every day. About a year into it, I had come in to model where there was a big umbrella VC firm that was all about intellectual property commercialization. They were running about 25 or 26 companies, and they provided all of what you hear about VC support services – will help you fundraise, will help you with your business plan, will help you with your target market, will help you with your commercialization, and all that. That company went through a change in business model that resulted in something like 20 of the 26 companies being either shut down or spun off. So there was a time where you reach the point where “Okay. The services you were counting on from that VC firm aren’t materializing. What do you do?” We are about three months short of what we needed to do from fundraising. I still remember putting a presentation together, going up to Boston, asking for a meeting on Sunday. I presented basically to say, “Whatever model we think we’re doing right now is not working. You’ll have to let me go fundraise in a completely different way, and you need to let me do it.” There were a few really loud words and a lot of emotions exchanged. After that, I got back on the plane, and I started fundraising a different way. I ended up convincing the engineering team, who are good friends now at Charter, to help us create a new model that would work really well for them and give us a strategic investment. Then, I went and also convinced the business team at one of the largest Tower companies as well, American Tower, to give us seed funding as well. With the two strategic investments, I was able to go back and round up the rest of the financial round and get the company started in a completely different fundraising model than when we started. The people at the VC firms are good friends and supporters now. They’ve gone through the [19:03] curve. I think that we have a very strong board now, a very strong investment team. I’ve learned that every time you go through a fundraising, it’s like opening a box to look at what’s inside it. You have to persevere and find the right plan and make the most of it. But, ultimately, if you’re not there to say, “I’m here. I’m going to take care of it, period. Nothing will ever happen. You have to be the one to carry the flag, no matter what the models.

Read More: Avi Freedman: Y Combinator Rejected Him And Then He Raised $62 Million To Build The Tech Infrastructure Needed Post COVID-19

Alejandro: Absolutely. What ended up being the business model of Federated Wireless, so that the people listening get it.

Iyad Tarazi: The business model for us is that airwaves are what needed to carry wireless signals. There aren’t enough airwaves. Seventy percent of airwaves in the U.S. are used by the Federal Government, primarily the DOD. Our model is to compute out the very, very small usage that the DOD does in these airwaves in using algorithms and cloud compute and sensors in order for us to make the other 99% of their spectrum available to the commercial sector in a Software as a Service model. We’re sort of Airbnb for airwaves. The owner of the building I the DOD. The tenants can be anybody, and they get it somewhere between 90% and 90% cheaper than traditional wireless models. We have over 50 customers now, big customers. We have about 100 different customers in various phases of deployment and trials. It took us five years to build the ecosystem, meaning, get this model inside iPhones and Samsung devices and iPads and laptops. Get it into the regulatory process. Convince the DOD to let us operate. Convince the FCC to let us operate. We started commercialization back in January. We are a little more than 50% of this market. Our one and only real competitor is Google, and we’re better than them, which is something I’m quite proud of.

Alejandro: That’s amazing. Just to go back to the conversation to expand on what you were saying, it seems that here you were when you were doing that round of financing in a place where you needed to learn everything about the fundraising and the venture capital world in literally three months. What did you learn about the venture capital business?

Iyad Tarazi: What I learned is that ultimately, it’s a people business, and it’s not a finance business as I expected. I thought the whole venture capital business is driven by the power of the spreadsheet and the power of the model. But really, it’s built on personalities, the strength of conviction, the track record of execution, the ability to explain the problem statement. I’ve learned a couple of things which are actually serving us quite well now. 1) Make sure you attack the largest market possible. That’s something that you hear over and over in books and so on, but I really learned it in real-time. You couldn’t go after a narrow segment of the market because the risk is just too high. We now operate in six segments at the same time – everything from enterprise to carrier to cable to wireline to infrastructure companies to IoT. We have to operate in all places because you need the biggest market possible. 2) Setting the business model is more important than the technology than anything else. Our business model is a recurring revenue per unit of deployment, cell sites, or access point. We have these contracts with multiple people. The more they deploy, the more we’re able to collect fees, even though you’re investing a lot heavier upfront in that model, but just because you’re setting it up so that over time, you can be profitable, and you have the right margins. That was more important than the technology itself. These are the two learnings: that VC business is a people business. The business model is more important than technology. And also, attack the biggest market possible. I’ve also learned that you have to continue to expand your network. Your network is everything. You have to continue to expand your network every day, or otherwise, you just won’t be able to keep up because the friends you make today are the people that you need to get their advice, and vice versa. When they need your help, you have to jump in and help them. The startup business is, again, an intensely people business.

Alejandro: In terms of money raised, how much capital have you guys raised to date?

Iyad Tarazi: $140 million. 

Alejandro: Got it. That’s a lot of zeros. I’m getting dizzy just from thinking about that. In terms of the execution and going about this, you mentioned that you were competing with people like Google. To be able to operate at this capacity, at this speed, at this effectiveness, I’m sure that you’ve rallied up the culture. The culture is a big thing with this. How do you think about culture, and how do these 80 people that you have right now pushing be able to deliver such remarkable results against such big companies?

Iyad Tarazi: Culture is everything. You hear that, but it’s absolutely true. The people we hire, I look for three traits at the end of the day: 1) that they are learning machines because it’s all about – startups compete by learning fast. We also were able to build distribution very, very quickly because usually as a startup, you’re always suffering on distribution versus you have a lot of good ideas. I really focus on building distribution as fast as possible. Fifty percent of my time was building path to market and distribution from day one, including all the brand marketing and all of the ways I needed to get my message out to as many places. But, ultimately, we hired people 1) learning machines, 2) really good at connecting with people, 3) they’re able to understand the systems thinking because a startup has to take about ten ideas and turn them into one, so you have to be able to understand the ten to turn them into one. I hired people from different backgrounds: some people from wireless, some people from carriers, some people from WIFI, some people from equipment, from chipsets. I hired people in different parts of the country, different backgrounds, and then I spend most of my time integrating them so that we can accelerate the mismatch of ideas and get things done. Everybody has a voice, so we’re 100% transparent with about everything we do. Before I do a board meeting, I go tell my entire team what agenda I’m taking to the board. When the board meeting is done, I go tell everybody in the company what we just learned and what we’re doing. Then you also have to get rid of [26:32]. I have never seen an [26:34] because every person in the company is capable of leading the rest of us, and you need to empower them. I spend a lot of time on things like offsites and management coaching and 360s and employee surveys and coaching sessions because the minute you see politics creeping up or level authority or process authority, you have to immediately weed it out. That’s how we execute. Every one of us is a boss, and we give people a lot of room to do what they want, and we support them. Also, you have to dispense of the idea that there are mistakes. I don’t really believe there are mistakes. There are learning points that we have to track and see what these learning points are. As a leader, you have to be very, very disciplined not to react when something doesn’t go right. You have to basically step back and go back and encourage the team and say, “Okay. What have you learned from it? What do we do about it? How do we make sure it doesn’t happen again?” Better to cause enormous discipline in leadership because most people’s reaction is, “This person screwed up. What do we do about them?” That’s, actually, never true. Ninety percent of the time, it’s either the circumstances, or the support, or the communication, or the timing, or all of that. There’s a series of things we spend on. I spend a lot of time on culture.

Alejandro: Let’s think about this. Today, you go to sleep, and you wake up in a world five years later, in a world where the vision of Federated Wireless is fully realized. What does that world look like?

Iyad Tarazi: What that world looks like is that you can, with one or two clicks of a button on an eCommerce marketplace, you can order your wireless network of choice for your location of choice. It could be a warehouse, and you do a couple of clicks, one click or two, and that’s all you need to do with very simple pricing and low-friction interaction. You can get an automation network for your warehouse, or you can get a security system or camera deployed around your office building or any other application or point of sale automation for your store. A way for us to get to a point where anybody can deploy their own wireless network anywhere they want with a click of a button.

Alejandro: Very cool. There’s one question that I typically ask the guests that come on the show, and that is if you had the opportunity to go back in time, Iyad, and maybe you had that chance of speaking to your younger self, maybe that Iyad that was thinking about taking that leap of faith and joining these two folks to go at it and become an entrepreneur. What would be that one piece of advice that you would give to your younger self knowing what you know now and why before launching a business?

Iyad Tarazi: I would have started earlier. I would have started my startup earlier. No question. I was always trying to be deliberate and thoughtful about all the things I need to learn and observing and all of that. You should do some of that, but believe in yourself. I should have started ten years earlier. I would have had ten more years of making my own vision happen. That’s my only real advice to my younger self.

Alejandro: I’m going to expand on this, and this is the second time that I’ve ever done this on this show. If you had the opportunity to go even earlier than that in your life, Iyad, maybe to have a chat with that Iyad that was in the refugee camp, what would you tell that younger Iyad?

Iyad Tarazi: The same thing I know today is that you get to make your own life. Nobody tells you what to do. Just do what you want. At the end of the day, each of us can make our own life. The only thing that holds us back is ourselves.

Alejandro: I love it. Very profound, Iyad. For the folks that are listening, what is the best way for them to reach out and say hi? 

Iyad Tarazi: LinkedIn is perfect. I do most of my email on LinkedIn.

Alejandro: Amazing. Well, Iyad, thank you so much for being on the DealMakers show today.

Iyad Tarazi: Thank you for having me.

 

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