| CEO Spotlight: Jonathan Yaron, Enigma Inc.
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search A top-seeded Israeli tennis player, ex-soldier, and software entrepreneur: Jonathan Yaron seems to get what he wants. Enigma, which counts industry luminaries Ray Lane and Leo Apotheker as board members, is an anomaly in the consolidating world of enterprise software: an applications startup that is actually thriving. Angel Mehta, Managing Director of Sterling-Hoffman, sat down with Jonathan Yaron to talk about the early days of Enigma and how it plans to dominate a market space that old school ERP vendors seem to have ignored. Angel Mehta: Someone told me that as a young man, you were on the way to becoming a professional tennis player… how does someone go from a career track leading into professional sports, to business? Jonathan Yaron: Well, I grew up in Israel and yes, was a serious athlete there - at one point ranked No. 3 in the country in tennis as a teenager… But in Israel, by law, you have to go into the army and that changes your life. The Israeli military is known to be the state-of-the-art but what is not completely published is that it's a huge breeding ground for modern technology. Although I was in the field, I got attracted to the relationship between modern technologies in the military, so I found myself on many different committees as a heavy-duty user and became more and more involved through the years. I spent five years in the military, learning about software and computers… then when I left, got a significant offer as a Consultant to lead a project for the Military where they let me go through university at the same time. I spent five years running that project and did a degree in economics and management at Tel Aviv University. After ten years, I decided that I had had enough of government life. While applying to Harvard to do an MBA, my friend and I wrote two business plans. Like good entrepreneurs, we wrote two because one company wasn't enough for us. You know, young, 27, 28-year-old guys think they can conquer the world in one shot. Angel Mehta: So you were bitten by the business bug…what happened to those original business plans? Jonathan Yaron: We launched them both. In 1991, we actually started the two companies. One, Business Graph was a decision support system for the stock market, and the other one was Enigma. My friend was a completely scientific type of guy, so I ended up running the business side of both companies. In 1993, we sold Business Graph to another small software company. My friend did his PhD in finance at MIT and stayed a small shareholder in the company and moved on. He's now on Wall Street, doing something with derivatives. Angel Mehta: Enigma started as an Israeli company, right? So why and when did you move to the U.S.? Jonathan Yaron: Yes, between 1992 and 1997, Enigma was managed as an Israel company selling worldwide. The R&D was in Israel. We grew it from zero to four and a half million bucks. The U.S. market was a very small business for us. It was a little bit over a million dollars. We didn't raise a lot of money either; we were basically running a shoestring operation. In 1997, I made a strategic decision to move the headquarters to Boston, and it changed from an Israeli company worldwide to an American company that develops in Israel. I saw an opportunity to become a leader in the market, and I was determined to pursue it to make it my long-term career. Angel Mehta: What one customer win was most influential in shaping the company early on? Jonathan Yaron: Pratt & Whitney. I remember Mark, my only sales guy in the U.S., said to me, "oh, they're going to have an RFP and it's for the triple seven jet engine… triple seven is a big thing… it's coming up." I said, "Mark, why are you wasting our time. They're not going to give it to a company that has one sales guy in the United States, and the CEO is the Sales Engineer…" He said, "Humor me. You know I'm crazy…let me do it." I remember they issued a very detailed RFP and I hired a professional guy who knew how to answer government contracts, (it looked like a government contract), to actually write the response, not from a technology standpoint but from a wording standpoint. We honestly had no idea how to answer a piece of paper like that. I went in, serving as the Pre-Sales guy…the negotiator…the post-sales guy…the whole deal. After a couple of meetings, I said, "Mark, it's costing a lot of money, we're not going to get the deal, let's leave it alone…" |
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| And he said, "No way - let's keep going." So finally we issued the response to their RFP and suddenly started to get specific questions about our response. All this time I was preparing myself to hear that we were no longer a contender. That May, I was in Singapore at a trade show and Mark phoned me at four in the morning. I don't think he needed a phone because he was shouting so loud. We got it. I flew to the States and we negotiated the final contract.
Angel Mehta: Was there ever any hesitation about your ability to properly deliver what they expected? Jonathan Yaron: At the surface, yes. Deep down, no. They trusted us and I wasn't going to let them down. In particular, I remember one of their engineers saying, "Look guys, Pratt tried to do what you're going to do for us twice before and failed. You're going to make this thing happen because otherwise, after 29 years in this company, I'm going to lose my job." He wasn't harsh, cocky or arrogant. He was just speaking his mind. After that meeting, I said to the guys who were with me in that meeting: "If this is not delivered on time, I will kill all three of you with my own bare hands." They knew I could be tough. The point was we were not going to fail this guy. It had nothing to do with money. It had to do with the trust they had put in us - and we had to make it happen. Period. And so…we made it happen. And that obviously changed the world for us. Pratt signed us to a five-year, multi-million dollar contract. The whole company changed, and this was, in fact, a key factor in influencing our move to Boston. Angel Mehta: How large were you when you were closing Pratt & Whitney? Jonathan Yaron: We were tiny. We closed Pratt & Whitney in June 1995. In 1994, we had half a million dollars in revenue. So in 1995, we probably sold one million dollars, or a million and a half dollars, and we won a $300,000 first deal with one sales guy in the U.S. He closed Standard & Poor's, Scientific America, Pratt, and then NatWest. You never forget your first clients. |
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