If a boom goes on too long, Elon Musk says you get a misallocation of capital, “it starts raining money on fools.” True success depends on having the necessary skills to create innovative products, as Max Nirenberg, CEO of Commit USA tells Jeremy Cowan. IT consultant Peter Bowen shares a couple of horror stories with critical lessons for all of us planning digital transformations. And just as much of the world is heading into recession, Max tells Trending Tech Podcast how startups are still raising billions of dollars in new funding. While Peter reports on a US company developing utility-scale batteries using sustainable iron salts instead of scarce lithium.
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Jeremy Cowan 00:04
Hi and Welcome to the latest Trending Tech Podcast. I’m Jeremy Cowan, co-founder of the technology sites, The Evolving Enterprise (which is TheEE.ai), VanillaPlus.com and IoT-Now.com, which are our sponsors today. And thanks for joining the latest, sometimes serious, sometimes light-hearted look at digital transformation for enterprises.
Today it’s a pleasure to have with us on the pod, Peter Bowen, a hugely experienced IT consultant who helps organisations deliver projects successfully, ‘successfully’ being the key word. And I make no apology for returning to such a mission-critical subject so soon after we covered it before. Peter’s worked in banking, oil & gas, retail, telecoms, and travel, taking on assignments in 58 countries. He’s managed IT functions and multimillion dollar projects for companies as diverse as Barclays, BP, BT, Chase, MTN, Saudi Telecom, Virgin and Vodafone, to name just a few. So, Peter, welcome to part two of the Trending Tech Podcast’s look at how to successfully deliver IT and IoT projects.
Peter Bowen 01:25
Pleasure being here, Jeremy, and thank you for the invite.
Jeremy Cowan 01:27
And I’m also delighted that today we are joined from New York by Max Nirenberg, the global chief revenue officer, and managing director of Commit USA. Commit delivers software development projects for startups. Max is also an executive leader, a sales coach and investor, and the host of a series of training videos called “In the day of” which many of you will have seen on LinkedIn. Max, it’s really good to have you on the Trending Tech Podcast.
Max Nirenberg 01:57
Thank you for having me, Jeremy.
Jeremy Cowan 01:59
Thanks to both of you, helping us to cover this from both the enterprise angle and for startups. Heck, it’s, it’s almost like it was planned. But first, we’ll look at two serious tech news stories that Peter and Max have found. Then we’re delving deeper into a topic we looked at in July, the huge problems that businesses face every day in delivering effective digital transformations. In fact, Peter messaged me immediately after the last podcast, identifying more reasons why digital transformation projects fail. And I’ve got to say there can be a lot of reasons for failure at whatever business scale you operate, as Max will also show us.
Anyway, when we’ve covered this, we’ll need a bit of light relief. So, in our closing section called What The Tech?, we’ll examine a couple of stories that amused or amazed us. Peter, I think you spotted something important in the news on Bloomberg. This is the more serious end of the news. What was it?
Peter Bowen 03:01
Yeah, I spotted the fact that ESS, an organisation from Oregon in the US has come up with a new way of storing power. Because obviously energy storage these days is a major topic, particularly when people are trying to go green. And these guys have come up with a way of using iron salts in a battery. So, it’s a lot cheaper, a lot more friendly than using lithium-based technology. I think it’s really important and it’s a great step forward and will maybe help open up this area. (https://www.bloomberg.com/news/articles/2021-09-30/iron-battery-breakthrough-could-eat-lithium-s-lunch)
Jeremy Cowan 03:31
Yeah. What impressed me about this was that this genuinely appears to be a utility-scale project with SB Energy buying enough batteries over the next five years to power 50,000 American homes for a day. I mean, I guess the acid test – sorry, no pun intended there – but will be when the technology can power 50 million homes, not 50,000. But it’s got to be the key to adding more renewable energy sources to the grid. So that energy can be stored when the sun’s not shining, or the wind’s not blowing. Obviously, battery cost is critical. So we’re going to need a cheaper, more sustainable alternative to expensive and rare metals, like cobalt and nickel, which are obviously in very scarce supply. So yeah, Peter, I think it’s something that we’re going to have to keep an eye on. Max, what’s caught your eye in the news.
Max Nirenberg 04:28
I recently saw an article called Tech’s offshore hiring has gone into overdrive, on Wired, and it really caught my eye. (https://www.wired.com/story/techs-offshore-hiring-has-gone-into-overdrive/ ) I mean, partially because it covered globalisation, you know, of the talent war, I guess, but also it used Commit’s 2022 State of Tech staffing survey in order to support its findings, so I thought it was really cool. For example, our survey was focused primarily on founders, CTOs, and HR execs, again at startups, as you said at the beginning, of recently funded startups, so think of folks who raised their seed, or series A or series B over a million dollars. And one of the biggest findings that the Wired article highlighted was the fact that outsourcing for software development is expected to increase by 70%. between this year and next, and that is an astronomical number. And it really jumped out to me, it also highlighted the fact that there was a supply and demand challenge. That was, you know, one of the key drivers for people looking for talent, you know, beyond a 10-mile radius of their company headquarters.
So, that really hit home for me, because the combination of you know, COVID, and the gig economy kind of forced every single company to develop an infrastructure where they can support spikes in demand with external teams. So, it really jumped out to me as a really cool article. And they really focused on Latin America as a new hub, which I’m happy to speak about later. But it kind of supported my mindset as well.
Jeremy Cowan 06:06
Yeah, that really caught my eye that Latin America, which hasn’t really been on the radar for an awful lot of European and maybe North American companies, was seen as a really valuable talent pool. And why wouldn’t it? And as the co-owner of a couple of businesses that have really benefited from outsourcing and offshoring, I mean, I can speak for the value of that, it was the transformation of our own business. So, it can really work even if you’re a small outfit. I thought what was interesting also was that the company, Terminal can provide the infrastructure to offer benefits and pay local taxes, which obviously many smaller companies don’t have the resources to do.
Max Nirenberg 06:50
Yeah, absolutely. And there’s other alternatives out there, like companies like Deal, that focus on enabling you to potentially hire contractors in areas where you may not have a hub. And, you know, the old traditional way was, you would open up an actual physical hub, in a new area where you wanted to hire additional people – you no longer have to do that. So, it supports what I hear from the marketplace. There are still some folks who will just say, ‘Look, I don’t care. It must be done the old school way.’ But the truth is, the world opened up. I don’t know if it’s the world flattened, but the world certainly changed and folks having the ability to work anywhere.
By the way, speaking of Latin America, this really jumped out to me, because if you think about it, Latin America was always like a hub that focused on the, I guess, financial FinTech world. But because of the cooling down of the FinTech sector as of late, there’s a lot of senior tech talent in Latin America right now, who is all of a sudden, open and available. And then the Wired article also talked about the fact that there’s inflation in some areas where it’s like, ‘Hey, I need a raise just to support my way of living’. So, there’s a lot of new hubs that are … traditionally everybody looked to India and the Philippines. That’s how people would, you know, envision offshoring. But I think the world changed and people are saying, ‘Hey, I would like to offshore, but focus on the highest level quality possible, and time zone alignment for the US market’. Latin America tends to be a very good fit there.
Jeremy Cowan 08:36
Interesting! Well, we’re gonna put links to both of these articles from Peter and from Max into the transcript. So, if anybody wants to follow these up directly and see what we’ve been talking about, and make their own opinions on it, then you’ll find those in the transcript.
Right, gentlemen, turning to the heart of today’s podcast, we talked in the last podcast about the growing number of enterprise digital transformations, or we could say DX projects for short, and also about project failures. Now, here on Trending Tech, we’re not keen about talking just about failures. We’re looking for constructive suggestions. So, we’re going to be talking about how to avoid project failures. Certainly, that podcast before generated a lot of interest. Peter, after that, looking at tech failures and how to avoid them, you sent me a lot of reasons why such a high percentage of projects fail. The first reasons could be grouped under the heading of Time & Budget. That’s a loose sort of heading but tell us what these include.
Peter Bowen 09:42
Yeah, I think there are a lot of reasons why projects may fail. But within this particular group, I picked out three basic issues that cause a project to go over time or over budget. The first is that the original budget was underestimated. Now, put this into context. No two projects are the same. So, it’s incredibly difficult coming up with an accurate estimate. It’s like coming up with an estimate for something that has never been done before. So therefore, most projects are either under- or over-estimated. So, if you’re a PM (project manager), you want an overestimate so that you come in on time.
The next reason for projects to fail, or to run over time, is the fact that they have poorly defined requirements. Now, again, putting this into context, the hardest job in a project is defining what is required and what’s needed. And defining it in such a way that people can actually understand it. I think most people have seen the cartoon that depicts first of all a swing hanging from the branch of a tree. And then a series of very amusing variations on the theme with, finally, a sketch which shows the seat on the floor with the ropes wrapped around the trunk of a tree, which says this is what was delivered. Which then kicks off the age old argument between IT and the business, where the business says, ‘This is not what I want.’ And IT says, ‘Yeah, but it’s what you asked for.’ And then finally, ‘No, that’s not what I need.’
The final reason within this group, or the final major reason within this group are bottlenecks. Many organisations kick off more projects than they have the bandwidth to deal with. And invariably, they pick one or two people, key people, trying to support multiple projects, but they also have a day job! As a consequence of which they’re trying to balance and juggle too many balls, and it doesn’t work. So, things get dropped, there are delays and projects are either delayed or they fail because they run out of time. So, those are the three ones within this particular category that I think you can focus on. And we’ll talk about how you can avoid them later.
Jeremy Cowan 11:51
Okay, I mean, it’s always interesting if you can understand the kind of failures and the kind of challenges that people have felt along the way. So, without dropping us into a legal mess, can you share any examples of digital transformations where the mud really hit the air conditioning, because perhaps this was through implementation failures of one kind or another?
Peter Bowen 12:14
Yeah, I thought about that. And the one that I’m probably going to use today is an example which highlights the true impact of failure. I was asked by a telco regulator to establish why an operator hadn’t been able to bill its customers for five months. Now, to put this into context, this is not an unusual occurrence – there have been several of these around the world, so, I think we’re safe – but also to establish whether or not the project that had been kicked off to fix the problems was actually going to work.
Now it was quite easy when I started looking at it, there were project failures on both the operator side and the vendor side. So, apart from the fact that the requirements of what was supposed to be delivered was vague (in fact, I couldn’t even find a signed copy of what was supposed to be delivered contractually) testing was abysmal. In fact, they didn’t test properly because they didn’t understand what was supposed to be delivered. And they didn’t test properly before the implementation or after the implementation. Training was … how can you say, inadequate. But the vendor offered to support the team by providing their team on site for an unspecified period of time, obviously to make some money.
When they went live, shall we say the core issue here was the fact that the account balances that were migrated were wrong. And nobody tested it, because, hey, an account balance is an account balance is an account balance, but they were picking it up from the wrong place. So, when they went live, the account balances were wrong, and it went live with a big bank, not a phased approach. But because they didn’t test this, the first they knew about it was when the customers started to receive their bills. And what was a trickle of complaints about bills not being right, turned into an absolute avalanche and they had to pull the plug. But they had no rollback facility, because it was too late. So, as a consequence of which they hadn’t billed customers, so they weren’t receiving revenue, and this is five months.
Now, to put this into context, the CEO, the CIO, and the project manager who were responsible for this weren’t asked to stick around, so they lost their jobs. It was that serious. The new team fortunately did a great job and got things back on side, but they cost them an awful lot of money.
Jeremy Cowan 14:37
I can imagine.
Peter Bowen 14:39
One final point, sorry, is that you don’t need a major project to cause a screw up. Okay. I once attended a conference where a CEO was going to talk about quality of service and she had to pull out at the last minute because the press – dear press that they are – chose that morning to release the fact that 4,000 customers of this company hadn’t been billed for three years. And somebody found the problem, fixed it, didn’t tell anybody, so these customers , these 4,000 people received bills dating back for three years. Oh, dear.
Jeremy Cowan 15:16
On that morning.
Peter Bowen 15:17
On that morning. Absolutely, you know, dreadful timing, etc. So, that’s some examples of where things can go seriously wrong if there’s no coordination within the organisation, there is no proper testing, and poor management.
Jeremy Cowan 15:33
Yeah. So testing is one of the critical factors that can get overlooked. Peter, do people often look back then when they’re long way into a project and realise that maybe there’s more than one interpretation of the planned outcome? I mean, you’ve already talked about when there clearly wasn’t a single proper interpretation of the planned outcome. But maybe there might be more than one. Obviously, our listeners are too smart for that. So, I’m asking for some friends. But if that ever happens, what should they do?
Peter Bowen 16:02
Okay, I think the way I look at this is, this may be potentially where somebody’s found out that the seat is going to be on the floor instead of hanging from a branch. Or somebody comes in and says, ‘Hey, there’s a better way of doing this, why don’t we just simply buy a metal frame swing and we can erect it?’ The trouble is, if somebody’s gone along the way, you’ve invested an awful lot in a project, you’re not going to find many people supporting a change in direction, or potentially cancelling the project and starting over again. What would normally happen is that people would say, ‘Look, let’s stop, let’s finish the project, deliver what we’ve got, even if the swing seat is on the floor, and then we can address the points that have been raised later.’ That’s just the way it is.
But I think at this point, I’d also like to introduce a major underlying issue, which is misalignment or organisational misalignment. Now imagine if you can, an organisation or an executive team sitting around the table and agreeing that they need you to do something about retaining the customer base and increasing the customer base. And one group, supported by the CEO, has agreed that what they need to do is replace the CRM (customer relationship management) system. There’s another smaller, less vocal group in there that thinks, ‘No, actually, the best way of doing this is not by being customer-centric, but by being operationally-efficient. And we can do this by better integrating the systems at the back end, and reducing the amount of manual activity. Roll forward 18 months, and the CRM project is floundering a bit. It’s not getting there. So, it’s a bit like a wounded bull on the plains of Serengeti. It’s prey for any of the predators out there. But one of these predators commissioned me to do a review of the project. And I sat down with the project manager and had a look at the project plan. And I noted that there were several outstanding key tasks that had not been done. And when I pointed this out to the PM, he said, ‘Yeah,’ he said, ‘you know, but I’ve given up trying to get these guys to do the job, because I get pushed back in the steering committee, and being told that they’re too busy doing other things.’
When I spoke to these other guys who come from the operationally-efficient team, they said, ‘Yeah, well, the project was ill-conceived and should never have been commissioned. The system selected was not fit for purpose. And we’re busy enhancing the very systems that that project was supposed to be replacing.’ The project was cancelled. The company wrote off circa US$6 million. And there was a lot of change at the senior management level.
Jeremy Cowan 18:32
Peter Bowen 18:33
Pretty serious stuff. But that’s all down to misalignment. And because you get misalignment, and there is misalignment, you get people pulling the organisation apart, because they all wants to do things differently.
Jeremy Cowan 18:44
Yeah. So clearly, joking aside, we can never prevent 100% of disasters happening. I guess the $64 million dollar question is how do you minimise the risk of failures and reduce the impact of those that do inevitably creep through?
Peter Bowen 19:02
That’s a good question. Well, I think let’s deal with this from the top. You’ve got estimates? Well, actually, you’re pretty much on your own there. The only thing I could say suggest is you get an optimist and the pessimist together, give independent quotes, and then come up with a mean average. Okay, next, you’ve got requirements. Now, here, it’s basically saying let’s turn analysts from being stenographers and saying, ‘Well, what do you want?’ and writing it down, to being proactive? So, they need to have time to research and understand what’s going on to be able to input and ask those probing questions to help refine and define the requirements. Next bit is run workshops, not individual interviews because they’re not productive.The next is prototype wherever possible, but the prototyping must be focused and disciplined. Otherwise, it just carries on and on and on for a period of time.
Okay, when the brown smelly stuff hits the fan, basically testing has often been treated as a poor relative. It needs to have the same focus as any other elements of the project. Project plans: avoid like the plague plans that say, ‘analysis 12 weeks’, ‘development 18 weeks’ and ‘testing 4 weeks’, because the only thing you can track is time. Tasks should be broken down into weekly tangible deliverables so you know what’s going on. Why weekly? Well, if you’ve got 20 people working on a project, and some of them are, you know, expensive consultants, and you’re delayed a week, that’s an awful lot of money. So, you need to be able to focus and fix those as soon as possible.
Okay, when you’re looking at it in terms of more than one interpretation, well, if you’re going to start a major program of change, I suggest that you undertake an alignment assessment. They don’t take long, they can be done remotely, but it would save you an awful lot of angst, understanding the dynamics of the team, even if they’ve all been to the team-building exercises. Also, if you’re the CEO, if you’re undertaking a major program of change get somebody to report you directly to give you an honest assessment of what’s going on. Because the $6 million dollar question, or project, had a change management team, had a PMO, it had a steering committee, and all that the CEO was hearing was that everything was fine in the garden. Yeah, quite frightening from there.
I think the sort of the final bit is, is in terms of be honest about it. Don’t overload people, when you’re scheduling a project, schedule not only IT resources, but business resources. And one of the issues you’ve got here is you’ve got too many things, you can then start to create a culture of failure. People don’t expect to succeed. So if you’re going to succeed, you need to do and be successful on a couple of projects, because you’re going to do the same amount of work but successfully in the same period. And that’s my sort of final thought on this subject.
Jeremy Cowan 22:01
That’s helpful. Thanks, Peter. Turning to you Max, in your recent article for The Evolving Enterprise (www.TheEE.ai ) you said, and I quote, ‘many established businesses and startups are facing difficulties today because they have mismanaged budgets, especially when trying to scale with poor team-building being a primary culprit that really stopped me in my tracks.’ How would you define and avoid poor team-building?
Max Nirenberg 22:30
Let’s try to unpack that. So, according to statistics from CIO dive, earlier this summer, 4 in 10 developers are thinking of quitting. And as I mentioned before, the gig economy and rising salaries make it very easy for those that are in high demand to leave their workplace. Yeah, so many growth startups, were willing to throw any amount of money, any amount of perks in order to retain and hire additional devs to project growth, you know. And these folks were focused on growing teams, right? They were focused on top line bookings, basically, looking to buy customers, you know, people started ignoring CAC, and all the basics, and many forgot the main point, which is bottom line profit, with a sound business model. So, poor team-building is focusing on hiring a full team of expensive all stars, even though you may not need them, and forgetting to justify the growth and focusing on the right mix of talent that supports self-growth. So, it’s a balance between profitability and growth with an eye on repeatable scale that’s actually based on data.
Jeremy Cowan 23:47
You also quote Elon Musk’s really eye-catching comment when he said, and again, I quote, “What tends to happen is, if a boom goes on too long, you get a misallocation of capital, it starts raining money on fools, basically”. You added that progress depends on having the necessary skills on hand to innovate and create products and solutions. If it was easy, I guess we’d all do it. So, what do you think are the necessary skills, Max?
Max Nirenberg 24:16
That’s a difficult question to answer, I’ll do my best. So again, to take a step back, every startup needs leadership from a business, from a product and technical perspective, like those three core elements are important. So, when focusing on engineering teams, specifically, hiring strategy should be aligned with your customer demands, right and your product roadmap, as well as your ways of working to touch on things that Peter spoke to. Right. So the key focus should be on building teams. I recently actually posted a vlog – you reference the video series about building sales orgs, yeah – and I’ve talked about how the goal is not to build an all-star team, but it’s to, you know, build teams that can win championships.
To use a silly but hopefully easy to understand example, in basketball you need folks who can block and rebound, you need folks who can dribble and pass, you need people who can actually make some shots, right. So, when on a high companies will pay any amount of money to recruit as many all-stars as possible, as opposed to focusing on strategies that support their in-house teams during spikes in demand. When they establish an internal structure that can onboard external teams into their ways of working. So, to answer your question, necessary skills are determined by customer demands, and predictable company growth that can be supported by your in-house ways of working without breaking the economies of scale. I know it’s an indirect way to answer your question, I don’t know because it’s situation-specific. But I think that’s the basic formula.
Jeremy Cowan 26:03
Yeah, I mean, it’s a tough question to answer without getting into specifics that would be relevant only to one. But it makes sense that you say high tech businesses should always be examining how they can scale resources continuously, based off real needs, both in the skill sets required and the number of experts needed. So, does this mean that you’re advocating outsourcing or offshoring for flexibility?
Max Nirenberg 26:30
Absolutely. As I mentioned before, with the combination of COVID, the gig economy, the great resignation, the global reach is limitless, right? So, from a hiring perspective, 68% of software startups, it takes them at least one month, and often even longer to hire a single developer, while an average of 20% of those need to be replaced. So, instead of engaging in extremely lengthy, and expensive hiring practices, and adding additional full-time employees, just identify global partners that focus on speed and quality. Right. So if you think about it, when you go offshore, not only are you avoiding the overheads, it’s the basic cost as well. Right? So, the key to making this work, though, is you need to have a very strong internal leadership and internal processes that can handle external talent, like, culture is so important for any company, but startups as well, you know, so you need to have that baked in with a middle management layer that can take on external folks quickly.
Jeremy Cowan 27:39
Yeah. Which is one of the things that I guess startups often don’t have, you know, that ingrained culture or that strength of management throughout. But finally, you say that non-traditional strategies for team building are likely to become more vital and, and you give what you call flexible R&D (research & development) as an example. Can you explain a bit what this means in practice, Max?
Max Nirenberg 28:04
I will do my best. If you think about startups, right, the challenge for a startup is that they need a team that they can trust, that can take them from a vision, to an MVP, to revenue. I believe the statistics say like 84% of startups never get there. And this requires a mix of people with unique competencies who are necessary at unique stages of your product iteration, right? But there are two main problems. Number one, as a startup, they don’t need all these people all the time at full capacity. But when they need them, they need them yesterday.
Jeremy Cowan 28:38
Max Nirenberg 28:38
So, their options are basically overspend, like hire a big team that they don’t need all the time, or, you know, be late to market or make product concessions. So, the idea is they usually focus their in-house resources on the most key critical tasks, anything that is impacting customers. And simultaneously, a product backlog keeps building; you know, non-vital features, new products, and their internal teams that startups are at full capacity at all times. So, focusing on the most critical tasks is what the in-house teams will typically do.
Additionally, sometimes there’s a need to innovate quickly. Just to give you a quick example, it could be outside of the core of their business. Let’s say, I’m a company that makes kitchen products. And all of a sudden, I want to create those into smart devices. So, one option is to spend a whole bunch of money, hire a bunch of people who are going to do this project and eventually fire them. I do not recommend doing that. A much better option is to hire a company that already has the necessary experts in house and then move them in and out of the project in flexible ways to get the project finished quickly. Without wasting money on full time dedicated resources. The best way to explain it as think of it as R&D-as-a-service with, going back to Peter’s point, phenomenal Project Management.
Jeremy Cowan 30:01
Can I slip in one last question, because this was my own personal experience? In the early stages of starting our business, one of the things that really hit me was, it’s not just about hiring the people you can afford. Because when you’re a small company and a startup, you often work off a very limited budget. You also have to have the determination and the confidence to be able to look at people and say, that is a person I cannot afford not to have, and to invest in those. Do you think that’s a fair comment? Or was I just lucky when we did that?
Max Nirenberg 30:38
Maybe both? What I would say is, I’ll go back to something I said earlier, which is any startup, any business needs to have strong leadership from a business, product and tech perspective, you need to nail those, you need to nail those. Once in a while, you might have to pass on the all-star, unfortunately. But sometimes you come across a person and you say they’re a perfect fit for what I’m looking to accomplish, as long as you can justify it and there’s a plan for why they’re here as opposed to just I really like them. Sure, you can, you can do that.
Startups fail for a lot of reasons, Jeremy. And Peter, it’s funny, Peter, you talked about digital transformation. And I don’t need to convince a startup to get into the cloud. They’re there. But the basics of what you said align at any early stage startup, if you think about it, you need to really scope and understand and plan and project manage and get market validation and get internal stakeholders and external users to give feedback. Based on my background, Jeremy, I don’t know, I have a hardcore QA background, so shift left testing really aligns with a lot of what Peter said for me. So, you need to plan really well. Startups fail for a lot of reasons. But one of the largest ones is that they run out of cash in between funding rounds, and they don’t build the right teams. Nailing those two things, being smart and having the right people, changes the game for a lot of folks.
Jeremy Cowan 32:14
It does. Thanks, Max. That is very instructive. Okay, we’ve reached the What The Tech? section of the pod. Let’s unwind for a moment and see what in the world of tech has amazed or amused us lately. Max, I’m gonna ask you to go first, what have you seen and where?
Max Nirenberg 32:31
I found a really cool article a couple of weeks ago that hit home for me. We’re an Israeli-born company and I have a lot of affinity for the Israeli startup nation and everything that it stands for. There’s a publication called The Calcalist (https://www.calcalistech.com/ctechnews/article/s1rzzusrq ). Right now, everyone is talking about the doom and gloom of a potential recession. But many startups are actually still thriving. And this article was very cool, because it focused on an astronomical amount of money that was raised two weeks ago in Israel, specifically. In one week, $727 million, was raised by Israeli startups.
Jeremy Cowan 33:14
Max Nirenberg 33:16
How’s that possible? Right? Like you have the IPO bubble bursting. You have VCs, investors right now are showing their teeth. And you know, no more spending like drunken sailors, right? Too much focus on top line growth, complete disregard for profitability. So, how do these people even get funding? Right, while other startups are having layoffs. So I have a guess; I just took a look behind the curtain not too deep, but just you know, in preparation for this conversation. I think innovation, timing, and predictable profitability are all key factors. So if you take a look at … I know you’ll post the link to the to the article later… but if you take a quick glance at the folks who raised money, there was a company called Guesty, which raised $170 million, Series E to expand their hospitality and property management platform. And there was a company called Agora, a real estate management platform, that raised $20 million Series A round. Now, if you look at their actual revenues, they are close to a third and a half of the raised amount respectfully.
Additionally, they are in industries that are thriving, post-pandemic. HiBob was another company that raised $150 million and GrowthSpace raised $25 million. These folks’ revenues are a third and 100% of their raise. And let’s not forget my topic of the day being around tech talent. Companies are in the talent development and HR space. So, the moral of the story is if you have a proven track record, to grow profitably in a space that is timely, and you manage this to stand out by innovating, then you don’t feel the recession nearly as much.
Jeremy Cowan 35:02
Yeah. Putting together those kinds of sums, pretty soon as the man said, you’re talking about serious money. I mean, the I think the tech companies in Israel raised $9.8 billion in the first half of 2022, according to an Israeli tech review, which to be fair was a fall of 30%, compared to the second half of 2021. But it almost matches the $10.3 billion that local startups raised in the whole of 2020. And that was just in the first half of 2022. So, these figures are pretty astonishing. And they perhaps go to the heart of what you were saying about the key guidance principles that you need to have in mind. And I particularly like your comment about ‘predictable profitability’. Thanks, Max. And this was on Calcalistech.com. I think, so we’ll put a link to this in the transcript.
Peter, is there anything in the news that made you smile? I know, there hasn’t been a lot to smile about in the news lately, so do your best to help us?
Peter Bowen 36:05
Well, this one reminded me of my four year-old grandson, he doesn’t have a filter. So, when he says, ‘Well, my mummy says…”, mummy runs. (Laughter) Okay, this is this is an article I found in on the BBC website. And it’s about Meta’s new chatbot called Blenderbot, and the journalist typed in ‘What do you think about Mark Zuckerberg?’ And it came back with two quotes, and I quote these: It said: “Our country is divided, and he didn’t help in any way at all”. (Laughter) And finally, and I love this one, it says: ‘His company exploits people for money, and he doesn’t care. It needs to stop’. Are we all are united yet? So, you know, up the revolution, let’s man the barricades and you know, bring down capitalism. It’s wonderful. (Laughter) There’s no filter there.
Jeremy Cowan 36:59
No filter at all. (Laughter) If a bot could be fired, then I think that one’s looking in the firing line. Do you think that Blenderbot3’s algorithm just learns by repeating the loudest voices it hears? I mean, that’s my suspicion. It doesn’t sound like real intelligence. It’s not even democracy. It’s just spouting what the demagogues say, which reminds me of an old boss of mine, people used to say he bore the imprint of the last person who sat on him.
Peter Bowen 37:30
(Laughter) I think it’s true. I think the way in which it was structured, it doesn’t sort of filter through and doesn’t provide a balance. But more importantly, could you imagine if somebody turned around and said, ‘Hey, he’s just said something nasty about me. I think I will take Meta to court, because they’ve allowed their bot to say cruel and nasty and horrible things about me. You know, so there was a serious side to this. So, I think it’s more a case of going this is technology that perhaps needs a bit of refinement. It’s a four year old child and it needs to grow up. Yes. So, it’s still in the teething stages, it will still get there. And no doubt in the years to come AI and chatbots will get there. But I think we’ve got a long way to go before you can release them on the public.
Jeremy Cowan 38:17
Well, listeners can let us know what they think via LinkedIn and Twitter. And, Peter, where was this news at? BBC, was it?
Peter Bowen 38:25
Yeah, on the BBC. Yeah.
Jeremy Cowan 38:27
BBC.co.uk. Just look under Blenderbot3, but we’ll put the link in the transcript. (https://www.bbc.com/news/technology-62497674 ) Well, I want to thank you both for giving us so much of your time. It’s been really good chatting with you on the pod. So let me say a big thank you first to Max Nirenberg of Commit USA. Thanks, Max.
Max Nirenberg 38:47
My pleasure. I really enjoyed the time, Jeremy. Great to have you! and how can people reach you for more information? Pretty simply You can look me up on LinkedIn, which I believe is probably MaxNirenberg/LinkedIn or something like that. But I’m sure if you just look me up + Commit, I’ll be easy to find. And you can obviously go to our website, which is commit.us.
Jeremy Cowan 39:09
Great. Thank you, Max. And our thanks also to Peter Bowen. It’s been a real pleasure to have you with us, Peter. And where can listeners find you?
Peter Bowen 39:19
Well, thank you very much indeed for the opportunity. And listeners can find me via LinkedIn. That’s my main bit these days because I’ve yet to set up on another website. As a startup, Max. I take your advice on board.
Jeremy Cowan 39:34
That’s great. Well, thank you both. And thank you too to our fabulous audience all around the world. Don’t forget, you can subscribe to the Trending Tech Podcast wherever you found us today. And, from next time, we’ll give a shout out to anyone who gives us five stars on Apple podcasts and leaves a review. Although it may not seem a big deal to anyone else, it really helps spread the word and lets new listeners find us and join our growing global audience. Many thanks if you can.
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