The Role of AI in E-Commerce with Eran Savir | Focus in Investment | Peter Sorgenfrei | EP. 10

Welcome to another episode of the Whole Human Podcast. Today I'm pleased to have Eran Sabir with me from Sabiran Ventures. Eran, welcome on the show.

Hey, thank you for having me.

So today we're going to have a conversation about your background, which is quite illustrious and interesting. Not only have you been a founder and company builder yourself, but you've also been an investor, a venture capital investor for, for a number of years now, but that doesn't do it justice. So maybe for the people who do not know you, would you mind introducing yourself and your background a little bit?

Sure. Thanks again for having me. So my background is. I have a technical background. I, I used to know how to write code many years ago, but I don't do that anymore for many years. And before I was, I became an investor, I was also a founder, founded 3 startups, 2 of which were acquired. And then I joined a company in the space of advertising technology and founded and managed their corporate VC. We did outstanding results with that fund. And after 4 years, we built, we decided to build a new fund outside of the company. We built our second fund and took it public in the Tel Aviv Stock Exchange. So we raised funds through an IPO.

Mm-hmm.

And deployed it into early-stage digital transformation startups. And then about mid last year, about a year ago, I stepped down from my role as a CEO. We completed the deployment of this fund. I stepped down as CEO and became the chairman of that fund and launched my new fund that's called Savion Ventures. That's my background.

So super successful, basically.

Yeah, things always look greater from the outside, but yes, it's, it's a journey. It's a journey.

And obviously, Put in a lot of hard work. We're not gonna talk about your acquisitions today of the two companies that you sold, but I know that's a topic that also interests a lot of people. What actually happens when either somebody approaches you to acquire you or when you try to sell your company? Um, so, so tell us about the latest fund. The focus I think is on AI, digital, and, and e-commerce. Is that correct?

Yeah. Yeah, we're, yeah, this is the 3rd time that I'm building a new fund. I guess many years, both as a founder, but also as an investor, roughly the same space, what used to be called many years ago, just internet startups. But now it's not, it's not like the best, most updated term. But I guess most companies today, specifically internet companies are using AI and we're focusing on that. specifically looking for, you know, more fast-growing internet companies, looking for those founders who in the seed stage, they already generate some revenues. They have a real, they've identified a real problem and, and also some real customers who are willing to pay, uh, real money. And so that's the, our sweet spot.

Mm-hmm. And, and, and I guess there's a fair amount of companies looking for capital. So you guys are busy essentially either receiving cold pitches or warm introductions.

Um, yeah, so I mean, I guess we've all experienced the last kind of 2 years, uh, with less, less capital available in the market. And specifically you could have felt that in, in the seed, we're investing in seed stage, so you could have felt that. In the seed stage. Um, but I guess that as a result of everything that's happening when it went to like downturns in the market and many people were laid off, and, and also there's a new generation of technology and that is the generative AI and stuff. In fact, many new startups are being created. Amazing. There are amazing opportunities. And it's great to see so many founders. Of course, there are many things that they don't have a real reason to leave, but many other, let's say, founders and solutions with amazing things that you can do with the new technology and kind of disrupt industries, invent new business models. I've been talking and writing about this quite a lot recently. And so yeah, we're seeing a lot of opportunities. from all over the world. Super excited about this.

If we go back to after having sold the last company, which was all the way back in 2000, I think, right? Adjusty. What, what caused you to then become, or wanting to become a VC? Why didn't you just not build another company? Like, or another startup?

Yeah. So in fact, my journey was built a startup and then I built another startup and then, and then I built another startup. And then when I started my third start— and then the other, the first 2 were acquired. And I think that when I started the third startup, I, I had the passion, but I knew that this will be my last, uh, time as a founder. So I, I felt that I'm super excited about what I'm building. And it felt like I know exactly what needs to be done and it's, and it's great and it's, it's exciting. It's easier at the beginning, but then it's never easy to build a startup and raise money. And so, but then I guess that third, that the third startup didn't go that well as, as I expected. Maybe, I don't know, doing the postmortem, I guess I know what happened, but Eventually it didn't go that well. And at that point I knew that I had enough of running as founder CEO, building, looking for customers, looking for investors, trying to find like the next big problem. And I had the passion to take all that experience that I've had with building a startup, with marketing it, selling everything that needs to be done when you're building a startup. And kind of take this experience and share it with others. In the startup community, you get a lot of help and advice from other people always. Many people are super accessible and I made myself also accessible and available to others who wanted my advice. But then I thought that maybe I can do that at scale. So when you build a startup, you just build one startup and it might be successful or not. And, but you're just focusing on that the whole day. And when you switch to the other side, you take all that experience and you can apply it to multiple companies, not only to my portfolio companies, but in fact to everyone I meet. So for example, today I have, I'm reviewing around 1,000 opportunities a year. It's a lot if you think of how many days are there in the year. Of course, I do not jump on a call with everyone, but I meet with a lot of founders. And my goal is to, well, like whenever I speak with founders, I will always provide some sort of like straight and honest feedback. During the call and by the end of the call, I will try to summarize with some— something that the founder will have, like by the end of the call, he should say that, that kind of effort was worth it. Because if you think about it, I will spend time with many founders, most of which I will not invest in. So most of the founders will Hear no a few times a day from, uh, from, uh, investors. But if every investor would've ended the call or the conversation and sent like a summary email with why did you choose not to invest?

Mm-hmm.

Then the founders would just be better equipped with, uh, great advice from not necessarily like Smarter people, but more experienced people who have a wider perspective. And I think that this is very helpful. So when I was a founder, and unfortunately most investors don't do that, they will either go to you and will stop responding to you post the meeting, or, which I think is super rude and not the, not the right way to, it's not the business ethics that I would expect from But to your point, that's what happens all the time.

And I think that's what's so frustrating to founders. So it's clear that your background and having been there yourself have caused you to treat founders more respectful, right? Or you're trying to give them value despite the fact that you will invest in maybe 1 out of 100 or 1 out of 500 that you meet.

Yeah, because I think that this is You know, we're, you know, everyone is, is, you meet builders the whole day and they're trying to build and they need, uh, help and they need support. And you cannot be mean. You need to be, you need to be helpful. Everyone who has got to whatever point in their career that they're, I'd say, quite successful, uh, were given advice and help and support from others.

Mm-hmm.

And I think they, that everyone should be, should be at a position where they respond and they treat, uh, others with honesty. So for example, my, my kind of learn— I, I remember that as a founder, I taught myself, I told to myself that if I ever become an investor, I will always respond to all the emails and messages that I get. So this is what I do.

Is that possible though at this scale? Can you do that?

It's very difficult, but that, this is what I do. So I'm also very accessible. So for example, if you go to my LinkedIn, like my email is written there in plain text. It's very difficult. It's very easy to find me and, you know, ping me. I'm responsive on LinkedIn, on email. It's easy to find me. And, and I try to be responsive and really give some respect to whoever took the time to do some research, to find my email, to think that I might be like the right business partner for them. It's an honor if someone thought that is the case.

But that's what makes you so unique, right, Ron? I mean, I can't remember speaking to many, I think many VCs say this, they're like, we try to be respectful of the time of the founders, but time and time again, I hear stories by people saying, yep, we had a first great meeting and then they didn't say anything or they didn't even respond. Or an associate called us and asked us a bunch of questions and then we didn't hear anything after that. It's, but it's also yesterday I was talking to another VC here in Copenhagen and they've actually, they've hired, they have a partner whose responsibility it is to Normally it will be called like platform something, but he is responsible for creating a brand with founders so that they know that these guys will take care of them if they become investors. So not only does he meet with a lot of founders beforehand, once they've invested, he actually has regular meetings with the founders outside of the board cycle just to help them along and work with them. And this is one of the senior partners at the firm because they believe And I think you might agree that in order to get the best deals over time, you need to absolutely unequivocally be seen as founder friendly. And so the, what you're doing by doing the notes afterwards, if you were, if you rejected me for an investment and we had this call, if somebody else would ask me about you, I'd be like, yeah, they didn't invest, but he gave me some really good notes and I really appreciate his time. He's a nice guy. You should go talk to him. So over time, I think it massively will help your competitive advantage in order to get the best founders and get the best deals.

I think it's always like a good advice. And this is also what I guess hopefully I did with my kids the right way. It's always a good advice, like to do the right thing, be human, be nice to people. It always pays off. Never a good practice to be Non-responsive, to be rude. That is at least my, my, my kind of way of thinking about this.

And so, yeah, I think most people would agree with that, but it happens because they might be overwhelmed, right? So you're some associate at a VC firm and you get literally hundreds of emails every day with potential pitches. At some point you're just overwhelmed and you can't deal with all of that. So what are some If we turn it around a bit, I think any founder who's listening to this will want to know what's a good approach to somebody like you. What, when you, when somebody writes you or contacts you, when does your lights go on? What do they do better than others?

Yeah. So that, I think that that's a good question, but this is something that as a founder, I hated this advice. You need to research. The investor before you approach them, and but you need to approach so many investors that you don't have time to research on every each and every one of them. Many investors would prefer like a warm recommendation, or I'm sorry, a warm introduction. But at least for me, it's nice to get a warm recommendation, but I don't really care. I get tons of cold emails and messages, and I respond to all of them. And once I get to that message or email, I treat it as if it. It's, it gets like a fair and equal opportunity. And so that is me, but I know that not everyone is like that. So I know that many investors would say, if you can't find a way to get to me through like a warm introduction, how would you be?

Don't bother.

Don't, don't do it.

Yeah.

Yeah. Which I, I think is, is not that right, but this is me. What I think what gets And me is, maybe I'll start with a turnoff. Like a turnoff is very long message that I need to read. And because as I said, I usually respond to every email. When I get a long email, I will read it. And this is like a waste of time. And many times If there is too much text at the end of the email, I will even not understand what is this all about. So it's, I think it's, you need to be short. You need to be to the point. You need to give me the, the beginning. What is it that you are building? In what space is that? Um, there are spaces that are out of scope for me, right? I know that from the third Word, if you will say we're building like this mobility startup, I'm not investing in mobility. Okay, thank you. This is out of scope. Be short, to the point. If you have these highlights of things that you've done, things that you've achieved, and what are you looking for? And so that will help me save my time, but also that will save your time because There will not be like back and forth of emails with questions. And if oftentimes there will be like an email that I get, it looks interesting. My response will be, thanks for the email. Looks interesting. Let's set up a call. No more questions. I get it. And I have a, I guess I have a wide perspective. I get it, I guess, quite quickly from a short message. So keep it short.

And I think that's paramount. I typically tell people that you should tell what are you building, who's building it, and why now, right? Yeah. Um, and essentially you can do that with 3 paragraphs with 3 sentences in each. Yeah. And if you stick to that model, it can fit on a laptop screen, an email. It can fit on one scroll on a phone. And to your point, if you are remotely interested, you'll take the call or you'll ask questions about the stuff that actually interests you back to the founder. So I see that time and time again too. They're basically writing novels when they should be writing, I, not haiku, but poems.

Yeah. Haiku.

Something shorter and sweeter.

One more thing, by the way, I see founders every now and then send a short message. We're building this. Can I send you the deck? This is a waste of time, right? Send the email. This is at least my kind of way of looking at it. Send the email with the deck, right?

Yes.

The deck is very helpful. Don't send one-pager. I, the deck is answering the questions that I wanted to ask. So that is the whole purpose of the deck, right? Send me a, a short email, send me the deck, and I will know if this is interesting or not.

Yeah. So it goes both ways, right? So you're being super respectful of their time. I think one thing that founders need to hear is instead of being upset and annoyed at lack of response and lack of decorum, cuz that will happen. Try also to be respectful of the VC's time. So yes, I know the standard advice, spend a lot of time researching this, that, and the other, and people hear that, but they don't, they just spray and pray, right? They shoot at everybody.

Yeah.

But if you do that, do it in a respectful way by keeping it short, keeping it to the point. Don't ask if you can send the deck. Don't ask of a meeting out of the gate. Just saying, this is what we're doing. This is who's doing it. This is why it's now. We'd love to tell you more, obviously, cuz that's why you're writing.

Yeah.

And then, and then hopefully sit back and people will treat you accordingly. What, so have you made any investments in the new fund already or has that not yet happened?

Yes, we did 2 investments from the new fund. Uh, first one is an e-commerce, uh, direct-to-consumer, uh, brand that's called Under Outfit.

Mm-hmm.

Yeah. That is growing very fast. And so that is the one investment that we've made. And the second one is an investment we've made in a company that's called Wok.ai, and they're doing gen AI for customer support and customer service, and also at seed stage.

But on the surface, those things, those seem 2 completely different businesses.

Yes.

So, so what was it? What was the commonality? Was it just that they were growing fast or was there something else where you're like, this is why these 2 fit in this fund?

Yeah, that's a good question. I guess, um, the, generally speaking, I would look for a, a, that has, you know, both B2B and B2C. And so what's common to those businesses like that? The first one is an e-commerce D2C, direct-to-consumer business. And the second one is a B2B SaaS for, let's say, like mid-level enterprise. And so what's the common— the common thing between them is that these are internet businesses. They have the ability to get to initial revenues very quickly.

Mm-hmm.

Um, and in fact, when you will meet this, when I met these businesses, they're early seed stage, they were already generating revenues. So they're tackling like a real problem or a lack in the market.

Mm-hmm.

And as a result, you would see quite early in the lifetime of the business, you will see revenue. You like, you'll see real customers and revenues. And so there's a lot in common. And if you look at it from like, uh, from the perspective of what it needs to grow a business, right? You need a real problem, you need a lack in the market, you need a founder's approach to identify the problem, identify the customers, the segment, know your go-to-market and execute on it early. And if you do that in an internet business, you will get to revenue Quite, quite quickly. And that is, I think, super appealing. I know that not all investors, uh, think like that. Used to be like the model of run fast, forget about revenues, just get users, get eyeballs, get every few years. It's called, it has a different name.

Mm-hmm.

And at least my approach, and that has been my approach for many years, in fact, That has been my approach since my third startup. Somewhere in the middle of the lifetime of that startup, we did a pivot. And the pivot was we had a product, it worked nicely, but it didn't grow fast enough. And I said, we need to pivot. We pivoted to something that, um, we were able to sell to customers with an animated presentation. There was no Figma back, back then, but it was like an animated presentation that showed like the solution and customers were signing up.

Hmm.

And, and then I realized what it is, what does it actually mean to identify a problem that is like a must-have to customers? And when you identify that, you will see revenues. And I think that we need to go like to the basics of what does it mean to build a business, let alone startup business. Like, you know, the column of the income should be higher than the column of the expense. That is your goal.

Mm-hmm. And it's funny because as you're saying it, it's, it is so simple. Actually, we're, we're not building a startup, we're building a company or we're building a business. And the definition of a business is something that takes in more revenue than it spends on other stuff.

Exactly.

Period. So having that or illustrating how you can do that, or to your point with your previous experience, essentially selling customers on the idea and And then create the service or create the product, similar to how we've seen it with the Kickstarter campaigns or other things like that, right? Where, and I think this is going to be a little bit of sidetrack and then I want to round it off, but I think we're also seeing that a lot of people on platforms like LinkedIn, right? People are essentially talking about some service that they want to build. They're signing up pre-interested people. They're signing up people and then they're launching their, Justin Welsh famously course for how to be great on LinkedIn. Sign up a bunch of people, essentially take their money, and then build the thing and deliver it. And to some extent, the people who are listening, regardless of the kind of company you're building, thinking that way about it, is there a way I can get commitment, ideally financial commitment, from somebody who will buy my product or service before I have to incur the expense to do that? That's a delicious story to, to take to a VC, right? Yeah.

Yeah, but not, but this is also something that I want to say. Don't think as a founder, don't think about what will excite the VC. You're not building the company for a VC. You're building the company for yourself, for, you know, for solving a problem. If it will be exciting, VCs will be excited. Um, so just focus on the basics. It's easier. To identify, you know, a list of 100 customers, talk to them, you know, do some sort of a questionnaire or whatever. You'll have this list and then you can run the Figma, whatever you have for your product through them. Then you can sell to them. They will be your early adopters. This is how you do it. This is like best basic business practice. that needs to be done. Put aside the fact that you could potentially raise money just by telling a story and showing a presentation. Put that aside. Focus on building a business, and that will be super exciting for everyone, for the customers, for your partners, and of course for investors.

Great last point. I want to round off here, Eran. You've said it already. If people want to find you, you're very easy to find. We're going to put links to you in the show notes of this episode, but they obviously can find you on LinkedIn and on the web. Any parting words for the aspiring founders out there looking to raise money in today's environment?

Yeah, I think, I think that the market is starting to change right now. So I see that some investors who are sitting on the sidelines waiting to see what what will happen or kind of starting to deploy money again. Don't be shy. Approach investors even if you think this is not like a good timing or if it might be too early. Approach founders. This is like a business of networking. This is a business of knowing people. Build your network, engage with the investors, and be ready to get a lot of nos. This is part of the business, right? You'll get, you need to get just one yes or a few yeses, but most of them will be no. And it's not because you're not doing something right. This is the business.

And with those words, again, to the listeners, thank you for following along. This was another episode of the Whole Human Podcast. My guest today was Eran Zavir from Saviron Ventures. One of the most empathetic and founder-friendly investors I've come across. Thank you, Eran, for being on the show today.

Thank you. Thank you very much, Peter.