Sramana Mitra: You launched a product and you had to experience getting traction with 8 million users but there was no monetization from the consumer market. How long did it take you to go through that process of testing the market? How did the financing correlate with that period?
Zur Feldman: This is probably typical to any startup. Sometimes, you make mistakes or hit a wall and then you have to change direction. To answer your question, it took us about two years or so to realize that consumers may like what we do but they’re definitely not at a point where they will start paying money for this type of solution. Then, we tried to look for who are actually suffering and can actually value the service that we provide. That’s how we turned to a much tougher type of customer. We engaged with customers who realized that there is a true problem and the problem is not getting easier. It’s actually getting more complex and tougher as devices are penetrating and technology of devices are demanding more and more data.
Sramana Mitra: It took you two years to experiment with the B2C business model. You got eight million users but you didn’t have any monetization model. What was this timeframe? When was these two years when this experiment was going on?
Zur Feldman: It was 2006 to 2008.
Sramana Mitra: In September 2008 when you went out to raise money, you didn’t have a monetization model yet. Is that accurate?
Zur Feldman: Yes.
Sramana Mitra: So you were going out to raise Series A with eight million downloads but no monetization model?
Zur Feldman: That was Series B. It was after the seed. In 2008, when we decided that we need more money, we realized two things. Number one is that the business model that we have in front of us is not working. Second is that the market maturity will take longer than we expected. Even though we thought that it will take a while, we didn’t think it was going to take that long – for all these devices to create the pain that it’s created and for people to realize that there’s big value in WiFi and how you utilize WiFi.
This switch took place sometime around 2008. Even at that point after we managed to raise money, it took time until the market was ripe. People and companies preserve a lot of their money. It was very tough to start getting them to pay for this type of solution. Even though they see it coming, they didn’t want to pay. It took time to get to that point.
Sramana Mitra: The money that you raised in this unvalidated mode, was it an internal round or did you have new investors in that Series?
Zur Feldman: At that time, it was internal. But later on, we got external financing.