From Pivot to Exit for half a billion dollars: the story of Ran Rabenzaft

Epsagon women and employees before the sale. Source: Epsagon

Let’s start from the end – Ran Rabenzaft, co-founder and VP of Technologies at Apsagon, has a dream that every developer in the world who will talk about the Sores method he uses, will talk about the company he founded. This week we hosted Rabanzaft, who loves to talk about entrepreneurship, cloud, and software development and sold the company he founded Together with Nitzan Shapira, Epsagon, to Cisco in a deal of about 500 million dollars.

Rabenzaft’s love for computers began at a very young age and was expressed, among other things, in dismantling hard disks and learning Linux at the age of 15. For 8 years, Rabenzaft served as a developer and then as a group leader in Unit 81, “When I was released, I knew I wanted to build something. This entrepreneurial dream stuck with me even in the army and I wanted to continue the It’s on, I connected with Nitzan Shapira, my partner, and together with him we founded Epsagon,” he says. Rabenzaft graduated in 81, with over 15 years of experience in the development and management of engineering and product bodies.

Apsagon was established about 5 years ago with the aim of giving developers a modern tool for monitoring, investigating, and optimizing their cloud environments. In a modern cloud environment, organizations develop more complex applications, which contain dozens and hundreds of different services. “We identified a very deep gap in the industry that has no answer. If the entire industry was talking about matrics, we were talking about traces.” In fact, any malfunction in the environment can cause losses of hundreds of thousands of dollars. Standard technologies that exist in the market such as logs and metrics did not allow for a deep understanding of the processes that take place in the applications, and therefore developers were limited in their ability to monitor and investigate.

Epsagon was among the first companies in Israel to grow in the Product-led growth (or PLG) model, and sold directly to developers (B2D). “We were relatively first there, I remember I would look left and right and I didn’t have many companies to consult with, unlike what I see today. It was a kind of dream come true because it was to build a product for people like me, like us. It was very nice to develop a product as people who understand the His concept and can contribute to it.”

How does the perspective change when you move from a failed startup to the other side, to which you were sold, and you lend to entrepreneurs and make investments?

“The two things I learned most from them is that a partner is more important than any idea, a partner in fact is more significant than this whole story. A good partner is like a wife for life or a partner for life, you go through many ups and downs and it is important to maintain good communication, honesty and openness. You can get through anything if We do it together right.” The second thing Rabenzaft describes as a significant lesson is to engage in a field that you understand because it gives entrepreneurs a significant advantage.

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The first idea that Rebenzeft and Shapira tried to implement was an automatic system for screening candidates. When they introduced him to a potential investor, he asked them why the hell they were in this field, “We were told that we are in a problematic area in terms of investments, and that we don’t understand it at all. We know how to build a technological product and there it was, preparing tests or dealing with analysis, and that’s not us, that’s not What we know how to do, it’s not the advantage we know how to bring to the table and our expertise.” He tells how they planned to bring in consultants for each area of ​​the product, which led to the insight that they don’t understand it enough themselves. “In the end, we know how to build a technological product as a priority for technological people. It was a very difficult day and we returned to the garage after a good Sabih Frishman, and that’s how we let things sink in and we decided to move on.”

And today, when entrepreneurs come to you for advice, do you talk about the importance of choosing a partner? Or in choosing the problem?

“In the end, there is a pattern of Israeli success, so although it is stigmatized, and it’s not that I only invest in such things, but the classic Israeli pattern is two or three entrepreneurs, X elite units, who have a good resume, who have progressed in life, who are hungry for success, who develop something in a field they understand “.

Let’s talk about creating a product for developers. Why does it still sound weird?

“Because historically, Deb-Tools was something that VC’s didn’t like to hear. Engineers were the executive contractor of the organization,” Rabenzaft answers “If you look 10-20 years ago, there were no companies that were known to developers, so it was not known, and it would be better Something like Salesforce or Faber.” At the micro level, Rebenzeft describes that a few years ago developers were given a more significant position in the organization, they became promoters of the technological progress of businesses. Today’s development is responsible for many end-to-end systems and therefore tools are needed to prevent malfunctions and crashes, today we are dealing with development bodies of hundreds of people and platforms and everything is becoming very complex and therefore a tool that provides a broad answer is needed.

How do you do that? How do you sell?

“The story begins by being very analytical about everything that happens in the product before and after it. You want to know where the customers come from, what kind of experience they get within your website. At PLG, one of the more significant things is marketing, if I have two new users of the product who came and they don’t understand why They got there, it’s bad.” Rabenzaft says and continues, “Being analytical means understanding how many entered, how many passed this stage, how many reached the moment of understanding, how many reached the stage of paying, how long they stayed.”

Trace worth a 1,000 logs

This is how Ran describes the moment when you can clearly see where the fault is, this is the moment when Nitzan and Ran know that they are giving value to their customers. “Developers who reached this stage, we knew it was a victory. From here we saw a very large convergence for payment.” Rabenzaft also shares that beyond speaking at conferences and being present in communities, he opened Twitter to produce relevant content for his audience while working on positioning and building customized messages. “Developers hate bullshit, at some point we talked about things at a ‘high level’ and then we got to Monitoring and troubleshooting for container and serverless. It worked well.” After the message, he explains that the product needs to be positioned against the competition – how it integrates with the other systems alongside live examples of how the product works for customers.

What are the days before the purchase like? You sell for millions of dollars and are growing, how does your role as entrepreneurs change throughout the life of the company from the beginning to the stage where you are in early growth?

“It’s a difficult stage. I read that this stage, from 1 to 10 million dollars, is the most difficult stage.” The answer is rabenzaft. “At 1-10, the team is still relatively small, you deal a lot with bringing in the right people, and unfortunately you usually don’t bring in the right people, so you have to have your finger on the pulse, and there is simply no stability in the organization. If the VP of Marketing leaves, the entire marketing side simply disappears and you have to force it – find the next CMO or VP of Marketing. At this point there is already a lot of pressure, because you understand that you have to succeed, you understand that there is success here and you understand that you have to start opening it up and try all the things and run And there is pressure from the board and there are paying customers – everything together becomes very difficult.” As CTO Ran describes that most of his day revolves around the customers, whether it is engineering solutions for end customers or participating in conversations with senior executives from other companies to understand their pain points.

Let’s talk about the macroeconomic situation, as an angel investor do you see it reaching the private market?

“Not in the early stages, maybe I’m a bit of a prophet of anger, but I think layoffs of 5%-7%-10% of the workforce, we’ll still say that these were good days in my opinion. My take on the story is that the end of the year is coming soon, at the end of the year you need good reports And to want boards and present good things (Light Stage). Companies will want to show efficiency and when they spend so much on development or on marketing or sales, they will have to start cutting back and 7% is not enough.” Despite this, he is optimistic about the feasibility of Irish Stage companies going through this wave, “at this stage you don’t expect these things yet, it’s very early and there is relatively a lot of capital in relation to expenses.”

The full episode awaits you here:


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