Tomer Tagrin has raised hundreds of millions of dollars for his startup which is empowering large brands and entrepreneurs alike to win online. His venture, Yotpo has raised funding from top-tier investors like ClalTech, Global Coin Ventures, Tiger Global Management, and Hanaco Venture Capital.
In this episode, you will learn:
- Tomer’s top advice before starting a business
- Picking the right type of business to start
- The future of eCommerce
- Steve Jobs’ quotes
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 Tomer Tagrin:
Tomer is one of Yotpo’s founders. He focuses on making Yotpo the User reviews distributor out there. He is a highly motivated, young, internet junkie entrepreneur. Most of his time he puts into the sales and marketing of the company along with customer support and production.
Tomer is also a contributor @TheNextWeb where he writes a weekly column on how is it to be a first-time founder and all the lessons he learned from running Yotpo.
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Connect with Tomer Tagrin:
Read the Full Transcription of the Interview:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m very excited about the founder that we have today. It’s been quite of a journey that he’s had with his business and quite a rocket ship that he’s building. So without further ado, I’d like to welcome our guest today. Tomer Tagrin, welcome to the show.
Tomer Tagrin: Thank you. Thank you very much for having me. I’m super excited.
Alejandro: Originally from Tel Aviv, so born and raised there in Tel Aviv. How was life growing up there in Startup Nation?
Tomer Tagrin: Wow. Israel and Tel Aviv are really, really fun places. Tel Aviv, by the way, is one of the best cities. If you like food, the beach, a lot of people, and a lot of innovation, it’s a great place to be born in.
Alejandro: You divided your time between tennis and Boy Scouts. How was that like for you? I know that also in tennis, you had quite a lot of dedicated time.
Tomer Tagrin: Yes, [2:15] my role model in life, and even until today, I use a lot of his phrases and videos in my company’s presentations. Tennis is a very tough game mentally because you’re alone. All the blame and all the glory is on you, so as a kid growing up, you need to really face a lot of challenges, and the [2:38] just like a great place to hang out, like really great people. Most of my friends are from there.
Alejandro: You were always a computer geek, so how did you come across computers? That ended up developing into you pursuing your career in that department and getting your degree in computer science, but how did you start playing with computers?
Tomer Tagrin: In the early ‘90s, my father brought a computer home, fortunately. I don’t remember the version, but I found myself playing with DOS a lot and understanding how it works. Every time I used to break the computer, he used to bring someone to fix it, and then it became an I’ll see generation if you want, and all of the early messaging wars and early internet where I liked the program and I liked to play games. I think that combination of gaming probably brought me first. Then I learned how to code in verse places, although I’m not the best coder in the world.
Alejandro: Then, for you going to the army, what would you say about the army? The army is a must in Israel, but what would you say that the army has brought to you, to your life, and perhaps also to your professional career when it comes to discipline and even work ethic?
Tomer Tagrin: Every time we meet investors, I [4:04] Israel entrepreneur that’s coming to the Intelligence Force. 8200 it’s called, Omri Cohen, my co-founder, is the smarter half. He was in the Infantry. I was in Artillery, so not related to computers at all. But what the army gave us is the ability that we know we can put the target on the map, and we’ll get there. By hook or by crook, we can get there no matter what. And our resilience and our ability to face challenges are definitely something that the army contributed a lot to.
Alejandro: That’s amazing. After the army, you went at it with computer science, where you met your now co-founder. Then after that, you did a little bit of a stint at Intel, so you were able to experience what was working, the life-type of environment, but that was a nice segue of you coming across Yotpo and bringing Yotpo to life. What was that process like, and was the sequence of events toward bringing Yotpo into launching and life?
Tomer Tagrin: I think the most important is Omri and I hit it off together. We built stuff together. Both of us were programmers, so we could build things today. Then from a very bad personal shopping experience that was based on fake reviews, we said, “Let’s fix authenticity with reviews.” Our first idea was, “Let’s open a search engine for reviews, and we ranked it. The problem was again authenticity who wrote like if it was from people called Tommy123. I don’t know anything about them. Why should I listen to them? We understood that in order to solve that, we needed to generate the content ourselves. Then we actually built it from B2C to B2B. Because we were programmers and we didn’t know what marketing says, we looked up eCommerce platform, and then we found a few platforms like B-Commerce and Shopify and others. Shopify had the best APIs, so we developed on top of APIs, started to get those using our simple widget. Luckily for us, it was great timing in 2012, 2013 to get into eCommerce. Retrospectively, we’ve been really working hard since then. When I look today at what we bring to our customers to help them win over consumers, I think that’s what we started. The first is how do you start with trust. Then we expanded to other products and expanded our vision as a company.
Alejandro: For you guys, what was it like reaching product/market fit?
Tomer Tagrin: A really interesting question. In the beginning, we reached product/market fit with our review’s product in the S&B space. Think about it. We got to, let’s say, probably $5 million to $7 million of AR. We’re growing. We raised a bunch of money. We found that product/market fit, but really quickly, it turned out that we cannot scale more than that because terms are not big enough. The competition was starting to enter from below because a lot of companies were developing 50% of the product for 20% of the prize. We needed to expand our vision, and then we bought companies, developed more products. I think, now, once we passed the $100 million AR, I would argue that we found again our product/market fit as an eCommerce marketing platform versus a point solution.
Alejandro: For the people that are listening to really get it, what is the business model of Yotpo today? How do you guys make money?
Tomer Tagrin: We have a SaaS platform. We take an annual or monthly subscription for eCommerce brands, and we have five different products in the market. Each one of them is sold separately or together, so you can pay us anywhere from $9.99 a month up to six-figure bills. It depends on your stay and what you do. We have 32,000 paying customers and another 300,000 entrepreneurs using our platform for free. We charge. We also have an SMS product where it’s also where we pay for usage as well, but paying SaaS, let’s say the large majority is regular annual or monthly subscriptions.
Alejandro: Now you guys have product/market fit. You’ve raised a bunch of money. But as you say, it takes a lot of luck and hard work in order to get there. How would you define, and how do those two look like combined, and how would you say they were really in place for you and your journey to help you in getting to where you are today?
Tomer Tagrin: It’s not like when we started, we knew how big eCommerce would be, or we knew that we were even going after eCommerce, so we were extremely lucky to position ourselves for success in eCommerce. But it was extreme luck. We also had some key hires that we did without even extending it so people who joined us today are like [9:26] on the business that in hindsight, we didn’t know what we were doing, to be completely honest. I think the most recent example is COVID. If there’s such a thing as a beneficiary of COVID, eCommerce is a beneficiary of COVID, and therefore [9:43]. In a very same way, we could have been not on the eCommerce side of the coin. I think this was everyday luck is the biggest factor to any business success. I do think we worked hard; we didn’t give up. We didn’t give up even when at a point solution with not great unit economics, and we raised a lot of money, and we needed—it was stressful times. We kept on working very hard to expand our vision. We did the necessary changes. We took the hits. There were multiple things happening, but I think as a company, hard work is very much in our nature, but extreme luck. I think luck meets us. We did an M&A that’s been three years ago that one of the co-founders there, Josh, has been a huge force forward for us, and we would never have gotten here without him. Our investor—there are a bunch of examples in here. In general, I think in life, I hope COVID—I think COVID was definitely like a teacher to that. We need to be very humble. We need to be very thankful. We need to be very authentic in what we do, and what we don’t do, and what we just got lucky at.
Alejandro: Yeah. I always like the word ambition, which is combining humility with ambition. I’m right there with you. So, Tomer, how much capital have you guys raised to date for the company?
Tomer Tagrin: We raised close to $400 million dollars.
Alejandro: That’s a lot of zeros right there.
Tomer Tagrin: Yes. That’s a lot of money.
Alejandro: And with a lot of money comes a lot of expectations. So, in this case, for you guys, how has the journey been of raising money and going from one financing cycle to another one? I know that also pitching Bessemer was not easy, and you were turned down quite a few times.
Tomer Tagrin: Yes. Bessemer, by the way, is our largest investor, and Adam, the leading partner, which I consider him as a friend. Every year, they told us no for a very good reason. But, in general, I think fundraising is a nightmare. Any entrepreneur that tells me that he or she likes raising money, I always think that they’re full of ***. I think raising money is like a nightmare. There’s so much uncertainty, and people are picking holes in what you’re doing rightfully. I think, for us, we didn’t love it, but I think, overall, we were quite good at it in terms of understanding what it takes for us to get to the next milestone and why and what we need. I think that’s also part of our mentality. We see a challenge. We get there. What did we learn, and what’s the next type of mentality; that’s really important. And to be honest, I always thought that after $100 million in AR, things would look different, but it’s actually not that different. You get bigger ambitions. There are still a lot of challenges, different challenges, but challenges of scale are really deep challenges. We’re not from zero to one anymore. We’re from one to end. I think we are learning to love those sets of problems, but entrepreneurship is entrepreneurship every day.
Alejandro: 100%. In terms of size, how many employees do you guys have now?
Tomer Tagrin: We have 550 people. We are growing quickly, so I think this year we are going to finish, hopefully, with more than 750 people. And if there are any great people that are into eCommerce that are hearing this, feel free to check us out because we are building something special. We have 32,000 customers from the biggest brands in the world like 1-800-Flowers and PNG and literally 300,000 entrepreneurs using the platform for free. The scale—everything became big.
Alejandro: I know that when it comes to getting big, it’s important to hire great people, and I know that in you guys’ case, you took an interesting approach when it came to hiring engineers, so what happened there?
Tomer Tagrin: In general, we believe that the best product win. We want to keep on investing in all the engineering because that’s our way beckon the future. Engineering, even today, is like how do you scale that in an extremely competitive environment. It’s one of the questions we spend a lot of time and energy on. One of our solutions—it’s not the only one—was let’s open more centers for a different type of population. So we have an alternate women’s center in Israel targeting a different population. We also have in the north of Israel another location that’s for a population that’s in a little bit different place in the lives and not like the pure Tel Aviv after the army-type of people. We now have in Sofia, Bulgaria, 50 people and growing. We can open another engineering center, and I think it created, on one end, a very diverse type of environment. On the other hand, we did like big muscles for scale. I think that’s one of the things to optimize. What we’re talking about is how do we build, for a longer term, now that we get the opportunity to think longer term, how do we ensure that 2024 is a great year, and we have the platform, the products we definitely want to have?
Alejandro: Talking about a great year and where things are heading, if you were to go to sleep tonight, and you wake up in a world where the vision Yotpo is fully realized, and you are waking up in maybe five or six years later. What does that world look like?
Tomer Tagrin: I’ll quote you a Shopify to say that if Amazon builds an empire, we are [15:33] meaning it’s a world where any eCommerce brand doesn’t mean it’s you and I opening a tee-shirt company or after PNG, it’s easy to create a great consumer experience. Brands win because of their community, how they engage with consumers, and we want to make it easy for them.
Alejandro: eCommerce as a whole, obviously, it has been a booming year for eCommerce. Through COVID, many people that I speak with that are directly or indirectly related with eCommerce have seen their vision of five, seven, or even ten years realized in one single year alone; everything has been accelerating. Where do you think eCommerce is going now that we’re going to start to enter the new normal?
Tomer Tagrin: First, just like some public data that it’s not slowing down anytime soon. I recommend to look at what’s solved in China as a proxy to what COVID is doing to the Western world in terms of eComm penetration. It’s definitely early days of eComm penetration. I think we have a very long way to go. When you look at the public stores, Shopify, eCommerce, globally, or [16:48], it doesn’t look like it’s stopping or actually saying like the next 24 months are going to be extremely strong for eComm. I can tell you we are finishing probably our strongest quarter ever. When we look at the data, a few interesting things are happening. 1) A new demographic entered eComm, meaning all of the population is now online buyers. My mother is buying online, and I don’t think that’s going to change. That’s at the point of no return. I think for any new entrepreneur, but also for older companies, online is not [17:19] to have anymore. You need to have a great online experience if you want to survive this world, so I think we see a lot of budgets now are moving into eCommerce because they understood the necessity of it.
Alejandro: 100%. Experience is everything. Look at now, for example, all these people that are pushing SEO, the Core Web Vitals, and the experience of your website is going to impact how you’re ranked. It’s really remarkable. One thing that I like to touch on is going back to the way that you guys have thought about arranging and building up your team and building up the exposure was an event that happened in Utah that was quite a lesson learned for you guys when it comes to growth and expansion, so what happened there, and what was the key lesson to be learned?
Tomer Tagrin: I think what we did there in Utah was probably four years ago. We wanted to expand beyond New York, which is our largest center in the U.S., because of hiring, and then we found Utah, and we found some really great people that we hired. Then we learned that in order to be really great and yet was go to market, the seller, the CSM needs to be a savvy consumer, meaning because you’re talking to the [18:35] of the world, they expect to meet savvier consumers. In Utah, we discovered that the team we hired was less online consumers, and we pivoted strategy to a different place. After we hired a few people and opened an office, we quickly shut down the office. Until today, it’s one of the most important lessons that we talk about. On one hand, we want the mentality of doing things and not being afraid of making mistakes. The other thing is how to be very thoughtful and strategic of where we put our energy as a company because it touches people’s lives, it touches the opportunity costs and so big that we didn’t spend the energy someplace else. I think as an entrepreneur, there’s a Steve Job’s famous sentence which is a little bit cynical, “If you want to make everyone happy, don’t be a leader; sell ice cream. I think it’s a tough reality eventually that there are so many amazing things about the job of an entrepreneur. You get an idea from inception to scale. I don’t think there’s something bigger in life besides family than that. But you do need to get to do hard decisions, and you need to will the company’s have and not even your own personal from relationship to people to what even your character. I think the best entrepreneurs know how to put the company in the first place.
Alejandro: As we’re talking about people, it really comes to culture. So how have you guys thought about culture in Yotpo?
Tomer Tagrin: We have a saying that despite our unicorn valuation, we build the flamingo, meaning a real animal in a real business, to provide real value to customers in long-term, but a very unique culture. I think culture, first and foremost, is the people you hire and how you make decisions. For us it means three main buckets: one winning as a team sport. That means we really like to win, but we like teams even more. The second is the go big or go home mentality—people that are not afraid of making mistakes, people with growth mindsets of pushing the boundaries of operational excellence, and those types of things. The last bucket is be a force for good, people that always think about the company’s benefit and the customer benefit before their own personal benefit.
Alejandro: What do you look for in people when you’re recruiting. I’m sure that at the beginning, you were probably very involved in onboarding individuals. Now, I’m sure that you have your teams that are helping in ramping up the onboarding of people, but when it comes to people, obviously, you have these different buckets, but is there a specific question that you typically ask or a specific thing that you are looking for in the answers they give you during interviews.
Tomer Tagrin: No, I really try to get to a conversation when I can understand the inputs, meaning what drives a person? What gets them going? What are the inputs of why they came from these inputs to the conclusion they got and why they chose to do something? I try to go deep on a few things. It really doesn’t matter to get to the understanding of the person if the person is a great culture fit for Yotpo if Yotpo is a great culture fit for the person. I think it goes both ways. People with a transparent sense of humor, a combination of customer centricity and data orientation, empathy, authenticity of things that are really important regardless of what you do. I think, for me, at least, it’s about really understanding the person and getting to know them.
Alejandro: Got it. The last question that I wanted to ask you here is the one that I always ask the guests that come on the show, and that is, imagine if I put you into a time machine, and I’m bringing you back to 2011, that moment where Yotpo was brought to life, and you have the opportunity of having a chat with your younger self, and most importantly, having the opportunity of giving yourself one piece of business advice that you would be able to give to your younger self before launching Yotpo. What would you tell your younger self and why based on what you know now?
Tomer Tagrin: It’s a great question. I think, in general, I already know, hopefully, that I’ll walk in Yotpo in the next ten years. When we started nine to ten years ago, I didn’t know that. To really have a mindset of optimizing for long term because eventually, that’s what’s important. Yes, you need to show progress, but what’s important is to position yourself to a place where if luck comes, you are a huge winner of that. I think, more practically, and taking it down a notch is probably like [23:42] is more important than anything else. Making sure you’re going after a big opportunity that’s getting bigger. That will probably determine the success of the business more than anything else.
Alejandro: I love it. Tomer, for the people that are listening, what is the best way for them to reach out and say hi?
Tomer Tagrin: Yes. Twitter, LinkedIn. I think the company’s website, again, our job stage would love people to visit there, but I think for me, personally, LinkedIn or Twitter we would love to hear. If you’re into eCommerce and doing cool things, we are very much the place of everything related to eComm.
Alejandro: Amazing. Tomer, thank you so much for being on the DealMakers show today.
Tomer Tagrin: Thank you very much for having me. It was great.
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