Establishing authority via industry experience with Unqork’s Gary Hoberman
Establishing authority via industry experience with Unqork’s Gary Hoberman
Gary Hoberman (00:01):
Some of the feedback we got from top investors were, "You're too old. You should have had three startups by now." Other feedback was, "If you lasted one year in corporate, there's no way you could be CEO of a startup. You've been institutionalized." And so I self-funded the company. I came back and I said, "We're going to go at it on our own. Let's focus on the customer. Let's focus on getting revenue." And we had revenue within six months of creating the company from one of our top clients, Liberty Mutual, Fortune 100 company.
Peep Laja (00:34):
I'm Peep Laja. I don't do fluff. I don't do filler. I don't do emojis. What I do is study winners in B2B SaaS, because I want to know, how much is strategy, how much is luck, and how do they win? This week, Gary Hoberman, founder and CEO of Unqork, an enterprise no-code platform that helps organizations build custom software fast. Founded in 2017, Unqork has now over 600 employees and received a $2 billion valuation during the latest financing round. In this episode, we discuss how Unqork established authority from the get go by addressing the largest and most complex challenges in the market first. Let's get into it.
Gary Hoberman (01:14):
I started on Wall Street, 1994, building trading systems and working my way up the corporate ladder. I was, I love to think I was an entrepreneur within large Fortune 50 companies and creating platforms, creating businesses inside of large, massive 400,000 employee companies. So we're still creating software the way it's been done for 30 years, no matter what improvements have happened around it. And I literally, I remember stepping day and saying, I've got 10,000 engineers working for me. That's a lot, in 47 countries. Like 500 engineers in Japan alone that were working for me. And then you step back and look at what we're achieving for the company, for the shareholders, for customers. And the reality was 80% of their effort and spend is just keeping the lights on. That's it. It's just keeping things running. And we refer to that as legacy and it's responding to another term, which many people will know called end of life. Meaning a technology is about to go end of life and it's a mad rush to rectify it, to fix it.
Gary Hoberman (02:20):
And all of that spend, 80%, is just in those buckets of making sure things continue to run as is. And then we all talk about that 20%. The innovation, the spend where you're going to change the world and drive this. And the real epiphany was waking up and saying, "God, every time we turn on something new, it's immediately going over to that next bucket. And it's immediately legacy." The misery of that enterprise, and what I was dealing with, I was, I felt like an attorney basically defending why things were late and over budget and why were requirements not delivered on time and the process of software? And the reality was, I just wanted to get to solving problems. I wanted to help my business fix their solutions. And that's when we created Unqork.
Peep Laja (03:04):
Today, there are quite a bit of no-code platforms out there. What was the competitive landscape in 2017?
Gary Hoberman (03:12):
Yeah. There was no one out there. In the enterprise space, there's still no one that competes with enterprise no-code. And we've really ushered in what we call Codeless Architecture. It's not about a tool, a single tool to solve world hunger and all your problems. It's about a strategy in architecture, which evolves from serverless architecture. It's the evolution of cloud. It's the next steps. And that's what we've been driving. We were the first pioneered it. We are still the only. At this point, you could see where the research groups have combined low-code with no-code and application platforms and where we sit. So in reality, every time we enter a client, they're competing us against the incumbents who are 20 year old technology companies. And Microsoft and Salesforce are the two big as competitors we see as the incumbent. They're never there when it's new.
Gary Hoberman (04:02):
It was about us defining the space because there was no one there. And I think as we defined the space and how fundraising went up, and now employees over 600 employees increased and the voice of the market and marketing, of course, everyone else came along with it. And now you've got a hundred companies, that are 20 year old all claiming to be no-code. And I could tell you if you ever try those companies, as I had as a CIO, and I tried everyone you could imagine, spending a billion a year on technology. That was my budget. A billion dollars, every single year on technology. They don't work. They actually don't do what they say.
Peep Laja (04:39):
So you had deep enterprise experience. You knew how they buy software. You knew the problems. You could probably sell them on their pain points. And you also knew how other players in the market, where they had fallen short. So you had a clear vision for what it needs to be in order for it to work.
Gary Hoberman (04:57):
We absolutely did. And what I would also say is knowing where we came from, which is Fortune 50 companies, where there's 50,000 engineers in a company. And we used to claim we have more engineers than Microsoft did. What we also knew was we can't start off solving simple problems in small businesses. So if you walked into a major top four bank and said, "Hey, we're going to come in and we're going to solve your major or onboarding issues that are the biggest issues of your company or your regulation issues." You'd get laughed out if the technology couldn't support the scale, security, vulnerability, assessments, everything they need and worry about from a regulation point of view, the compliance. And so what we did different was we said, "We're going to start with tier one customers, the Fortune 100 customers, the ones that are the toughest on any company, no matter what size. The ones that give you a 1500 questionnaire when you're coming in to meet with them about compliance. And we're going to start with tier one customers, with tier one use cases."
Gary Hoberman (05:56):
So applications are classified into tier one, tier two, tier three, maybe a tier three app is a spreadsheet, an online spreadsheet, simple, easy. Tier one apps are critical to the business. That's the ones that are the complex apps that historically no software could solve except code. And there's 500 billion dollars spent in tier one apps, in just coding. That's every single year in enterprises, 500 billion spent, which is our town, that we're going after. And so we said, we're going to start with tier one customers, in tier one apps. And that's our first use case. Many investors early on said, "Hey, you should only have one customer when you start. Focus on that one customer be in stealth mode. Don't do anything. Don't present anywhere, just focus on one customer." But living 20 plus years in enterprises. What we know is they're going to change priorities. That customer's going to have a management change or a shift or a budget change.
Gary Hoberman (06:51):
And suddenly what we've been working on, which our livelihood and our future is in the hands of a single customer whose priorities might change and teams. So we said, we had a focus on five tier one customers, five different tier one problems to solve. And the goal was if we solve those problems, all the other problems are easy. So instead of working our way, upwards in complexity and scaling, we said, let's start with the most complex. Everything else is easy after that. And it proved so true that when we started working with Goldman Sachs in 2018, there was very little changes to the platform we needed to make. Starting with tier one, I would recommend everyone, go big. Go for the largest complex use cases, the largest customers, because you'll be taken seriously by the rest of the market. And everything else is easy.
Peep Laja (07:38):
About 15 years ago, I was part of a national leadership program. We built the vision for what we wanted to achieve in 15 years. I looked at it and said, "This is super ambitious." "There's no point doing small projects," replied one of the senior leaders. That stuck with me until this day. Go big. There's a difference between playing to win and playing not to lose. A huge difference. Sure, there can be all kinds of desired good enough outcomes. Just got to be honest with yourself. What kind of a game are you playing? And if you truly are trying to win, you've got to play a different game. You've got to be faster, more aggressive. Here's Paul Singh. Co-founder and chief strategy officer at Bump Health. Talking about this very idea and how he thinks about this.
Paul Singh (08:26):
I'll just kind of share my framework. I want to double my company's top line revenue every year. Simple, but it is not easy to do. When you're in the moment and you're thinking about, whatever problem you're dealing with, I can apply that framework. Like, are we talking about something here that's going to double my money next year or double my revenue? If no, there are certain things that, when you apply that framework, then become obvious where it's like, man, even if I solve that problem, I'm not going to get to 2X.
Paul Singh (08:50):
In a world where you can't predict the future, the goal here really ought to be, to reduce the number of bad decisions you might make. And so playing to win to me is not about anything other than getting to a thousand bucks of revenue or whatever in the first month. That's something I think about a lot. And then I think it's about setting the target at a million bucks by the end of the year. Not because you should be feeling bad if you don't, but because the framework of thinking that you would apply then to your daily decisions of, is this going to get me to a million? That's going to allow me to say no to a lot of things. Anyway, play to win.
Peep Laja (09:27):
You're an industry insider, yet when you started to fundraise for the company, it didn't go so well.
Gary Hoberman (09:35):
I could have sworn coming out of Fortune 50 companies, I was in the C-suite, flying corporate jets, meeting with CEOs from Microsoft and other major companies regularly. I had a CIO peers of all the Fortune 50 companies we meet with and I could have sworn the venture world would've welcomed someone who actually lived the pain and suffering and knew it best. But it was the exact opposite. So when we were pitching this vision of what we're going to be doing, we started to receive no, after no, after no, from the top minus investors. The advantage I did have, we were taken seriously. We had a network, we had credibility, but the feedback we were getting from investors were, "You're too old." And I was 44. So feedback was, "You should have had three startups by now. There's no way you could create a startup."
Gary Hoberman (10:27):
Other feedback was, "If you lasted one year in corporate, there is no way you could be CEO of a startup. You've been institutionalized." And I think they kept picturing Shawshank Redemption with Morgan Freeman carving his initials, and so institutionalized, interesting. The feedback was platform sells hard. It'll take two years to make a platform sell, your first sell. Our average deal cycle with the largest customers is less than six months. It's about five months today. And so I self-funded the company. I came back and I said, "We're going to go out of their own. Let's focus on the customer. Let's focus on getting revenue." And we had revenue within six months of creating the company from one of our top clients, Liberty Mutual Fortune 100 Company. Amazing leadership. We were in production within six months and it was revenue. And so we had five of the major insurance companies as customers within six to eight months.
Gary Hoberman (11:21):
And when it came time to actually fundraise, we defined the terms. We defined where we're going and who we wanted. But most importantly, we took every quote from those investors, the quotes that were just the most negative constructive quotes. And we plastered them on a wall. A 20 by 20 wall in our office that has come into two offices, at least that we've had. And we called it the quote wall. Took everything negative that was said and made it an inspirational quote for us to prove wrong and drive forward. And we loved it. And that's been a journey since, and we have the best investors I can imagine. Goldman led a series A, capital G alphabet led a series B and BlackRock led a series C when we hit the two billion valuation over five quarters ago now. So it's been about five quarters since that.
Peep Laja (12:07):
Someone recently told me that they shut down their startup with impressive pedigree clients when they couldn't get funding at terms they liked. "What about bootstrapping it?" I asked. You already have customers. Oh, blah, blah, blah, excuses, excuses, blah, blah, blah. That's something I don't get. Sure, raising money from investors is challenging, but why throw away the seed of something great when it's already gaining traction with customers. That's not to say that the right investors won't make your life easier if you can find right fit. If you're struggling with fundraising, consider this advice from a serial entrepreneur and author of The Starter Playbook, Will Herman.
Will Herman (12:44):
In terms of fundraising, most angels and venture capitalists have models in their heads about what makes a good company and what makes a bad company. What makes a good team, a bad team, a good idea, a bad idea. And they're not uniform. So one, you can find people to fund you who have a model that's already closest to what you offer. If there still is no one in that set of potential funders that work, don't hesitate in changing your look. If the general feedback you get from funding is that you don't have enough experience on your team, go get more experience on your team. Don't fight at that level. It's just not worth it. Build the team that gives you the best opportunity to raise money. And ultimately the most important thing is if you can get to product market fit without funding, you will find somebody to fund you. So if you can get to that point, then everything gets a whole lot easier.
Peep Laja (13:51):
With revenue, when you're finally fundraised, and those first set customers, did you get them through cold out on sales or these were people you knew?
Gary Hoberman (14:00):
Yeah, I would definitely say in the beginning we had credibility and I'd say half the customers were what you'd call relationship customers that knew me and knew my team. My team is the best team of experts. Industry expertise is so deep that I sit back in awe in many meetings and just listen and learn and watch and just every aspect of regulation and needs and where we're going and definition. And that's what helped create the product, the maturity it is.
Gary Hoberman (14:26):
But when we think about those early customers, I think the first year we might have had maybe 100K of revenue or 200K, but then we projected six million when we did our seed round. That's a mil, first full year in business. So first full year in business, we projected six million and we hit it. And that was then we did the series A and we projected to be triple, we hit it. We projected another double, triple we hit it. And we've been double, since that point, which has been a great place to be. Early on, we were probably one of the few startups that could talk gap earnings, just coming from corporate, we kind of understand gap and audits and how it works. So, I loved it. One of our seed investors used to call us the best run company he'd seen.
Peep Laja (15:07):
Once you ran out of the first set of, let's say relationship leads. And you had to venture out to start selling to people you don't know. How were you acquiring those customers?
Gary Hoberman (15:19):
From inbound perspective, outbound perspective, we definitely are owning the space. What I really am proud of though, is those customers we've had, they see us deliver. They see for the first time it works. They're telling everyone else it's three times faster, and three times cheaper than anything they've ever seen in their life before us anywhere. And those individuals who took those risk on us are getting promoted. They're moving up, they're moving to different companies. So we see our customers moving around. And many times we are in their new company before they are. We're signed up and they make sure we're ready to go because they know they need us. They understand the value that we bring.
Peep Laja (16:05):
Making your customer the specific person you bring in, a hero can be a powerful strategy. Paying attention to your customers on LinkedIn, keep track of their promotions, saying congrats, and job changes. Create a strong value based culture of making customers wildly successful. When customers change jobs, they'll bring you with them. It's a strategy that has worked well for Intellimize. As we heard from their co-founder and CEO, Guy Yalif on a previous episode of How To Win.
Guy Yalif (16:34):
How do we think about differentiating the two top ones are one, make our customers wildly successful. And to us that does not mean they give us money. It means they're heroes, they get promoted, they get up on stage and say nice things. We can say we've got a better tool. Okay. We can even say it in ways that are meaningful to our customers, okay. To have our customers get up on stage and say it as they've done at CXL Live and other places, that's a big part of the differentiation, for folks to say, "Well, gosh, if all of those folks had success with this, shouldn't I try it?" Or ideally, "Wouldn't I be silly if I didn't use this?"
Peep Laja (17:12):
You mentioned that you're still the only one in this space. So what's the moat here? Why is it so hard for other competing players to enter the market?
Gary Hoberman (17:21):
There's amazing, no-code companies. The difference is just the level of complexity they could handle before you need to code is their simple apps. They targeted the tier three apps and that's great. And I guess I look at that world of growth and where we're going. And it's about understanding compliance. HIPAA compliance, SOC 2 Type 2 privacy shield, GDPR compliance, FedRAMP certification, Privacy 2020 WORM compliance. You want to make sure you understand data lineage and compliance needs a versioning and document storage. All of that requires in depth industry expertise none of those platforms have. So what we're saying is the horizontal to us now is just to go to market play now. It's not a product play. The product market fit is there. The product is capable. It's simply now just targeting those tier two and tier three customers and driving that downhill. And that's the scale play we're currently executing.
Peep Laja (18:19):
The underlying moat that Gary is talking about here is called cornered resource. A business that leverages a cornered resource has preferential access to some assets. And those assets can be talent and know-how. If you have access to certain know-how expertise, and if that can't be taken away from you, that's called the cornered resource. Unqork team had an intimate understanding of how the enterprise works, thinks, what they value, what the problems are. You can hire great engineers to build software, but if your company lacks that enterprise expertise that Unqork has, it's almost impossible to take them on. Here's Hamilton Helmer, the author of the book 7 Powers, explaining how cornered resource works.
Hamilton Helmer (18:58):
The example I use in my book is Pixar. What happened there was in the early stages of Pixar, there was an early group that went through the hell of developing Toy Story 1 and 2, and Bugs Life and learned how to work together in this incredible creative way. And each of those people involved in that became able to direct these amazing movies. And so Pixar ended up with this incredible string of successes, a really unparalleled in the movie business.
Peep Laja (19:31):
Tell me more, how are you competing on brand and marketing today?
Gary Hoberman (19:35):
We are defining the new space. Many of the research groups have said, "We get it. You're a category of one, but you can't have a category of one." So many teams group us into the bigger categories of low-code, no-code, which we don't believe in. We don't believe the category should exist. And so what we're doing right now is, and you'll see a lot of messaging is, we've defined what really this is about, is not about selecting a single tool to solve your needs. It's about codeless architecture. And in a codeless architecture world, the best of breed technologies are brought together, not a single technology and Pep, the best example. So in corporate world you would not believe how much paper still exists. We were meeting with a C-suite of a big Fortune 250 financial firm. And when we meet with them, we typically ask one question, which is, "What's your biggest problem today?"
Gary Hoberman (20:26):
And before we got to that question, the chief architect raised his hand and said, "Hey, do you blockchain?" And you know, we said, "No, today we're being trusted to store the most secure data in a way where it's single tenant. We give the customer the key, we don't hold the key." So they trust they'll store all their PI data, privacy data in Unqork. And I'm excited now. And I'm like, "This is going to be a great conversation. They're so advanced, they're talking blockchain." And we ask the question and say, "Tell us, what's your biggest problem we could help with?" And the CEO says, "Can you get rid of the fax machines?" And the disconnect between the two, blockchain, fax machines. And so many of the companies today are running on paper and faxes and paper. And as a consumer, I don't know if you have filled out a claims form for your healthcare provider? It's paper documents still today.
Gary Hoberman (21:16):
I just look at my vaccine card. It's like a library card from the 1980s. So many companies say OCR is a strategy. OCR is not a strategy. And to us there should never be a single technology that promises to do all the OCR needs you need, all the kick. OCR is ingesting paper and it digitizing it. We view the world as there's many amazing OCR companies out there. In our codeless architecture story, you just simply click which one and drag it. In which one you want. Many of the other companies out there, the largest tech companies are saying, we built OCR into our software and we say, you shouldn't have. That's a mistake. And any company picking them should welcome the fact that I could pick the best of breed and snap it together and compose it in a way that hasn't been done before.
Peep Laja (22:03):
Sooner or later a competitor will enter your space. Are you consciously building any type of moats, or are you just happy being the top dog? And probably that market position is going to carry for a long time.
Gary Hoberman (22:17):
We step back and look at what's unique about us is that engine we built to run those complex tier one apps and regulated apps, no one could compete with today. And we understand that there's many trying, but that's the area we're unique. You could think of it as, we built an operating system for applications. It's almost equivalent of on your iPhone, the iOS, the App Store. And the thing about that engine is what we're listening, that we're listening, we're listening to the clients' needs and feedback, what they want and see, and the requirements and the drive. And that engine isn't still. It's not a 20 year old technology, like a CRM tool that's deploying today and saying, "That's what it does." It's continuously being enhanced.
Gary Hoberman (22:57):
And what's unique about us is the second we said, you can't put code in our engine. That's what's actually happening right now, as we speak with every other company they're telling their customers, put your code in our container and we'll run it for you. And the reality is insecure, can't be patched, can't be scaled, no visibility, no transparency. You don't know what it's doing. And yet that's what's happening today.
Gary Hoberman (23:19):
So in our world, that engine, which will never allow code inside means every customer of ours is on the same version, guaranteed, no matter what industry they're in. No matter which provider they're running. And it doesn't matter to us for cloud agnostic, but by keeping everyone in the same version, it basically means they're supporting each other without knowing it with cyber checks, vulnerability assessments, penetration tests, functional testing, user testing, experience testing, all of that is being done by every company on the same version of software. So if someone pen tests Unqork tomorrow and someone else pen tested the next day, they're pen testing the same software. That doesn't happen in any technology you've seen. So to our mode is the engine. We welcome others to create the design tool.
Peep Laja (24:08):
One of your pieces of advice for a startup founder or a B2B SaaS startup would be to tackle a very hard problem first. What other advice and wisdom would you pass on to a fellow founder?
Gary Hoberman (24:23):
When you're in the corporate world, they invest in you, which is a great thing. I thank every company I work for, and every leader I work for that investment has taught me one thing, which is we all have a hidden bias to hire people like ourselves. And when you interview someone, if it feels natural and comfortable, it's most likely because they think, and look and talk like you do, and that's why it's comfortable. And so I want to be uncomfortable. You learn when you're uncomfortable. So I would definitely recommend bring people to your table who you trust, who think differently than you do. You don't want everyone swimming the same way you are.
Peep Laja (25:07):
So what are the three key strategies that Unqork has used to build a successful business? One, they establish dominance in the market by targeting the biggest, most complex and most valuable problems first.
Gary Hoberman (25:20):
Starting with tier one, I would recommend everyone go big. Go for the largest complex use cases, the largest customers because you'll be taken seriously by the rest of the market. And everything else is easy.
Peep Laja (25:31):
Two, they nurture customer relationships and ride the coattails of their professional success.
Gary Hoberman (25:37):
Those customers we've had, they see us deliver. And those individuals who took those risk on us are getting promoted. They're moving up, they're moving to different companies. So many times we are in their new company before they are. We're signed up and they make sure we're ready to go because they know they need us.
Peep Laja (25:56):
Three. They'll leverage their deep enterprise experience. So they knew exactly what pain to address and how to sell it.
Gary Hoberman (26:03):
I was there for almost 25 years. So it's been a long journey, but it was something I saw as an absolute necessity that was needed in the market. It was something that personally, as a chief information officer I saw was lacking and wasn't experienced there, which was software creation.
Peep Laja (26:21):
One last take away from Gary.
Gary Hoberman (26:23):
The horizontal to us now is just to go to mark the play now. It's not a product play. The product market fit is there. The product is capable. It's simply now just targeting those customers.
Peep Laja (26:34):
And that's how you win. I'm Peep Laja. For more tips on How To Win, follow me on LinkedIn or Twitter. Thanks for listening.
