On the Record with Erez Nahom, CEO and Founder at Konnecto
Erez Nahom, Cofounder & CEO of Konnecto
Hometown: Meitar, Israel
Hobbies: Sports, chess, poker
Three words to describe Erez: Creative, focused, likes to laugh
Konnecto is an External Customer Data Platform founded in 2018 that enables brands to reveal and disrupt their competitors’ consumer journeys by applying unique data science on consumers’ anonymized digital footprint.
What were you like as a child and how do you think that shaped who are you today?
I was very competitive in my early days—everything was centered around competitive sports. I didn’t know how to accept failure. Years later, when I joined the Israeli army, I was able to channel that same competitiveness into trying to succeed in a place where there are so many successful, super smart people. I joined the army at the age of 18 in the 8200 unit (Israeli equivalent of the NSA)—many of Israel’s start-ups founders were in this specific unit.
How did spending time in the 8200 unit prepare you for what you’re building today at Konnecto?
From a very early age you get responsibility for building platforms that can help national security. Back in the day, we didn’t call these platforms “big data” or “machine learning”, but we were essentially building very sophisticated platforms that helped us have a competitive edge over the other players in the field.
This experience really shaped many of us—spending 5 years developing products, pushing them to production quickly, and learning about the latest technologies, while also getting to work with the most brilliant people out there.
What do you think is your main takeaway from the army?
That the best thing you can do is surround yourself with people that are much smarter than you in different areas; whether it’s product technology, understanding the clients a bit better, etc.... At the same time, having friends and colleagues who are always pushing you to do better.
What led you to start Konnecto?
After the army, I spent a few years at a VOIP company called Vonage, and during that time I realized that it would be super interesting to try to build something by myself. Unlike many of my army friends that went into cyber and cybersecurity, the thing that always got me was consumer patterns and behavioral patterns. Why do people do what they do? How do they search for something? How do they buy products?
At Vonage, we were launching a product to market, and I noticed that it’s not easy to understand how to get consumers to use or buy your product. When I asked the guys in the company about it, they told me that we had some blind spots on how or why consumers ended up buying from the competitors. That’s essentially where the inception of Konnecto came from.
Israel is the start-up nation, but Israeli startups often need to engage heavily in the US market, both for sales and for fundraising. Can you tell us more about your experience working in both countries?
Israelis are good at technology, data, building products, etc… but all of that is worthless unless you can bring it to the client. Israel has fierce competition—there so many startups with amazing teams and great ideas—and we realized early that we needed to engage with clients from the US. We understood that the market is there, we are far away, and so we have to open operations there.
We also needed to get involved with VCs that are based in NY. The way I see it, you start in Israel with the first round of funding, but after you have the product out, if you really want to push it into the market, the best way to do it is by partnering with investors that are located specifically in the market you are after. When we looked into different investors, it was a strategic decision—could they help us to build operations in the US and get to different clients?
How did you get connected with Differential Ventures and what does the start-up/VC relationship mean to you?
When we started raising our seed-round we were specifically looking for NY-based VCs that invest in deep tech, B2B companies. We identified Differential Ventures, and also noticed they had a few investments in Israel, which made it easier as they already knew the dynamics of our market. We were looking for a warm introduction, and a friend of Marni’s knew Mitchell and it went from there. We jumped on the first call, and it just clicked. The partners asked us questions that made us think deeper about how we were building our product and approaching the market.
What has been your biggest or most unexpected challenge?
This is going to sound cliche given the timing, but COVID. We landed in Boston to start our VC meetings for our seed fund the week the US shut down due to the pandemic. Obviously, all of our 20+ meetings were cancelled. So raising capital was completely different than what we expected.
The weirder part was how fast our clients and new clients started adopting our product due to the pandemic. Initially, we were under the assumption that our clients would need time to rethink expenses, but we were growing 50% QoQ and are still growing incredibly fast thanks to the secular trends in our industry.
So, I can proudly say that we found incredible partners & clients and have persevered and grew through those challenging times.
Has COVID impacted Konnecto in any other ways?
Interestingly, COVID was actually not so bad in terms of the sales cycle. Instead of us jumping on planes, you could just jump on a Zoom call. Clients started buying online without the face to face element that was a big part of sales before. I think this is a huge opportunity. Even in markets that are recovering right now, like New York, the sales cycles will remain online, which is great for the companies that don’t have big operations in the specific market. It cuts the travel expenses!
Having said that, I do feel like as we get into [fundraising for] growth rounds, it’s super important to identify the right partners and more face to face time may be required than during the Seed round and Series A.
Have you ever needed to change or pivot the business based on product feedback, product market fit, or product building?
Yes, definitely. The initial product we launched was just terrible in terms of customer feedback, but we were lucky enough to have customers who really wanted to help us understand how to solve one of their biggest pain points. Initially, the platform we built was great in terms of solving the pain point, but it didn’t provide it in a way that was simple and easy for the clients to work through. We had worked so hard to break into the pattern analysis that we didn’t put so much effort into how we were delivering these recommendations and insights to clients. Danielle, our CRO, was very close to the clients and helped us shift the product to the place where it is now—not only providing huge value, but also a fun product with which to interact. Something we call “effortless luxury”—you get a lot but don’t need to spend too much time in order to get the value you need.
What excites you most about the work you’re doing?
I always love first client meetings, especially before we start working together, when they start sharing their biggest pain points. There is so much data for brands, but almost none of it helps them identify how to increase market share & sales. When we’re able to show brands our ability to identify patterns and present sales opportunities in those patterns, it is those aha moments I live for. Especially, as the teams we are working with have really seen it all and are using all these different platforms. To have ours be the most exciting and useful to them is a wonderful feeling.
As you look to the future, what are you looking forward to?
I’m mainly excited about turning our product into the center of decision making for our customers. A place where they can easily get value from all of the analysis we do of customer behavior beyond the brand website.
I think in the next few years, we are going to hear more and more about this new category we are building- external customer data platforms. We are the first ones pushing towards it and at the same time making sure we build a product that is simple to use and adds a lot of value.
Lastly, are there any life lessons you live by?
Have a very short term memory for everything bad that happens while building a business and a long term memory for the lessons you have learned in those moments. It’s important to enjoy what you’re doing, make fun of the failures, and learn from them. Life is short.
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Erez Nahom is Co-founder and the Chief Executive Officer of Konnecto. Erez has over 13 years of experience in managing development, QA, and product teams. Previously, Erez managed the automation development and QA team at Vonage, and prior to that he served as an officer in the elite Israeli Intelligence unit, 8200 (the Israeli NSA).
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