Neil Patel

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Molham Aref’s journey as an entrepreneur is nothing short of fascinating. With multiple successful ventures, big exits, and a deep history in AI, his story offers insights into the trials, triumphs, and evolution of the tech world, especially around the rise of AI.

In an engaging conversation, Molham shared his unique perspective on what it takes to bootstrap, build, scale, and exit companies, the importance of founder dynamics, and the role of luck, timing, and persistence in the entrepreneurial journey.

Listen to the full podcast episode and review the transcript here.

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Early Life: Shaped by Diversity and Adaptability

Born in Beirut, Lebanon, Molham’s childhood wasn’t confined to just one country. Due to his father’s job at DuPont, his family moved frequently, living in places like Switzerland and Egypt. This constant change of scenery became an integral part of Molham’s upbringing.

As he reflects, the experience of being the new person in different environments taught him to be adaptable, observant, and empathetic toward diverse cultures.

“Being the new person in an environment where you’re not sure about the culture or the language teaches you how to listen and absorb,” Molham shares. He quickly learned that every culture and society has its own strengths and appealing aspects.

This ability to adapt would prove invaluable in his entrepreneurial career, especially when Molham was making connections and building teams across borders and cultures. He still keeps in touch with the friends he made throughout college, graduate school, and building startups.

The Early Days of AI: From “Computational Intelligence” to Machine Learning

Molham’s entry into the world of AI began long before the term was as ubiquitous as it is today. In the early ‘90s, when AI was still in its infancy, the field was known more commonly as “computational intelligence,” “data mining, or “database mining.”

This term was used to describe technologies that were focused on solving business problems through data analysis and pattern recognition. Neural networks were also reemerging. This was at a time when the concept of AI was seen as an experiment and even a taboo in some circles.

Molham’s fascination with AI began with a simple but profound curiosity: how can computers make decisions like humans? He was drawn to the challenge of teaching computers to recognize things in images or understand text.

These are the fundamental AI concepts we often take for granted today. His journey in the field of AI was propelled by the idea that technology could transform business decisions and enable large enterprises to optimize their operations with predictive and prescriptive technologies.

Corporations were running massive operations, deploying hundreds of millions, billions of capital to inventory, capital, wireless spectrum, manufacturing capacity, transportation, and labor. These operations typically involved make-or-break decisions and predictive analysis could help.

“I’ve always been curious about how we could use predictive and prescriptive technologies in large businesses to make smarter decisions, whether that’s in banking, logistics, customer acquisition, or supply chain management,” Molham explains.

He points out that these concepts were invented around World War I to help deploy armies and the logistics of armies. They helped armies win and lose because they could plan ammunition, food, and manpower.

Essentially, these technologies have been developed over the years. They can make the difference between an organization or business being successful.

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Big Company or Small Company? The AT&T and Startup Pivot

Molham completed his studies at Georgia Tech and started his professional career at AT&T, working in an advanced development group focused on computer vision. The corporate environment at AT&T gave him the opportunity to work on groundbreaking technology.

However, after two years, Molham jumped to a startup that applied neural networks to detect fraud and optimize supply chains.

The decision to leave a secure corporate job for a risky startup was driven by a desire to work in an environment that could turn innovative technology into viable products. Molham also wanted to follow his interest in technology that could start approximating human intelligence.

His leap paid off. Molham joined a San Diego-based company that was doing great technology, and also had an excellent management team. The company went public in 1995, during one of the most exciting periods in tech history—marking his first taste of a major IPO.

Molham’s experience in the startup world provided him with insights and know-how on how to build successful businesses. AI, startups, and entrepreneurship became his professional interests.

During this time, Molham recognized the importance of aligning cutting-edge technology with an effective go-to-market strategy, a theme that would resonate throughout his career.

A Formula for Success: Technology, Business Models, and Market Strategy

Molham’s role in building companies like HNC and Retek showcased his ability to combine groundbreaking technology with clever business strategies.

Both companies had similar ingredients for success: cutting-edge technology combined with innovative go-to-market strategies, an understanding of the industry’s needs, and the ability to scale.

Molham’s ability to build and lead these companies was instrumental in their ability to achieve multimillion-dollar exits and IPOs. HNC Networks created fraud detection technology for banks, which became a massive success in the early ‘90s as credit card fraud became a growing issue.

One of the key differentiators of HNC’s approach was the creation of a consortium of banks that pooled their fraud data to improve fraud detection models. Molham and his team were able to stay ahead of the competition since their models had more data and were able to be more accurate.

Molham’s second notable success came with Retek, a company that revolutionized retail software for supply chain management.

By leveraging strategic partnerships, such as a collaboration with Accenture, and focusing on the Y2K crisis, Molham and his team turned Retek into a major player in the retail software industry, even though it was a much smaller company.

They partnered with a much larger and scalable organization to support their go-to-market motion and achieve selling and delivery scale. This strategy allowed Retek to “become the 800-pound gorilla of retail ERP, merchandising, and supply chain software.”

The Entrepreneur’s Dilemma: Success, Failure, and Moving On

After two successful IPOs, Molham’s next challenge was to start something new. He helped launch a company in the early 2000s, which failed despite being innovative. For Molham, the failure was a valuable learning experience.

“Too soon is indistinguishable from wrong,” he reflects, recognizing that market timing is crucial in entrepreneurship. Despite this setback, Molham quickly moved forward with a new venture, Optimi, which focused on applications in the cellular and wireless network optimization spaces.

Optimi’s solution helped wireless provider customers like Cingular, AT&T, T Mobile, and American Mobile optimize network capacity. These companies were trying to allocate billions of dollars to infrastructure and spectrum as they transitioned to newer standards like GSM and GPRS.

They were trying to retain the ability to run networks on the old technology and needed prescriptive simulation technology like wireless network optimization that made it possible to eke out every ounce of capacity from the limited networks.

Molham opted for a bootstrapped approach this time, raising only $300K and building the company with minimal external funding. The company was eventually sold to Ericsson for $100M, a remarkable return on a modest investment.

Reflecting on his decision to bootstrap, Molham explains that the six major wireless operators in the US were open to paying Optimi to develop the solutions they needed. Instead of tapping into investor funding, he built and scaled the company with the revenue he earned.

The Optimi exit was followed by another successful exit with a company in the retail technology space, which was acquired by Infor, marking Molham’s second successful exit–this time worth $150M. Infor, a private equity-owned company, was looking to modernize intelligent applications.

Next, Molham went back into retail as an industry building intelligent applications for merchandising, supply chain, and revenue management. His startup was acquired by a company that was a roll-up of many older companies from the nineties.

The acquirer was looking for modern, cloud-based, machine learning differentiation. Molham successfully earned 10x revenue, adding up to millions of dollars.

The Founder’s Journey: Managing Dynamics and Keeping Grounded

One of the most intriguing aspects of Molham’s entrepreneurial journey is his focus on the importance of founder dynamics and board relationships. In his experience, success can be more detrimental to team dynamics than failure.

As companies grow and reach significant value, the stakes become higher, and tensions can arise over who gets credit and how decisions are made. Molham stresses the importance of appreciating good luck, good fortune, good time, and the support from amazing people.

“Success can create fear of losing what you’ve built, and when you have something to lose, the dynamics can change. People start getting scared,” he explains. For Molham, maintaining clarity in leadership and staying grounded in the early stages of a startup was key to avoiding the tensions.

The Next Big Thing: RelationalAI

Molham Aref shares insights into the journey of building a successful business, reflecting on how his instinct for adaptability and moving to new places played a crucial role.

His ability to embrace change helped him and his family settle into new environments, making connections along the way that ultimately benefited his growth. The support from the network he built–in terms of people and resources–were invaluable in helping him thrive in new ventures.

After selling his last company, Molham moved with his family to New York for a few years. Next, they moved to Woodside near Stanford where Molham dived into understanding how the startup community worked.

Here, he was exposed to an entrepreneurial ecosystem, which was much different than the one in Atlanta. Aspiring founders had access to funding, expertise, and everything else they needed. Through a social network, Molham also connected with Bob Muglia (ex-CEO of Snowflake).

Bob introduced him to the concept of combining AI with Snowflake and was super excited when Molham talked about his ideas about RelationalAI, a company he founded to simplify building intelligent applications by providing a unified AI infrastructure for relational data.

As Molham opines, AI is not just customer-oriented. It is also about enterprise-level solutions where the standards are higher. Making erroneous decisions can hurt the people, customers, and the business. This is why companies must operate with strict compliance to safely and the law.

His experience in building applications across various industries, such as telecommunications, retail, and banking, showed him the challenges of combining techniques like predictive, graph analytics, prescriptive, and rule-based reasoning into multiple technology stacks.

RelationalAI enables businesses to build smarter, more intelligent applications by seamlessly integrating knowledge and CompoundAI workloads directly with enterprise data.

While cloud vendors have modernized data infrastructure, application infrastructure remains fragmented. RelationalAI solves this by eliminating integration friction, empowering companies to develop next-generation AI-driven applications natively within their data ecosystem.

While AI was already a growing field when Molham founded RelationalAI, his focus on AI for relational data came at a time when the technology was beginning to make its way into the mainstream.

The company’s mission to create AI-driven infrastructure for enterprise-level applications would allow businesses to make more informed decisions with intelligence and run more efficiently.

RelationalAI’s Business Model

When discussing the business model of RelationalAI, Molham explains the company’s approach, which is similar to data cloud platforms like Snowflake.

Their go-to-market strategy leverages the success of Snowflake’s existing infrastructure, allowing them to plug into Snowflake’s platform as a native app.

This integration enables their AI technology to enhance Snowflake’s capabilities, offering a comprehensive suite of AI tools beyond Gen AI and Document AI technology–often called neuro symbolic AI, composite AI, compound AI, or decision intelligence.

Molham emphasizes the value this adds for Snowflake customers, as it eliminates the need to move data outside of Snowflake’s security perimeter, offering a seamless solution that Snowflake itself can support.

As a result, Snowflake has established itself as a platform, not just as a data warehousing technology, making it a huge success with customers. As Molham explains, Relational AI taps into Snowflake’s $1.2B annual go-to-market machine.

Snowflake has a more than 11,000 customer base, some of which also use Relational AI.

Raising Funding for Relational AI

Molham reflects on the decision to raise $122M in funding, acknowledging that the scale of infrastructure they were building required significant investment.

Storytelling is everything that Molham Aref was able to master. The key is being able to capture the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.

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Unlike a traditional app that can deliver incremental business value, building a company like RelationalAI requires complex and frontier innovative work that combines database technologies, programming languages, and several other technologies.

Molham mentions how raising funds was essential to drive real, deep innovation, particularly given the complexities of building something from first principles. He raised an initial $7.5M seed round which kept them going for a few years, but he quickly realized they needed more.

Molham recalls how Bob’s involvement attracted more investors to their $40M funding round. He explains that, of this amount, $22M was contributed by himself, Bob, colleagues with whom he had worked in the past, and other board members.

In his Series A fundraising journey, Molham recounts how he chose investors based on shared values and experience.

While the round was heavily oversubscribed, Molham and Bob had learned from past experiences the importance of working with investors who aligned with their vision. Since Bob was a very involved advisor and board member, he was able to explain technical concepts to the investors.

The duo carefully selected investors like S. Somasegar from Madrona, ensuring they had partners who understood the long-term mission and would provide the proper support. They also brought in investors like Addition and Menlo Ventures.

Molham highlights how, despite the challenges of turning down friends and potential investors, choosing the right partners ultimately played a crucial role in their success. Snowflake became the largest software IPO of all time when it went public.

Six months after the series A, Molham and Bob raised their series B round from Tiger Global. The investor had the vision to understand what they were doing, and was more interested since Somasegar and Bob were involved. They closed the round within an incredible 30 days.

The Future of RelationalAI and Lessons Learned

Molham also shares a forward-looking vision, emphasizing that the future of decision-making lies in integrating intelligence into the systems that guide decisions.

With the right tools, organizations can make better, more informed choices, which, in turn, can lead to better outcomes across businesses, governments, and societies. The ability to predict the consequences of decisions will improve decision-making quality and expense.

Molham sees this as a crucial step toward a better world, where decisions are more data-driven and less reliant on uninformed judgments.

Looking back on his entrepreneurial journey, Molham offers advice to aspiring business founders. He stresses the importance of choosing the right partner and understanding the sacrifices involved in building a business.

The path is not easy, and there were times when Molham wasn’t sure how his company would survive, particularly during moments when payroll seemed uncertain. However, he credits his persistence and determination for leading him to success.

Although the entrepreneurial journey comes with significant personal sacrifices, including time away from loved ones, Molham expresses no regrets. His passion for combining technology with entrepreneurship has been the driving force behind his continued success.

Conclusion: The Power of Persistence, Timing, and Innovation

Molham Aref’s story is a testament to the power of resilience, timing, and the relentless pursuit of innovation. His journey has been shaped by the constant push to improve and adapt to new challenges.

Molham’s focus on technology and business models has helped him create value across different industries, and his ability to build strong teams and navigate complex founder dynamics has played a crucial role in his successes.

As he continues with RelationalAI, Molham’s story inspires entrepreneurs everywhere. The key takeaway? No matter how many setbacks or challenges you face, the combination of a great idea, impeccable timing, and the right people will always lead you to success.

Listen to the full podcast episode to know more, including:

  • Molham Aref’s entrepreneurial journey highlights the importance of adaptability and cultural understanding, which shaped his success in building global teams.
  • His early fascination with AI led to groundbreaking work in predictive technologies that transformed business decision-making across industries.
  • Leaving a secure corporate job at AT&T for a startup taught Molham the value of agility and aligning cutting-edge tech with effective market strategies.
  • Successful business ventures like HNC and Retek combined innovative technology with smart market strategies, leading to multimillion-dollar exits and IPOs.
  • Molham’s experience with failure taught him the critical importance of timing, showing that market readiness often determines success or failure.
  • RelationalAI’s focus on simplifying AI infrastructure for enterprise applications aims to help businesses make smarter, data-driven decisions at scale.
  • Throughout his journey, Molham emphasizes persistence, the right partnerships, and resilience as keys to overcoming challenges and achieving long-term success.

 

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Neil Patel

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