Factual Founder, Gil Elbaz, Talks About Failure And Neutral Data

Yesterday, I saw a Best Buy back to school commercial. A student is shopping for a laptop for college and his startup. As the commercial evolves the students are hard at work developing their product that gets the thumbs up from “investors” and just like that the startup is an ”overnight success.”

Oh, if only it were that easy. Unfortunately, 90% of startups are destined to fail. It’s a grim statistic but true. There is a host of reasons why these companies fail; poor management, lack of vision, and segmenting responsibilities too early.

“A good product idea and a strong technical team are not a guarantee of a sustainable business. One should not ignore the business process and issues of a company because it is not their job. It can eventually deprive them from any future in that company.” -- Dijiwan’s leadership

No one wants to fail, but it’s an intimate part of a business. Taking intelligent risks and making mistakes is how you grow, as an entrepreneur. So failure is not the enemy it’s an escort that guides you through your journey.

If you learn from your mistakes, they can lead to a treasure of significant discoveries.

As an entrepreneur, investor and philanthropist Gil Elbaz has followed this philosophy, and it has led Elbaz to understand:

  • the worth of working with the right people
  • that working in the right environment would define his standard
  • that learning as much as possible as fast as possible was important to his success

Elbaz understands that failure is an asset that teaches you how to evolve as an entrepreneur. But we must be ready to listen and responsible enough to take action. So let’s take a look at Gil Elbaz’s story on becoming an ”overnight success.”

So, Gil, what is your story?

As a child I was always fascinated by data - weather data, baseball stats, really anything. My parents got me an early Apple computer and I would spend hours upon hours working with spreadsheets, collecting, organizing, and analyzing data on all subjects.

I went to college at Caltech where I studied economics and engineering. There was a tremendous amount of math in general at Caltech and then of course in my majors. One course in particular that really influenced me was probability. It’s the basis for the natural language processing and predictive algorithms that we used at Applied Semantics and that we use at Factual.

After school I worked at a couple of jobs, but in 1998 I co-founded Applied Semantics with an old friend of mine from college. We built natural language understanding technology based on our proprietary database of word meanings and relationships and used that to understand the context of web sites. We developed a contextual ads product called AdSense, and in 2003 Applied Semantics was acquired by Google.

I was at Google through 2007 and then I left, and formed Factual in 2008. To date my life had largely been about building products with data, but I wanted to focus on the data itself, specifically, building a neutral data company that enabled anyone to access trustable data so that they can go on to build great products.

We’ve been focused on location data, collecting data on every place in 50 countries around the world, and building technology to make it available in ways that make it easier for others to consume. There is a tremendous amount of understanding, or context, that can be derived from a proper understanding of location, and this has incredible potential for mobile content and mobile experiences.

The long term plan is to cover many different types of data, but to me, anything that happens in the physical world is location data, so there is a lot to do under this very broad umbrella.

What’s the biggest mistake you made in your life and what did you learn from it?

I glossed over those years in the previous question, and I’ve certainly been extremely fortunate in my career since, but I made a big mistake early on in my career. I chose a job based on title and salary, which in hindsight is really not the right way to start a career.

I should have optimized on working with the right people, and working in an environment where I would be empowered to push myself, so I could learn as much as fast as possible. It ended up taking me two years to realize I made this mistake.

Who is your role model, and why?

There are many successful, ambitious entrepreneurs who I look up to and highly respect. Some of these individuals enjoyed tremendous, seemingly overnight success. It’s generally a combination of talent, hard work, building great teams, and a bit of luck - being at the right place at the right time.

But, what about those individuals who eventually built something great despite a serious challenge that needed to be overcome. Perhaps they were in the right place at the wrong time (too early), or perhaps they had a bit of bad luck and an entrenched competitor decided to make their product free.

Those are my real role models, the gritty competitors who like Elon Musk “stared into the face of death” and lived not only to tell their tales but to build a great company (or two, or three.)

I think of Ben Horowitz who, along with Marc Andreessen, built LoudCloud in 1999 and raised $120m in a 2000 IPO, but by 2002 they had to reimagine their business as Opsware and start a new business from scratch with no revenues. Through sheer willpower Opsware grew, succeeded, and had a great exit in 2007.

I think about Adam Miller, CEO of Cornerstone on Demand. Today they are a very important, significant SaaS business helping other companies optimize their human resources. But, from 1999 when the company was co-founded, it wasn’t an overnight success, and Adam’s focus, long-term dedication, and passion for serving their customers paid off.

What were the biggest challenges you faced at Factual in the first 3 months?

“Big data”, “data is the new oil”, “data scientist” - these terms, ideas, and concepts didn’t really exist back in 2008. Back then, investors were really looking at two main categories, you were either making software / web apps for consumer or you were doing so for the enterprise. The concept of a neutral data company that didn’t do either and was trying to solve a relatively vague problem of “access to data” was going against the flow.

Fortunately I was able to raise a healthy seed round from a variety of forward thinking investors and now we’re in a world where data is a part of every conversation.

What is Factual's mission statement and how is it used to keep the company focused on long-term thinking and not short-term goals?

I briefly mentioned this above - we view ourselves as stewards of the world’s data, sitting in between millions of disparate sources of data and those who need data to solve problems. We ingest data from millions of different sources and then we clean, structure, and package it up to make it easily accessible for a variety of use cases.

This leads to two fundamental tenets at Factual - an emphasis on data and the concept of neutrality. We always want more data, and we structure our deals to incent partners to share data with us, even if it may cost us some short-term revenue. This core tenet of valuing data can be seen in the way our sales and business development teams interact with clients, always looking for opportunities to strike new data sharing partnerships.

The second one is the concept of neutrality. We call ourselves a neutral data company because our product is data - we don’t have “end user products” such as consumer apps or an ad network. If we did, we’d be competing with our customers and that’s rarely a recipe for success. Plus, it would prevent us from forming data sharing partnerships that have been so foundational to our success. No one wants to share data with their competitor.

So we make our business and product decisions with these two tenets in mind, and that keeps us on the path to be successful in our long term mission.

How do you design Factual to be around for 100 years?

I think it largely boils down to two things - work towards something big that inspires people, and then create an environment that attracts and retains great people to work towards that vision. We’ve already talked about the vision so I’ll focus on the second part here.

I try to create an atmosphere of respect where people believe that they can have hand in influencing the company’s strategy and really have impact on the company. Ultimately a company is a collection of people, so if I can create a place where people believe in what we’re trying to do, and they believe they can have material impact, then the company will thrive.

Question: You are still worried about making mistakes. It’s natural. But understand that by not taking intelligent risks you will not grow. So what will you do today to grow?

Andrew Argue, of Ten Key Heroes, Talks About The Agony Of Failure

Entrepreneurs fail repeatedly. In all honesty, they fail more than they succeed. So are you entering entrepreneurship so you can start a business and have a multi-million dollar exit?

If you are, then you will be epically disappointed. Nine out of every 10 startups will fail. That is the bleak truth behind the, not so glamorous, life of an entrepreneur.

The failure post-mortem pens the many reasons why the entrepreneur failed:

  • No market need for your product
  • You ran out of cash
  • You don't have the right team
  • You made a bad product

There is no strategy that will guarantee you success. And luck is not a plan of action.

Yes, having a product that the market needs is one ingredient to success but the entrepreneur needs something deeper to continue the fight for success.

These three attributes need to be part of your DNA:

Andrew Argue, the founder of Ten Key Heroes and the host of The Bean Counter, has failed many times before achieving success.

Argue's journey was not rosy -- he was busted for selling drugs, was nearly broke, and in debt. But Andrew refused to give up on his dream.

After hustling for two years and with the help of a business coach Argue's hustle has paid off.

So Andrew, what’s your story?

I'm originally from Oklahoma sadly but lived all over the US (NYC, New Jersey, San Diego, Tampa, and Costa Rica for two years in high school).

When I was about 14, I was sent to a troubled teen program for selling drugs (my first entrepreneurial stint) to kids in my neighborhood.

All small time stuff by my parents freaked!

I spent the next two years in Wilderness Program (Utah) and Boarding School (Costa Rica).

After that, I went to University at The University of Tampa where I got a Masters of Accounting and my CPA License before starting at PwC.

I loved PwC and did extremely well.

In my first year, I got a 1 rating on a 1-5 scale and a 10% raise that was big compared to the 3% I thought most people got.

My second year was even better, a 19% raise and another 1 rating and worked with a Fortune 100 client.

But in that second year I changed offices as my girlfriend (now wife took a job in Miami).

I didn't like the new office as much as the old and decided to quit.

In the 22 or so months since I quit PwC, I've done a lot.

I've started 4-5 companies, and all have stopped or failed except for The Bean Counter.

I have failed a lot.

And no I don't have this glamorous entrepreneurship story of selling my company for millions of dollars.

The truth is; I've mostly failed.

But, I have made more money each year than I would have at my job.

My wife and I have been able to pay off $55,000 of student loans in a 14-month period and saved on top of that.

I haven't let me pride kill me. I've started 4-5 companies but I've also worked contract accounting jobs, taken writing gigs, and other small freelance gigs to earn extra cash and keep things going.

I've learned a TON! It's like an actual MBA, not that crap most schools are selling.

I now know the basics of:

  • Sales
  • Internet marketing
  • Start-up funding
  • How to buy a company
  • How to sell a company
  • Fundraising
  • How to find/handle investors
  • How to write
  • and much more

While I haven't made crazy money, I've done okay and learned a lot.

I'm excited about my future. It's been a crazy adventure the last two years and I am only 25 years old!

Who is your role model, and why?

I'd have to say, George Carlin, the comedian.

He did an interview once where he said he didn't succeed early in his career because he wanted to be a mainstream comedian. Very middle America, a people pleaser, he had in mind a traditional job, a mainstream dream.

But in reality he is more of a rebel.

And once he accepted that he became wildly successful.

I think I have a similar problem that I hope to overcome.

Being too mainstream in terms of the business ideas I think I should start, vs. where my radical rebel brain takes me.

Tell me about a project or accomplishment that you consider to be the most significant in your career?

When I first started The Bean Counter, a site with career advice and information for young accountants and professionals, I knew I needed some reputable people to make the brand seem legit.

I mean, who was I? A 23-year-old nobody.

At the time, I emailed the #3 partner for PwC US, the largest accounting firm in the world at the time and asked to interview him for my podcast.

He responded and preferred a video interview, and he flew me to New York.

We did a full video interview on a set with a crew, and this launched The Bean Counter from nothing into something very special in the next few weeks!

I guess the reason this was so memorable wasn't because I got any monetary gain from it. But rather because I learned a simple lesson:

Anyone. And I mean anyone is reachable with a great fucking email.

What has been the biggest let down in your career so far?

There have been some tough times these last two years as an entrepreneur.

When I quit my job, I saved up about $20,000.

But I hadn't learned how to properly budget (weird for an accountant), and I got married a few months later.

One month after my wife and I got married. And five months after I quit my job I have no income at all, $55,000 in student loans, and only $1,500 cash to my wife and I's name.

I was scared.

In the depths of that fear though, I find that crazy motivation to dig us out. A little over a year and a half later we are debt free and have lots of savings!

While not directly related to one of the businesses I started, this was a huge part of my experience.

Being broke isn't a great way to start.

But sometimes that almost life or death fear can help you get crazy and get shit done.

How can entrepreneurs find success in a marketplace that always seems to change?

If things always stayed the same, then there wouldn't be any opportunity.

The only way we can find opportunity is with the market constantly changing/shifting.

"Chaos is a ladder" - Petyr Baelish, Game of Thrones

That's true for business.

The execution of a creative idea can be a chaotic experience. So how do you organize, prioritize, and manage your creative ideas?

I was "institutionalized" at the age of 15. I went to boarding school, then college, and then a big public accounting firm.

Institutions.

Institutions tell you what to do. They set everything up for you with rules, expectations, deadlines, etc.

The real world isn't like that.

You need self-discipline. I didn't have it, and I found that out after five months of being an entrepreneur. I had no income and no money.

So what did I do?

I hired a coach. A business coach.

She helped my transition from my institutionalized mind into an entrepreneurial, self-organized self. I can't give one answer for every person, you have to know yourself and find your way.

But, if you know you aren't organized, can't prioritize, and manage your ideas. Get a good coach.

The first five months after I quit I made less than $1,000. The 12 months after I got a coach I made over $100K.

It was WELL worth the $4,000 it costed me for the few months we worked together!

Question: Failure is a right of passage for every entrepreneur. It's not what happens to you that shapes the outcome; it's how you react. How do you react to failure? Share your answers on Twitter.


Charles Lee, co-Founder of Genee, Talks About His Biggest Letdown

The journey to becoming a successful entrepreneur is never clear.

In all honesty, the journey is more of an expedition, where failure, not success is the only guarantee. You must approach entrepreneurship with a few basic assumptions:

  • The marketplace is constantly changing, so it’s imperative that you are constantly scanning for those changes;
  • Technology is a tool that must be used to provide a unique solution to a problem, but at the right time; and
  • Building a team that is both passionate and smart is critical but if there is no cultural fit, then the team’s cohesion suffers.

So how can you work through these challenges and take advantage of the opportunities? You must focus on your mission and not the product.

The mission is the reason you are in business. The mission is the long-term plan that survives a fickle market, technology disasters and the replacement of a team member.

Charles Lee understands the importance of a long-term mission statement, especially if the company is to survive for 100 years.

What has been the biggest letdown in your career so far?

In 1999, I was the fifth employee at a startup, Backflip. The founders had a vision of creating a personalized Yahoo search through online bookmarking of web pages. I believed in the founders and they were charismatic in their long-term vision. From an engineering perspective, we were working at the forefront of some truly interesting technologies, such as search indexing, natural language processing, automatic categorization, content sharing, and authorization models.

The company grew quickly, and the level of talent was top notch. However, a year later in the face of missed expectations, the founders pivoted quickly to something completely unrelated to the original goal.

I left the company with misgivings about the founders having given up too early on a vision that they spoke so passionately about and that I believed in. However, the letdown truly materialized later as other companies in search, social networking, content aggregation, crowdsourcing, adwords, data analysis, and machine learning emerged.

In hindsight, I believe that timing was not right from both a technology and user perspective. I learned a lesson about having a long-term mission statement to believe in, and providing a solution and technology to a current problem that users can find immediate value from.

Entrepreneurial Tip: Think long-term and have a mission statement that can get you through the messy middle. But more importantly, you must understand when it's the right time to marry the current problem and technology so you can offer immediate value to customer.

Can you tell me about a time when you almost gave up, how you felt about that and what you did instead of giving up?

As an entrepreneur, you’re constantly faced with putting in a lot of hard work and not seeing a reward immediately. This is especially stressful when you have risked your livelihood and the financial picture of the company is bleak.

I co-founded a company named Hyperic with four other founders in 2004. It had been a year since we started the company and sales had been uneven and unsteady. My wife became pregnant with twins and another co-founder’s wife was also pregnant. When things looked particularly dire, the other co-founders and I sat down to discuss the future openly.

As I looked around the room, I saw that I was not just among a group of co-workers. They were also my friends, whose talents I respected and company I enjoyed. It was clear to me that beyond the financial gains, we were already successful in building a company that I looked forward to working for everyday. I believed that this group of smart, talented individuals could achieve something great together.

So we pressed on and looked at other ways to evolve the business so that sales numbers were not the only measure of success. That led to a commercial open source model for Hyperic, and we built a community of contributors and IT professionals that really broadened our reach.

Entrepreneurial Tip: The journey of an entrepreneur is hard; sometimes lonely. But when you surround yourself with people who are smart, talented and driven -- you have a formula for achievement.

Tell me about a recent project or problem that you made better, faster, smarter, more efficient, or less expensive?

We started Genee specifically to tackle the problem of time, effort, and stress being wasted on coordinating and optimizing our schedules. This is a common problem, and the only solution thus far has been to hire an executive assistant that can understand your requests, knows your preferences, communicates with others on your behalf, and makes intelligent scheduling decisions.

Clearly, that is not an option for most people, and yet, we all juggle our schedules just as much as any executive.

We feel that with the advancements in natural language processing, artificial intelligence, cloud services, and mobile devices, the time is ripe to bring a technology-based solution for this age-old problem. Genee provides the same level of functionality and care as a human assistant but surpasses them in certain respects like cost, response time, and data and systems integration.

Entrepreneurial Tip: If you want to put a ding in the universe, find a pain point then engineer a unique solution that will provide immediate relief.

How do you see the company changing in two years, and how do you see yourself creating that change?

One constant you can count on for a startup company is that it is continuously evolving and changing. Complacency is the leading indicator of imminent failure for a startup. As a startup co-founder, I am mindful of both internal and external forces of change.

As a company, we are guided by our mission, but we need to be aware of market trends and environments to continuously update our solutions that deliver on the promise to help coordinate and optimize people’s times and schedules.

As an example, the most popular interface for our hardcore Genee users is to interact through email. However, in a couple of years, as messaging becomes the platform (like Facebook Messenger), users will want to coordinate and schedule directly during their chat sessions without leaving the platform. We have to ensure that we build our technology so that we can go where the users and markets are to continue growth and stay relevant.

The internal change will likely be the organization’s size. Company leadership, roles, organization structure, and processes are different when you have five employees, 50 employees, or 500 employees. While we don’t yet have a forecast of where we will be in two years, I have to be the driver of those changes as the company scales. I have to understand how the magnitude of growth translates into success and exercise good judgment along the way.

Entrepreneurial Tip: You must be a student of market trends and the environment -- this strategy will allow you to guide your company through its evolution.

How do you design a company that will be around for 100 years?

It’s an extremely high bar for a technology company to be designed to last 100 years, considering how quickly the world has changed before and after the popularity of the Internet.

Good examples of technology companies that have been able to endure and stay relevant are IBM and Apple. I believe, aside from having created a company culture that fosters continuous innovation and reinvention, that those companies adhere to their mission and core strengths.

It’s not necessarily about Mission Statements, as they often evolve and take on different words or meaning as products and markets evolve. It’s their internal compasses that are timeless and drive decisions and execution.

IBM, for example, is about building great client relationships and ensuring client successes. That has taken them through a wide gamut of product categories from hardware to software. IBM is truly a 100-year-old company that is a mainstay in technology.

Apple was founded with a mission “To make a contribution to the world by making tools for the mind that advance humankind.” That mission has taken them from a computer kit for PC enthusiasts to the largest company in the world delivering products ranging from computers, phones, and music.

We like to think that we are following in the footsteps of giants and focused on building a company that delivers virtual assistant technology that is personal and delightful. Hopefully, that mission will be as true today as it is 100 years from now, and as a company we will have delivered on a wide range of amazing products in those 100 years.

Entrepreneurial Tip: If your company is to last the test of time then you need to focus on your mission statement and a culture of innovation.

How can entrepreneurs find success in a marketplace that always seems to change?

It’s precisely the constant changes in the marketplace that creates ample opportunities for entrepreneurs. Otherwise, existing players would prevent anyone from entering their market given their financial clout and footprint.

As entrepreneurs, I think success depends on our ability to detect market changes early and use them to our advantage, because these market shifts have the potential to change the game and put new entrants in a better competitive position against established companies.

For Genee, we saw a number of changes that made it possible to offer a free scheduling assistant for everyone:

  • Smartphones got everyone to manage their calendars electronically and made their calendars accessible from the Internet
  • Artificial Intelligence (A.I.) is mature enough to allow machines to understand the nuances of sentences (not just words) in natural language
  • Large amounts of data can be analyzed and processed results can be delivered in real time

By leveraging these advancements in technology, we can deliver solutions for existing problems in new and innovative ways.

Entrepreneurial Tip: Be a student of the market but keep in mind that markets will change. It's your responsibility to deliver solutions in new and innovative ways.

Question: Clarity of purpose is important to an entrepreneurs success. What does your company’s mission statement read-like? Share your answer on Twitter.