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Q&A With Jivox CEO Diaz Nesamoney

Last week, a couple of readers lambasted me—well, politely lambasted—for interviewing an unproven entrepreneur.

I took notice. And I want you all to know I appreciate where the criticism stems from. After all, the conventional wisdom among Silicon Valley investors is that serial entrepreneurs are more backable than fledgling company founders. Most of the VCs I hear from—not all, but most—tell me they like repeat entrepreneurs. They like it when the founder has experience in the trenches, so to speak, and has proven himself or herself in the past.

If this is indeed the case, I thought it would behoove me to get the perspective of one such entrepreneur. I did. His name is Diaz Nesamoney, founder of San Mateo, Calif.-based Jivox Corp., a provider of online video advertising services. Nesamoney already has two successful ventures under his belt. In 1993, he founded Informatica Corp. (NASDAQ: INFA), which raised $18 million in VC funding before it launched a $44 million IPO in 1999. In 2002, he founded Celequest Corp., which raised more than $20 million in venture funding and was acquired by Cognos in 2007 for an undisclosed price.

Nesamoney, who earned a masters degree in computer science from the Birla Institute of Technology and Science in India, founded Jivox in 2007. The company has raised about $13.5 million in two rounds of funding from Opus Capital and Helion Venture Partners,

Here are some of his insights into what it takes to succeed.

Q: Your past two startups were in the business intelligence software space. Jivox is an advertising technology company. Why did you shift industries?

A: Enterprise software has become a mature industry, so I was looking for ways to apply technology beyond the enterprise. Media and advertising businesses have not been huge adopters of technology, and I saw an opportunity to use some of the technologies developed for the enterprise to automate many of the processes in media and advertising.

Ten years ago, creating and distributing a TV commercial was out of reach for small businesses. It was just too complicated and costly to develop an ad. Not to mention run the ad on TV.

Jivox has developed technology that allows any small business—restaurants, chiropractors, private schools, you name it—to quickly and easily develop a video ad and get it in front of local audiences online.

At a high level, what we did with Jivox is not too different than what we did with Informatica and Celequest. In all three cases, we took expensive, complex technologies and made them accessible for the broader market.

Q: Jivox is your third venture. You launched Informatics more than 15 years ago. What are the changes you’ve seen as an entrepreneur since your first startup?

A: It feels like we’ve come full circle as to the amount of capital available.

When Informatica was founded, we were pre-bubble and capital was a bit harder to come by, much as it is today.

After Informatica went public in middle of the Internet bubble, there was a lot of capital available. Companies could get funded with an idea and a short business plan.

Now, we’re back to where we were, with more intense scrutiny and a deep evaluation of basic principles: Having a real market need and a business model to make money.

Q: As an entrepreneur, what do you think is the key to go from launching a startup to achieving a successful exit?

A: First and foremost is identifying a real market need, not just a perceived one, and then working at it to validate the assumptions. Often what you think is the market isn’t really the market, or it turns out there isn’t actually a great way to make money doing what you set out to do.

There needs to be a process and runway to refine and tweak the model until it clicks, spending as little money during that process as you can. If you do that well, the company will start to grow and will have a decent shot at an exit.

Q: What do you look for in a VC firm?

A: I look for a few different things. The first is the VC’s experience in the area. It’s important that your VC partners can help validate and provide input on the business model.

I also look for VCs whose partners have strong operational experience, especially in this environment where execution is often more important than ideas.

And, I look at their track record of funding companies and sticking with them in good and bad times and providing value beyond money, such as having a really solid network and being able to make the right intros to customers and strategic partners.

Q: Jivox’s backers are based here and in India. Is it difficult to work across continents?

A: The reason we picked an investor in India is that we see substantial opportunity in India, and we’ve been selling there since day one. We wanted an investor with local knowledge and connections who could provide the local view and input into the business.

That has certainly turned out to be the case with Helion. Even board meetings and communications have been fairly straightforward, and I think most businesses are learning how to work across continents more effectively.

It does mean more travel, but this also means I get more face time with our investors as I travel to meet with customers, partners and the team in India.

Q: Are you planning to raise another round anytime soon for Jivox?

A: We have plenty of cash in the bank, and we’re not actively looking to raise money right now, but if the opportunity presents itself with the right investor we would look at it.

Otherwise, we expect to raise money within the next year. How soon depends on our growth and the market conditions for financing.