EKMH Innovators Interview Series
An interview series spotlighting global tech influencers, disruptors, visionaries, and of course, innovators.
As the pandemic and US political turmoil continues, the Innovators series will continue to spotlight global cerebral trailblazers who are fomenting and inspiring much-needed change both in and out of their sectors. As expected, many changes can be perceived rapidly, while others will ideally lead to lasting, systemic improvement over months, years and decades. Today’s installment highlights the career and vision of Israel-based entrepreneur, angel investor and polyglot OurCrowd Managing Partner Denes Ban.
But first, a brief background on OurCrowd… Founded by the dynamic serial entrepreneur CEO Jonathan Medved, OurCrowd is one of the world’s leading venture investment platforms for institutional, corporate and individual investors. With $1.4B of committed funding and investments in over 200 portfolio companies and 20 venture funds, OurCrowd is not only the most active venture investor in Israel, but, according to Bloomberg Business Week, “OurCrowd is hands down the most successful equity-crowdfunding platform in the world.” OurCrowd vets and selects companies, invests its capital and maintains “skin in the game,” while providing its global investors with unparalleled access to co-invest. Since its founding, OurCrowd portfolio companies have been acquired by some of the most prestigious global brands, including Uber, Oracle, Nike, and Intel.
I recently had the pleasure to connect with Medved’s fellow serial entrepreneur-turned-serial-investor Denes Ban, a Managing Partner at OurCrowd. Ban has dedicated over 15 years of his career to fostering growth, fundraising, and shaping corporate strategies for the world’s leading corporations, financial institutions, and family offices, along with improving the profitability of over 100 companies around the globe.
As a successful entrepreneur and angel investor, Ban has personally invested in over 70 companies and founded a number of startups in the past decade, including founding and selling an HR company and co-founding the incredibly useful PocketGuide, a TechCrunch winner and one of the world’s leading travel apps for 150 cities, with millions of users. Some of his exits include: Lemonade (NYSE: LMND), Beyond Meat (Nasdaq: BYND), Uber (NYSE: UBER), Argus (acquired by Continental), Replay (acquired by Intel), Crosswise (acquired by Oracle), Nanorep (acquired by Logmein) and Rewalk (Nasdaq: RWLK) and several others acquired by households names such as Microsoft and Samsung.
In addition, Ban also served for seven years on the Swedish Diplomatic Trade Mission in Europe, leading their management consulting division where he directed international corporate strategy for companies including Ericsson, Electrolux, Volvo, Absolut Vodka and H&M. Readers can also catch him on the academic circuit; Ban has lectured at Harvard, Kellogg, INSEAD, HEC, Hebrew University and CKGSB.
Furthermore, Ban has ignited change though his community leadership and involvement with a number of philanthropic organizations. He not only serves as a director of the Am Yisrael Foundation, Israel’s largest incubator for social entrepreneurial activities fostering community leadership and volunteerism, Ban also lectures on Jewish Wisdom and Ethics all over the world, including in the USA, China, and Japan and writes a weekly blog with the Times of Israel merging ideas on business, tech, psychology, and philosophy with Jewish Wisdom. But wait, there’s more! Ban is also known as an accomplished jazz and blues musician and polyglot (he speaks eight languages and counting) — next time you are in Tel Aviv, catch him playing a Saturday evening set!
I connected with Ban via WhatsApp and email to learn more about all of the above; our interview follows.
EKMH: Full disclosure: While I’m writing up your interview questions, I’m listening to you and your band playing the blues! The blues specifically require empathy and understanding of your fellow musicians with whom you share the stage. How do you know when to lead and when to let your teammates (whether in music or in business with your OurCrowd team) take the stage?
Denes Ban: I have been playing the blues and jazz since I was 16 and while I may be a Muddy Waters and Miles Davis fan musically, when it comes to leadership, I have been a Stephen Covey fan for many years. Covey writes that leaders have to treat their employees just as they treat their customers: as “VOLUNTEERS”, because ultimately, that’s what they are. Employees may have to show up each day, but they choose whether or not to give their best and most invaluable parts. He explains: “You can buy a person’s hand, but you can’t buy his heart. His heart is where his enthusiasm, his loyalty is. You can buy his back, but you can’t buy his brain. That’s where his creativity is, his ingenuity, his resourcefulness.”
Within OurCrowd, my biggest satisfaction is when I see my team empowered to work independently and then see how that independence graduates to “interdependence,” when we are all collaborating, bringing our unique skills, heads and hearts, together in order to increase the value of the whole.
Often this means for the leader to be able to identify the unique motivators for each member of your team. Some people may be motivated by intellectual challenges, others by status, some are motivated by money, others prefer power, etc. Some people thrive under pressure, while others need steady praise, and some need constructive criticism, etc. Once you have identified the unique motivators for each member of your team you can inspire them to “volunteer” their best, most valuable parts of themselves: their hearts and minds.
Interestingly, the same applies for a great band. Every member, whether a soloist or a drummer, has a unique function and strength. A beautiful harmony or an awesome riff happens only when each member is empowered to do what he or she does best, in the right moment, supported by the whole. Thus, it’s also a kind of independence that merges into interdependence.
EKMH: You have invested in many successful companies that were acquired by some of the biggest companies in the world, such as Microsoft, Intel, Oracle and last year you even had two IPOs: Uber and Beyond Meat. And now, just last month, another one of your investments, Lemonade, doubled on the first day of trading. What unforgettable lessons did you learn as you transitioned from a serial entrepreneur to a serial investor? How does your experience as an entrepreneur affect your investor MO?
Denes Ban: As a serial entrepreneur with both successes and failures, I understand the challenges entrepreneurs face and what to look for when investing in them.
VC is a business of outliers. Every year there are only a couple of hundred, maybe a thousand great companies. If you are a typical VC and invest in 10 companies a year, 1 to 2 of those will generate most of the returns and they have to become full home runs. Entrepreneurs put a lot of emphasis on tech but in order to become a full home run, teams today can’t just be techies. They also have to know how to execute. They must be able to build and lead a diverse team and excel not only in innovation but also in sales, management, data science, operations, finance, and more. At the end of the day we invest first and foremost in the founders. Everything in a startup environment can and will change...markets, competition, technology, and even business models. But the people themselves will likely not change. They can either manage the circus or they can’t. So, that’s why we are investing in the founders - who they are and how much fortitude they possess.
EKMH: As the Managing Partner of OurCrowd, Israel’s leading venture capital platform, you have helped raise over $1Billion for more than 200 portfolio companies and 20 funds since its launch in 2013. How did you manage to raise this amount of money and what is your number one tip for all of those who want to raise money?
Denes Ban: Perhaps you’ve seen the movie Glengarry Glen Ross, in which Alec Baldwin's smooth-talking character famously advises, “A.B.C. – Always Be Closing.” Your every move, every thought should be tailored to finalizing the deal and getting that money in the bank. In the eyes of Hollywood, this is what makes a successful salesman.
I can strongly attest to living by a different moniker: S.I.S. = Sales Is Service. Besides having an excellent product that you believe in and are passionate about, you have to show your clients whether you are here to sell or here to serve. Are you pitching to your clients only to meet your quota, or, do you really care about your clients and are you attuned to their needs?
I listen to see what my clients’ needs are and then identify whether I have a ‘product’ that suits them. My job is to engage, ‘actively listen’, understand, and then try to help.
This is the “sales” technique I have lived by and has proven itself right on every occasion. Do not think of what you can get from your clients but how you can be of service to them.
EKMH: Given your global portfolio and the present volatile environment, what is your advice to startups during this crisis?
Denes Ban: My advice for startups is, in short, reassess everything you thought you knew about your business.
The number one action item is to cut your burn and extend your runway. Being already 3-6 months in the crisis, I assume you already did this. Second, everything that you thought prior to the crisis might have changed, some permanently. You have to reevaluate your whole business model and all your KPIs: your CAC/LTV ratio, Sales Cycles, Churn, Lifetime Value, etc., etc.
The key is to stay crisis relevant. Technologies that are relevant today are not a one-time “trendy” hype. The impact of the pandemic is here to stay and some of the new trends are reaching inflection points and the point of no return.
EKMH: And tips for the investors?
Denes Ban: When you look at the public markets, everybody has been guessing, will the recovery be V-shaped (very quick), U-shaped (slow) or L-shaped (very slow)? The best description thus far can be described as Y-shaped, a V on top of an L. Thus, there are winners like Zoom, or the FAANGs that offer quick opportunities - the Vs, and there are industries that will take a long time to come back - the Ls.
When it comes to the private markets the scenario is very different. Public markets came back already but not the VC markets. If you are an investor in the private markets, you need to act differently, you need to be calm, think long term, and know that some of the best deals surface at these times. It is true that many investors will focus on their existing portfolio and look for liquidity. However, smart investors will be out there on the offense. There is less competition and many good deals will become available, especially in the next 6-12 months. Look for deals with sound business models that benefit from the current environment. Valuations will be negatively affected and will come down further for many companies. Renegotiate, look for better terms, discounts, ratchets, and warrants. Of course, as always, do your due diligence and make sure you back your winners (with competent founders) that have relevance to the “new normal”. Companies with a corona thesis will rise to the top. This is not only in medical but includes: robotics, automation, remote work, distance learning, home related activities, communication infrastructure, etc. Deep tech and interdisciplinary tech will be more important than ever. And don’t forget that some of the best companies were built in bad times. (Airbnb, WhatsApp, and Uber, to name a few). Moreover, in venture investing, we often see that vintages during crises perform better.
Although many investors pull the brakes, those who have the cash and the stomach for risk can benefit from investing in this environment.
For corporations and multinationals this is even more true. The previous downturns were very different. In 2000 we had a tech bubble. The companies that went public shouldn’t have and it affected every single tech company. The 2008 crisis was a mortgage crisis.
Today everything is affected. No part of the value chain and no company is immune anymore. Microsoft CEO Satya Nadella said, “We saw two years of digital transformation in two months.” Even before the crisis, corporations needed access to core technologies to avoid becoming obsolete from disruptions. Now it is even more true. But it is extremely difficult to separate the signal from the noise. As tech startups and entrepreneurs are uniquely skilled to provide fast, effective, efficient solutions to some of our greatest challenges, corporations need to engage with them now more than ever in order to stay afloat and certainly to thrive.
EKMH: You have taught entrepreneurship and fundraising at Harvard, Kellogg and some of the most well-known Universities and private companies globally. What advice do you have for entrepreneurs who need to constantly pitch to raise money including in front of big crowds?
Denes Ban: Mark Twain said, “There are two types of speakers: Those who get nervous and those who are liars.”
Public speaking for entrepreneurs is especially difficult. In training 1,000s of entrepreneurs and CEOs, the two top mistakes I have seen, time and again, are in the openings and the closings of a pitch. In the first 30 seconds, an opening must establish credibility with your audience so that they give you “permission” to tell your story. If you don’t have this, you may have a great story, but your audience already started thinking about dinner by the time you hit the punch line. If Bill Gates, Elon Musk, or even most speakers on a TED-like platform go up on stage, they already have my attention and my “permission” because of their fame or the TED name behind them. I will listen to whatever they have to say, well at least I will give them a chance. But you, the entrepreneur, on the other hand, will not have the audience on your side, at least not automatically. You have to earn it. You must begin with something that will not only capture and captivate your audience but gain their trust without the trappings of coming off as self-promoting, salesy, cliché, etc.
I, as a potential investor listening to you, am, by default, skeptical. In my workshops we focus on building openings that get you past the skeptics and immediately go to the core of your credibility to enable you to tell your story.
Every entrepreneur must also have a closing with a clear and tangible “call to action,” otherwise, what was the point of the pitch? Gates, Musk, and most TED talkers do not necessarily need a tangible call to action. They just want you to leave their talk inspired and generate buzz. You on the other hand have a different goal: you need buyers for your product and money in the bank! You need someone to follow up with you and to invest. The challenge is how to make your “call to action” as elegant as possible. Just improving these two points will significantly improve your conversion rate whether at a networking event, in an email, or at TechCrunch-type stage pitching.
EKMH: As an active philanthropist, how would you encourage others to become more involved in their own communities?
Denes Ban: I suggest approaching how to volunteer just as I would suggest how to find a vocation. Using the “three variables method”, know your “why” - what gets you up in the morning. Combine it with what you are good at and what is actually needed to make a difference. The intersection of these three circles will reveal your best area of work, whether volunteered or otherwise. Find something that you are passionate about and where you can add real value beyond writing a check. The check will help them, but the time spent helping others will help you.
EKMH: And, last but not least, which book or film impacted you? And why?
Denes Ban: There are far too many!
I will say, from my youth, I always had a soft spot for Herman Hesse, and particularly, Siddhartha. This story of a young man’s quest for finding true purpose and meaning in his life had an impact on my own quest for meaning as well as my business mentality. In the middle of the book Siddhartha, a young man who has less than nothing to his name and no experience in business is asked why he should be hired. His answer is: “I can think, I can wait, I can fast.” That’s it. He convinces his boss-to-be with these three qualities and goes on to become a top business man. Growing up on a bunk bed in the living room of a housing project in Communist Hungary, this struck me as profound.
“I can think” means that high value can be found in cultivating a real strategic mind and knowing how to make sound judgements in the long term - separating short term gain from long term goals. With all the information overload, one of the biggest challenges in our time is not what to focus on but knowing what NOT to focus on.
“I can wait.” Patience is one of the most undervalued traits in our society and you will unlikely learn it in any business school. If you are driven by your own ego and ambition, you will shoot yourself in the foot in the long term. Timing is one of your most valuable tools.
“I can fast.” I can fast means just that, I know how to survive for long periods on nothing at all. And if I can be entirely self sufficient, nothing can be used to force, bribe, or tempt me away from my ideals and judgements on what I think is right. I am not scared of scarcity. I know how to dance with scarcity - that is making it into an art - fasting. Which is particularly critical in business, or anything you do in life. Integrity is everything.
Be sure to check out the EKMH Innovators’ archive! Due to the current format, only the most recent 30 interviews are shown in thumbnails above. Readers can search below and also click here for past interviews and more information. Thanks for your patience!