Oz Alon’ s journey is a living story and a fairy tale of how he and his wife, Naama, met at around age 13 and became friends and managed to build a huge business.
Both of them are co-founders of HoneyBook which they created on a whim after a generous offer. Their story is exciting, inspiring, positive, and filled with many lessons for entrepreneurs.
The venture, Honeybook has raised funding from top-tier investors like Tiger Global Management, Zeev Ventures, Citi Ventures, and Durable Capital Partners.
In this episode you will learn:
- Starting a business in a foreign country
- How to build businesses together with a spouse
- How to be successful in funding rounds when you only know few people
- Taking advantage of opportunities when they strike
- How to handle business growth and handle transition over the years
- His top advice on how design can be the key to business success
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.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Oz Alon:
Oz Alon is the Co-Founder and CEO of HoneyBook, the leading business and financial management platform for creative entrepreneurs and freelancers.
As a third-generation entrepreneur, Oz’s leadership was shaped by observing his father and grandfather run businesses in Tel-Aviv.
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
Connect with Oz Alon:
Read the Full Transcription of the Interview:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m super excited here with the guest that we have today. He’s another entrepreneur from Startup Nation, and I think that we’re going to very much enjoy what he has to say—a lot of stories here, fundraising, and you name it. So without further ado, let’s welcome our guest today. Oz Alon, welcome to the show.
Oz Alon: Thank you. Thank you for inviting me. Just so you know, folks from Startup Nation like to refer to it as Scaleup Nation now. That’s the new term.
Alejandro: There you go. No more startups. Now is the next thing. You guys are taking it to the next level. I love it. In your case, let’s talk about you and your upbringing. You were born in Israel in the countryside. So how was life growing up there?
Oz Alon: It was great, and the best part about the countryside there was that I met my wife when we were 13, and we started together, and threw parties together, and did everything together until we started Honeybook.
Alejandro: That’s amazing, and talking about parties—parties all the way up to 2,600 people. Were you inviting every single person in your Facebook account?
Oz Alon: Some of it was actually pre-Facebook, but in Israel, you have your grade around 200 to 300 folks. And then when you all join the military, all of your friends have other friends, and they’ll bring them to the party, so that’s why when you meet Israelis, they have many friends, and we know a lot of people. That’s why.
Alejandro: Obviously, as well, when it comes to Israelis, you guys also do the army. So you and your wife both did the army. She joined the Air Force. You did the military. What kind of discipline do you think that this experience gave you guys?
Oz Alon: It’s actually very interesting. There was a moment a few years ago that we talked about. One of our employees wanted some managerial experience. We talked about it. Suddenly, we realized that both of us, my wife and I, when we were 18 years old, and after we joined the Air Force and Intelligence, we were sent to the Commanders Course and Officers Course. I got to command over 50 folks and two commanders. Naama, my wife, actually had a platoon of 200 soldiers. That was at the age of 19. When you think about that, the experience that you get in the military is incomparable.
Alejandro: Wow! No kidding. Right after the army, you guys went to school, but you, in your case, law. Why law. You ended up doing business, and here you are, opening your own business, but the whole law aspect and interest, how did that come about?
Oz Alon: I blame my parents for that. [Laughter] I wanted to study engineering. They thought, “What are you going to do with that? You need a real profession.” I don’t think that was wise, to be honest. But luckily, we got into this amazing ecosystem, the tech ecosystem. I’m glad things panned out well. Naama, actually, studied something good, something important. She studied UX Design in an amazing school in Israel. That was good.
Alejandro: And that has definitely served you guys very well as you were building the company.
Oz Alon: Yes.
Alejandro: It’s interesting here because I also studied law, and I practiced law, as well, so we have so many things in common; it’s crazy. In my case, it really helped me, for example, as I was going from financing round to financing round, to anticipate potential issues down the line and things that maybe the lawyers had missed. How do you think the legal background, in your case, has perhaps helped you?
Oz Alon: I actually tried to avoid it and really leave it to the lawyers and not assume that I know because I didn’t really practice law. I was an intern, but yeah, I think what helped me maybe when we were studying law was more on the theoretical things, the way of thinking, and weighing situations on both sides of it. People that studied law learn how to look at situations in a more and objective manner. So I believe that was helpful.
Alejandro: At the same time that you were working down the line at the law firm right after coming out of school, you were at this law firm doing the internship, as you were alluding to, and at the same time, your wife was working at a web design studio that she was running. You had the internship. You also had your pub or bar that you were starting. This made you both small-business owners, and this was the perfect segue or what led you guys to build HoneyBook down the line. What was the process of really coming up with the idea and bringing HoneyBook to life?
Oz Alon: It’s interesting because we were living the dream. We were owning our businesses. We loved it, but we didn’t love the mundane tasks that came with it. We liked communicating with our customers. We loved serving them, but we didn’t like bookkeeping. We didn’t like tracing payments, tracking agreements. That was not the thing we liked about owning a business. I think that’s probably the reason we gravitated towards building software for service-based businesses or independent businesses that helps these businesses manage their client flow. Through HoneyBook, independent businesses today send proposals, sign agreements, and accept online payments. It’s from lead, all the way to money in the bank. That’s why we started it eight years ago.
Alejandro: You did that in Israel, or where did you guys get started with the company?
Oz Alon: We started in the U.S., but we definitely had the dream in Israel. We met our first investor back then that offered to give us an offer we couldn’t refuse. It was $25,000 if we made the move to Palo Alto. It seemed like a no-brainer. He said, “I’m going to seed you. Once you start the company, I’m going to seed it.” We jumped on a plane, and we made that move.
Alejandro: That’s amazing. For the people that are listening to really get it, what ended up being the business model of HoneyBook?
Oz Alon: The business model of HoneyBook is if you’re an independent business, which could be a) interior design, or web design, a business coach, or a photographer, you will use HoneyBook to manage all of your potential clients who become clients to manage lead to money in the bank, to send them a proposal, to send them an agreement, an invoice to accept online payments. Later on, you can even get capital from us. So HoneyBook is like your client flow and your cash flow. The business model is, you pay a software subscription fee: $40 on a monthly basis, and you pay a fee for transactions. So it’s similar to business models like Shopify and others.
Alejandro: Also, to really get it, an operation like this sounds capital intensive. How much capital have you guys raised to date?
Oz Alon: We’ve raised to date around $250 million. From a Kaplan perspective, it’s actually an efficient business, but we have the aspirations to build more products, develop more, to become a platform, and to acquire many of these independent businesses because as we grow in our member base, we can deliver more value to the entire community we serve. So, it’s more geared to that.
Alejandro: Got it. I’d like to hear, and I’m sure that the folks listening are going to love it, the welcome story to Silicon Valley when it comes to fundraising. So let’s go to the early innings of the capital raising efforts.
Oz Alon: Yeah. First of all, we went through quite a bit, and one thing I can share is, when I look at the older rounds that we went through, it doesn’t matter what the amount is. It could be hard; it could be easy, but it doesn’t matter. It’s the same thing, whether we raised $25,000 or when you raised $150 million. In the early days, we were living in Palo Alto, immigrants from Israel, and we didn’t know many folks. We finally got our first term sheet. It was a huge thing, and we needed to fill it up. Someone introduced us to investors. One of them is Ben Mink, and the other investor was Michael Birch. We knew we had these important meetings. I was very nervous, and I just couldn’t sleep the night before. In the morning, I said to my wife, “Look, you have to join me and drive because the meetings are in San Francisco.” I didn’t sleep. So she joined me, and we got to the first meeting, which was with Ben Mink. It was in a coffee shop in SoMa. We’re sitting in a coffee shop waiting for him. We Googled his name, and one of the things I read online was, this is going to be one of the smartest people you meet, the fastest thinker. I’m reading all of that, and I’m like, “That’s great on a day like this that I can hardly think.” He walks up the stairs, and he looks at us, and sits down, and says, “Hi. So, what have you got?” I started the presentation. [11:54]. Nothing was going well that day. I can hear myself thinking that the pitch did not make sense. Every word that came out had nothing to do with the word that came out before, and the sentences couldn’t make sense. At one point, I just concluded that this is a waste of time, and I should do everything I can to cut this meeting short because then I can buy time to prepare for my next meeting with Michael Birch. As I’m thinking about: how can I get out of here and cut this meeting short? And suddenly, Ben looks at me and says, “Okay. Stop. I got it. I got it. This is what you’re going to do. You’re going to serve these guys, photographers, and whatnot. If I multiply this by that, I get to $10 million of revenue. But, tell me this: how do you get from $10 million to $100 million? I’m looking at Ben, and I’m thinking to myself. “Okay. Here is my opportunity. I’m going to give him an answer, and after that answer, he’s going to kick me out of here, and I’ll have enough time to prepare for my next meeting because clearly, I need it.” I looked back at him, and I said, “How do I get from $10 million to $100 million? Well, I multiply by 10.” For people who know Ben, Ben has muscles. I’ll just say that. I’m looking at him, and I’m absolutely certain that he’s going to punch me in the face. I’m getting ready for that. I was never punched in the face before. I wasn’t sure what it feels like, but I was ready for it. He looks at me and says, “Are you serious? That’s your answer?” I think, “Okay. This punch, I’m sure I’m going to get it.” I made it as if I’m calculating again, counting the zeros. “Yes. Ten times—yes, $100 million.” He stands up, and he says, “Just don’t waste my time. Is there room for me? I want to invest at least $100,000. Can you make room for me? Don’t waste my time. He started going through his resume, and he was at Facebook and Google, and he says, “Look. I can support you down the road. You want me on the cap table. I will be a great investor—$100,000. Can we shake hands on it?” If you ever met Ben, he never shakes hands. He fist-bumps, and that was the first and the last time I ever shook his hand. I just couldn’t believe it. He shook my hand. He gave Naama a hug, and he left the room. Naama and I just looked at each other shocked. I said, “Naama, what happened?” She said, “I think he wants to invest.” “Yeah, I heard the same thing, but what did you think about my pitch?” “Oh my gosh. It was so bad. What’s wrong with you?” I said, “Yeah!” Long story short—by the way, after that, we went to the meeting with Michael Birch, one of the best meetings we had, and Michael is amazing, and he invested as well. A month later, I met with Ben Mink again. This time, in the gym in SoMa. [15:24] I said, “Ben, you have to tell me the story here. Why did you invest? My pitch was not good.” He said, “Oh, yes, Oz. You were all over the place. That was a really bad pitch.” “But why did you invest?” He said, “Look, there were two things I look for. The first is, I like teams that lead by design; they’re led by design or lead with design. I looked at the mockup that you sent over, and I thought, “These guys know how to design a product, and whatever happens in the meeting, I need to invest as much as I can. By the way, my minimum was $50,000.” I’m like, “Wow! Okay. What’s the second thing?” He said, “You know, I like to work with CEOs that don’t give an ass.” The funny thing is that I definitely give an ass. I was just in the worst position and in a survival mode, to be honest. But the one thing I will say about Ben is, he’s brilliant, one of the smartest people you will meet, a fast-thinker, and an amazing investor. And that was my welcome to Silicon Valley.
Alejandro: How amazing! That was a fantastic welcome, that’s for sure. Oz, here you are, two co-founders that are married. I’m sure that for you guys, it has also been interesting. I’m sure that perhaps in Israel and the U.S., it was treated differently. Perhaps there were some questions there that could have been, at times, uncomfortable. So what kind of differences did you see between Israel and the U.S., and were there any uncomfortable questions that you got or things like, “Why are they asking me this?”
Oz Alon: First of all, the cultural difference is very interesting. Obviously, it depends on who you meet. But an investor in Israel that met with us back then, we pitched him. At the end of the pitch, he looks at us and summarizes everything, and says, “Look. On the one hand, on the plus side, I like the product and the business model. But on the minus side, I’m not sure about the market, and you’re a married couple.” I said, “What do you mean? Is that married couple in the negative bucket?” He said, “Yeah, sure. It’s not a plus.” “What do you mean? Why?” He said, “Well if you’re married, you can get divorced.” I said, “Well, first of all, that’s true. All the divorced people I know were married before that, so 100%, that’s true.” But that was his perspective, and then after that, many months later, we were at a meeting in Sequoia with Mike Moritz, another amazing meeting. In that meeting, at the end of the meeting, Mike says, “You know. I like the product, and I like the market—small businesses. I like that in this approach, and you’re a married couple.” I said, “Is that a positive?” He said, “Yeah, absolutely. We invest in,” and he started giving names of companies. He said, “Cisco and Eventbrite—we love married couples. We’ve had great experiences with married couples.” It really depends on the people you meet. But more than anything, at the end of the day, you find the people that believe in you. I think from all of these stories, the first guy that gave us the $25,000 was Gil Ben Artzi, and the term sheet came from Bobby Linton, and afterward, Ben Mink and Michael Birch. These are folks that really believed in us and stuck around to this day. We talk quite a bit, and they have supported us in many rounds, so I think it’s all about the people that you meet, and they believe in you and join this ride.
Alejandro: Why do you think that Mike Moritz, someone that is like a legend in Silicon Valley and in the venture world, why do you think he saw, or he sees married couples as a positive?
Oz Alon: I think it’s probably the list of companies he has invested in and saw it as a successful investment. It’s all about the experiences that they have. But if I had to advocate why married couples are a plus, I will say that most of the time, married couples have some history before they started the company together, and that’s not always the case with co-founders who are not. I think more important is, married couples are not just any co-founders that start a company together. If I were in the investor’s shoes—although I would be a bad investor, so I shouldn’t. But if I was, I would ask, “What is your history together as co-founders?” It is important that you have a history, that you went through stuff because this is going to be tough. It’s a very long ride, and you’re going to go through ups and downs and together. That’s the more important question.
Alejandro: Absolutely. So let me ask you this: imagine you go to sleep tonight, Oz, and you wake up in a world five years later. Imagine a tremendous snooze. You’ve never slept like this in your life. [Laughter] You wake up in a world where the vision of HoneyBook is fully realized. What does that world look like?
Oz Alon: Wow! That world looks like every individual that has a talent and finds their talent can turn it into a business and can live a life based on passion and purpose and manage the business seamlessly and confidently enjoy their relationship that person develops with their clients and succeeds as a business and is proud of the legacy that they’re building and how they express themselves. We want a partner with as many as possible in the world that would do that.
Alejandro: That’s amazing! Now, it’s incredible what you guys have built. For the people that are listening to get an idea on how big HoneyBook is today, anything that you can share in terms of the number of employees or anything else?
Oz Alon: We are around 120 employees in the company. From a size perspective, tens of thousands of businesses use HoneyBook, and book and transact from HoneyBook more than a billion dollars a year. So it’s already sizable, but just the beginning. Yeah, we are still a small team. We actually want to stay as small as we can. It’s hard, but we’re excited about the number of members that we serve, and hopefully, we will serve many, many more in this community.
Alejandro: I’ve heard you talk about the world scale or staying small a couple of times here. Obviously, at this point, you guys have raised quite a bit of money. You are definitely in a growth stage ramp-up type of mode, but what does that transition of going from early to growth stage look like? What are some of the typical issues that you guys had to deal with?
Must Read: Tomer Tagrin On Building A $1.4 Billion Business By Helping Retail Brands Generate Online Revenue Growth
Oz Alon: There were many issues over the years and many transitions. At the beginning, we wanted to personally serve every one of our members—get on the phone, give them a demo of the product, help them onboard to a product, and we hired a sales team to do that. I think over time, we learned that, in scale, our members didn’t want that. As the years went by, we saw that potential members—we call our customers members—would land on our site, and they wanted to try it themselves. They don’t want to jump on a call with someone. So we made the transition to being able to do this in a self-onboarding manner and be able to give the level of service we wanted but in scale. That was something that we had to transition from sales to a more online acquisition. The other thing was as the years went by, we started seeing this long-tail of businesses. At first, you have your core businesses that use HoneyBook. But then, over time, almost every day that goes by, you discover another kind of business, so there’s this very long tail of verticals. You constantly need to make sure you build a great product for them and that you speak their language with content that is relevant to them and constantly build a community that is relevant and can support their needs. I think in scale, again, especially when you serve a diverse group of businesses, you need to learn how to do that. Then, communicate internally. From the early days, we would meet when we were five, six people, and we were working in a split team between Israel and the U.S. We met together every day, and as we grew, we had to learn how to keep that daily communication going and between the offices and learn how we can make sure that we get together enough physically and all the things the entire world is dealing with, but we need to learn how to do that over time in scale. And one more thing that I will mention is, when you deal with payments, as you grow, there are more and more threats to business and the world, in general, today is a dangerous world for payments, and constantly you need to think about how you protect your community, and that’s something that in scale becomes a challenge for many companies. And, by the way, when you asked before about why raise, what will you do with the funds? Companies like HoneyBook need to raise money because they need to be as secure as possible to protect their members, to protect their community, so that’s another thing.
Alejandro: Imagine, Oz, that I put you into a time machine, and I bring you back in time to that point where you guys were thinking about bringing a business to life, and that time in 2013 when HoneyBook was being incubated and brought to life. If you were able to have a conversation and to have your younger selves of yourself and your wife right there in front of you, and you were able to give them one piece of business advice before launching the company, what would that be and why, given what you know now?
Oz Alon: Wow! And I can’t give them advice on what share to invest in?
Alejandro: And multiply by 10. Right?
Oz Alon: Exactly. For us, my advice would probably be: listen to your instincts and keep on leading with design. Design is hero. That’s going to become your superpower and double down on it as much as you can.
Alejandro: Why is design so important, Oz?
Oz Alon: When you build product for this kind of business, for a solopreneur and independent business, this is a person that is going to use your product every day, and your product matters a lot to them. That’s how they understand their business; they manage their business. That’s what helps them sleep better at night and gives them the confidence that things are in control and design matters. It’s a B2B, but the businesses are more like consumers, and they truly care about what the product looks like, what it feels like, how intuitive it is, and how does it make them look in front of their clients? I think that will be the advice if I go back.
Alejandro: As we’re thinking about going back in time and advice, is there a book that you wish you would have read sooner?
Oz Alon: Oh, wow! These are great questions. There’s a great book that was just published yesterday, actually. A person named Natalie Franke, who is our Head of Community at HoneyBook, and it’s called Built to Belong. I wish I had read that back in 2013. But luckily, I got to work with Natalie, and you should all go out and buy the book, Built to Belong by Natalie Franke.
Alejandro: And why is that book so important?
Oz Alon: I’ll amend my answer about design. It is design, but it is the community as well. The power of community, especially for what we do, creates another layer of value for our members as they interact with HoneyBook and with each other. Because these businesses, again when you think about them, they’re lonely. At the end of the day, they don’t have many colleagues that they work with. You can build a supportive community for them, and you can really help them, first of all, find answers to the things that they need. And secondly, feel like they’re not alone and that they belong. We invested over the years quite a bit in the community, and we had Natalie join us. She’s the co-founder of the Rising Tide Society community. I think if I go back to 2013, we should have started investing already then in the community. So, reading the book, back then, would have been very important.
Alejandro: Amazing! Oz, for the people that are listening, what is the best way for them to reach out and say hi?
Oz Alon: [email protected] They can send me an email. I’m not great on social media, to be honest, but they can find me on Twitter. Probably, I’m on Facebook and LinkedIn.
Alejandro: Amazing. Well, Oz, thank you so, so much for being on the DealMakers show today.
Oz Alon: Thank you. Great questions.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected].
Podcast: Play in new window | Download
Subscribe: Google Podcasts | Spotify | Stitcher | TuneIn | RSS | More