Moe Arnaiz is an outstanding entrepreneurial CEO; he shares two founder stories: the successful sale of eMOBUS and how going through that process helped him navigate his new venture, Weeldi. As a serial entrepreneur, he has shown the ability to take his awareness of industry direction and craft it into a business vision.
Moe Arnaiz: Lessons Learned Bootstrapping eMOBUS and Weeldi
Below, Moe talks about getting started.
Moe wraps up his talk with Sean Murphy with final advice for startup founders.
Full video of Moe Arnaiz : Lessons Learned Bootstrapping eMOBUS and Weeldi
Edited transcript of Moe Arnaiz : Lessons Learned Bootstrapping eMOBUS and Weeldi
Welcome to Lean Culture Meetup for March 8, 2023. We’re fortunate today to have Moe Arnaiz, as an outstanding entrepreneurial CEO, share lessons learned from his founding of eMOBUS and now Weeldi. He will cover the successful sale of eMOBUS and how that prepared him for navigating the challenges in his new venture, Weeldi. Moe, welcome.
Moe: Hey. Sean. Thanks for having me.
Sean: Let’s start with eMOBUS. What led you to found eMOBUS?
Moe: Well, I know you’re very familiar with this, because you were part of some of the early discussions back in the day when we pivoted to the eMOBUS model, ultimately out of college, I worked for a telco provider, and had an opportunity to join a company as a partner that was reselling carrier services to the mid-market. This was things like Backberries, air cards, and cell phones. This was early 2000’s when businesses were really starting to adopt mobile technology.
We realized long term that it wasn’t really going to be a sustainable business even though the carriers were paying us pretty outlandish commissions because they wanted to capture market share. But as they gained share those commissions went down and we needed a new model. So we started to look at what problems we saw customers having that we could solve and bill for directly.
When we sold these devices into companies–call it 200 or 300 cell phones–we’d do everything right. They’d be satisfied in the beginning, and then suddenly they’d be coming back to us with billing issues, support issues, wanting to simplify the way they ordered devices, wanting to understand their costs better. So we saw an opportunity to start charging to provide those support services.
Sean: You had been providing this support for free, right?
Moe: We were.
Sean: You were doing customer service and you personally had developed some domain expertise in cell phone plan configuration and management. Then you saw the saw reseller dollars go down and some customers said, “Hey. We like this so much. Can we pay you to do this on a regular basis?”
Moe: Exactly. Initially we were doing spend management for free and using the carrier commissions to subsidize that. Obviously you can’t subsidize servicing an account in perpetuity from one commission. So we started going back to the customers we knew had the biggest problems and saying, “Hey. This is what we’re offering. We’re going to send you a report every month. Here’s the opportunities for you to save money by optimizing your plan configuration. You can let us know what you approve and we’ll make those changes for you.” A lot of customers said, “That’s fine, we’ll sign up.”
It was very service oriented initially, and it ultimately became eMOBUS. It evolved as we responded to new requests: “Can you help us when we need to order new devices? Can you help us turn these devices off?” And it went on from there and we realized there was a real opportunity, especially if we added some software to better serve these requests: for example we could present all of the billing information on a monthly basis and standardize a lot of the support requests.
“Nobody Will Pay for That…But It Proved Very Sticky”
Moe: I remember in late 2007 we flew up to Silicon Valley to meet with you. We were trying to sort out how the service should work and how to take advantage of software to make us more productive. And we started with something that you recommended. It was not sexy but it was a huge headache for customers: waiting on hold for the carrier. At that time it was very hard to speak to a carrier to swap out a phone or switch from one phone to a new one because the old one broke or there was a new model they wanted. So we setup a tool to let the customer specify these basic requests and let us handle it so they did not get stuck on hold.
And I remember sitting in that meeting thinking, “Well, nobody’s going to want to do that. That’s not interesting. They want to see all these fancy graphs, and we can show them all this stuff about how they’re spend is trending.” But ultimately, the ability to get a phone swap through our system proved very sticky. They didn’t have to call the carrier, and sit on hold for 30 minutes.
From there, we continued to build the platform out. We saw a lot of other consultants that were doing similar things buy they didn’t have software. By 2010. our software was strong enough that we saw an opportunity to license it to competitors as a “white label” offering: they could use our technology to interface with their customers, and provide our same services. Both sides of the business grew and we ended up with about 50% of our revenue selling direct, and 50% where we licensed software to other service providers. We moved up market selling direct, and acquired customers like Netflix, Genentech, and Silicon Valley Bank.
Three Key Mindset Changes
Sean: I think there were three key mindset changes you made that impressed me. The first was you were up against other “spend management”or accounting firms had a “billable hour” model that leveraged their expertise. From the beginning you had been quite diligent about getting your expertise out of your head. First it was encoded in a spreadsheet, and later in software. You were always thinking about, “How do I scale this beyond what I can do?” When the accounting and professional services firms were thinking about, “How do I protect my high hourly billable rate?” So I thought that was a key mindset.
Moe: You’re right.
Sean: The second things was that the carriers, the phone service providers, looked at support as a cost to be minimized. So their customers would be on hold for 15, 20 minutes, 30 minutes. You realized you could have one person on hold for six clients, so you could spread the cost. The third was that the carriers would make money on breakage – on a customer going over a limit and getting a surcharge and notification after the fact. You would help them minimize the breakage,
Licensing to Competitors
Sean: You were approached by another reseller, one of your competitors, show asked: “Can we license your software?” And I thought your answer of “Yes” was a key decision. Your plan was to turn them into a partner. Can you talk about how you looked at that? It’s a pretty big jujitsu move.
Moe: Yes, but the barrier to entry to be able to fix a phone bill was not high. It’s just that the incentives weren’t aligned for the carriers to do it. There were a lot of people across the country who had sold phones–or had been in some aspect of the business–who knew how to optimize a cell phone bill. There was not a lot of computation or technology needed. You could lay the bill out in a spreadsheet and go through the plan options, calculating costs based on how they were using the devices. So market was very fragmented.
A guy decides to quit his job at Sprint or Verizon: he goes to his customers and–similar to what we did–says, “I’ll help you manage this.” They know he delivered for them so suddenly he’s in business. It was hard for us to come in and say, “Hey. We’re this California company with this great technology, you should switch to us.” There really wasn’t enough pain for them to move on from a guy they knew. But the guy was in pain because he couldn’t scale his business. He was still doing it all himself, or had a couple reps under him, or was building out a big headcount operation to grow. So we said, “Well, instead of fighting in the war, why not just make the bullets?” Our software will make his business more efficient and it will be a more compelling experience for his customer.
Because now his customer can log in to a portal where everything is laid out cleanly. So we let them put their brand on it and offered it as a white-label platform. Even though we were selling nationwide, we established partner relationships in every region across the country. We picked licensing partners strategically, those who could give us coverage in markets that we couldn’t touch or that would’ve been expensive from a sales standpoint. So this gave us a pure software business that generated significant profits from an asset we were already using and didn’t add any incremental cost.
Sean: Your background in sales and support was very similar to the other service firm owners you were selling to. But you had been able to recruit Matthew Guilmineau, an experienced CTO, and these other firms could not recruit someone of an equivalent caliber. As a result, you and Mathieu created a cloud automation layer that provided you with a level of scale most of these other firms could not pull off.
Moe: It was a huge advantage in a technology-starved space: few firms were building good technology. Some raised a ton of money–eventually, a company went public in the space, which eMOBUS is now part of, but technology was never at the forefront of what they did. So our discipline of building usable technology that worked reliably gave us a huge advantage.
Managing the Sale of eMOBUS
Sean: At a certain point, you realized things were consolidating, and you went through an acquisition process. Can you talk about how you approached selling eMOBUS.
Moe: Our business was growing a lot. We had hockey stick growth in 2013 and 2014, with 60-70% yearly growth. And we were incredibly profitable through the whole process. We had bootstrapped a business with great margins. But as we brought on larger customers like Genentech, Netflix, and KKR, they would say, “This is awesome. We love what you’re doing for us. Can you do this in Europe? How about Asia?”
We realized that if we wanted to keep serving our customers well as we moved more into the enterprise, we would have to go global. At the same time, we started getting some acquisition inquiries, primarily due to an integration we did with a company called ServiceNow, which became one of the top SaaS platforms. We were one of the first integrations on that platform and it gave us a lot of visibility.
We started having people call in that were looking at acquisitions. So we had a decision to make. We had bootstrapped this business from 2008 to 2015, “Did we want to double down again?” We had never really wanted to take outside investment. So it was kind of, “Do we want to double down again and go global? Or do we want to exit the business?” And we thought it was a good time based on our growth and the state of things at that time to look at a exit. We brought on an investment banker.
We went down the road with the public company, and about 30 days into due diligence, they had a horrible earnings call. I think their stock dropped like 35%, and their board said, “Freeze everything.” So based on our persistence of letting them know that we had a number two that was right there, they came to us and said, “We probably can’t get this done, and we know you’re basically going to light a fire under our because you’ve told us about this number two a 100 times already, so we’re going to let you out of due diligence and out of the LOI.” And we killed that. And then within 40 days, we have the business sold to the private equity firm. So it was quite a journey.
Sean: So before we move on to your next firm, Weeldi, any other key takeaways you want to share from eMOBUS?
Moe: Always be building, growing, and pushing the business forward. One thing that helped us when we were in due diligence selling is that a few earlier, we had cleaned everything up and ran all our financials off of GAAP. So we had sales processes, a CRM system, and support processes and systems. We were profitable and growing. Everything was very dialed in. So when we decided to sell, we had options. I suggest that you don’t just decide to sell one day. If your goal is to sell eventually, then take the time to prepare and position your business to sell. And with every business, you either sell or go out of business at some point. So you should be thinking about selling early on.
Weeldi Automates The Tasks You Need to Do on a Website
Sean: With eMOBUS you started out working in the cell phone industry and felt your way forward. With Weeldi, it seems like you were more intentional about identifying a real problem from the beginning
Moe: Absolutely. After we exited eMOBUS, Mathieu–my brilliant CTO–and I took time to study some of the problems we had encountered at eMOBUS, considering which we could build solutions for. One of the challenges of automating interactions with the carriers was that they had monolithic systems that hadn’t been upgraded in years. They did not offer APIs, so we initially had to do it all by phone: pulling billing data, ordering a phone, or requesting any change
Later they invested in their websites to enable customer self-service and reduce support costs. Now all the tasks that we needed to do and the data we needed was buried in these clunky user interfaces on their websites. So we developed software that automated our website interactions with the domestic US providers Verizon, AT&T, and Sprint.
Our technology was hard coded for those specific carriers. So when customers came to us and said, “Hey. Can you support this new vendor or can you go international?” That was an undertaking because we were forced to reverse-engineer everything in each website to support their request. So we thought it would be awesome to create a platform that we could point at any website and quickly enable operations people, not developers, to build the automation they needed. That’s where that idea came from and what Weeldi does. People in operations rely on us to automate basic web tasks they do on a regular basis.
When we looked out into the space to see if there was something out there, we saw this space called RPA, which is robotic process automation. And some companies were growing fast in that space. UiPath is one of them; they ultimately went public a couple of years ago. None of them did a good job of automating website interactions: they were born out of automating internal systems for healthcare and finance. These systems didn’t have APIs that would make it easy to migrate data into newer systems like Salesforce, HubSpot, or ServiceNow. So they automated interactions with internal systems that have not changed in 20 years. But automating website interactions using the RPA model did not work as well because websites can change three times a week. Also, a website may take steps to complicate or even block your access. You don’t have the same control that you do when it’s an internal system. So we saw a lot of pain there and decided to focus on automating interaction with websites. And that’s how Weeldi was born.
Sean: And so where are you today?
Moe: From a revenue perspective we are at seven figures and profitable. We’ve been profitable pretty much since the get-go. We have started off in the telecom vertical, based off of the contacts, experience, and people understanding we had success in that space. That was the easiest path. So expense management around that. It’s now evolved to expense management around technology: people who are managing licenses like Zoom and Microsoft; operations people that need to pull utility bills,which bleeds into a space called ESG, where they need those same utility bills for their reports. We also support operations teams managing shipping and logistics, they face a similar challenge to telecom where there’s not a lot of API access for the information that’s needed. And then last year we actually got our PCI compliance as a PCI level 2 provider. So now we are helping companies automate payments. There’s a ton of companies that make money by doing payments for customers, bill pay, and that requires them to go back into websites and make these payments. They now use our technology to automate those payments. So we’re kind of slicing off new verticals as we go.
Sean: That’s an expansion from just spidering a site in an intelligent fashion or filling out forms to pull data off. Now you’re filling out web forms to initiate and complete a transactions.
Moe: Exactly. Although it’s more a change in our marketing message than our technology. PCI compliance involves significant new technology to manage payments, but many of the ways that we would get data from websites already felt like a transaction. You end up taking something off versus writing something to a database, completing an order, or something like that. So it was an easy transition to go into that space. It’s a matter of having the customers ready to go in that direction. That requires less of a technical leap, and it was more of a process engineering leap. You have to make sure the process you want to automate is well-thought-out when you’re ordering something because the implication is that an iPhone shows up on somebody’s desk. If your process for downloading an invoice is a little loose, it’s not a big deal: you end up with one invoice you didn’t want.
Weeldi Empowers Operations to Automate Tasks that Sweat the Details at Scale
Sean: So you offer an API front end where in the back end, you handle what essentially looks like a guy interacting with a website?
Moe: Exactly our goal. We offer three key capabilities with Weeldi.
First, we take care of all the details you need to manage when you automate a website interaction. It can be hard to convince some prospects who will say, “We can just write a script to do that.” Depending on the websites they are interacting with, a basic script may run fine for a long time or break every few days. In the latter case, they soon find they have a department of six people devoted to managing this rich set of fragile custom interface tools. Weeldi is a center of excellence for these integrations so that companies don’t have to re-solve them each time.
Second, we empower operations teams the ability to manage these automation solutions so that developers don’t have to be in the middle. Operations can quickly build an automation with our tools, just by recording what they do. If things break, Weeldi let’s know, “This is not working and here is exactly why. Here are additional insight to help you navigate to a solution.” And we give them the capabilities to solve it.
Third, Weeldi works at scale. Our customers rely on our API to start automated tasks and pull in the output from hundreds of thousands of runs a month.
Sean: How much competition do you face from traditional RPA vendors?
Moe: From a technology perspective, very little when we are approached to automate tasks on a third-party website. From a perception point of view, quite a bit. UiPath, to pick one example, is a public company that has done an excellent job educating the market on the benefits of traditional RPA to solve common problems. The reality is that most people are risk-averse about operational infrastructure software and want something that is established and safe. And for internal websites under the operations team’s control, RPA is a good choice. It’s like driving a Formula One race car on a well-manicured track.
But accessing, navigating, and pulling data from third-party websites that the operations team does not control presents a very different set of challenges. It’s more like driving the Baja 500. The landscape is harsh and more complex than a racetrack, subject to change with little or no notice. It’s difficult for Operations to drive that Formula One RPA car quickly or far in that environment. So when a prospect tells us they plan to use a traditional RPA tool on a third-party website, we suggest we talk again in three months when they will see the value in a 4×4 Jeep with some extra gas cans for traveling off-road.
Surprises the Second Time Around
Sean: What have been the most surprising things since you started Weeldi?
Moe: So one is how quickly we gained traction. When we founded Weeldi, I thought, “I’ve been an entrepreneur since my early twenties. Here we go again.” But with the success of eMOBUS, we had many business relationships that made it easier to get started. We approached several people we knew and were able to build the product with customers from day one. Compared to eMOBUS, when prospects had been very cautious, our past shared success with prospects meant they were willing to take a risk on us.
After those first few customer successes, selling was a lot faster because we could leverage our Rolodex and work with people who wanted to work with us but did not want to rely on a brand-new product for operations infrastructure.
I was surprised by how quickly we could get meaningful revenue in the business and evolve the product into something that offered customers a lot of value.
One negative that’s easy to forget is that you can give people amazing tools and make things very easy, but automating a task or process requires a very different thought process from doing it. Engineering the steps of how an automation works and making sure you have the correct data to feed the automation requires care. It’s like the difference between following a procedure versus writing a procedure for others to follow; there is more you have to consider.
So we provide a lot of support for our customers to help our customers through the process of setting up a new automation. We have incorporated a lot of what we have learned into better feedback loops and better tools to extend or copy and modify existing use cases. For example, suppose they are downloading an invoice or making a payment. We help customers think through the primary process and the possibilities they may need to account for if the automated task is to finish successfully. We also offer an option that customers requested where we build an automation and they manage it.
Sean: So you view your support as a critical element of your sales and marketing strategy. It’s not a cost center. You are not trying to get customers off the phone to minimize support cost, you are trying to learn from your customers. And adding guard rails and training wheels to make common errors harder. Part of your success at eMOBUS was also bringing on partners and key customers. Is there anything that’s been different, or how have you applied those lessons to Weeldi?
Moe: Everything is direct to the customer now. We have yet to develop a partner ecosystem, but it’s one of the things we’re looking at. One of the challenges with the RPA space is that the big companies have largely built an integrator ecosystem. So these guys bill $100 or $200 an hour to do process engineering, to create the automation with the tools: a traditional integrator working on a billable hour model is not a good fit for us. But for some integrators with third-party website interactions as a small part of the system they are building, we may be a value add–or a way to avoid upsetting the customer when the traditional RPA keeps breaking.
Sean<: Regarding exit planning, eMOBUS ran for seven years. You started Weeldi in 2019, so is 2026 a potential exit time frame? I’m not trying to trick you into disclosing corporate secrets, but I am curious; how do you think about that problem?
Moe: I think of it more as an opportunity than a problem. Any good exit will be driven by inbound interest. We actually had some interest in this business early on. We launched at the very end of 2019, coming out of stealth and starting to sell to customers. And then COVID happened, and then money was falling out of the sky. Some people were reaching out to say, “Would you guys consider selling the business right now? What are your plans?” We just felt like it was too early.
Sean: You sound less like a “Built to flip” entrepreneur and more like a “When is it ripe?” How do you assess when you’ve created enough value? That has to be hard to determine, much less predict in advance. I am not trying to get a specific answer for Weeldi as suggestions for how startup founders should think about how to create and manage exit opportunities. If a founder were to ask you, “How should I map this out?” What would you say?
Moe: When you are bootstrapping it’s a personal decision between you and your other founders or shareholders. If you have investors, then it becomes more of a community decision involving them and their fund, and timing, and everything else. So you may have other triggers that are more outside of your control. I’ve always looked at it kind of like an investor looks at it, like an investor raises a fund and they have 10 years in that fund.
I feel like 10 years is a good window for a business, and you don’t want to be like at nine and a half years and all of a sudden you’re the hottest thing in the world and you get out of it, you probably want to run a little longer. But if it’s steady, good growth, I think that 10-year window is a safe window to look into. So as you start to approach that 10-year window, just like a fund would be managed, you start to look for liquidity in the business at that point. That’s our preference. I don’t know if that’s the right answer for everybody. There’s certainly companies that run for 25 years, and then have great outcomes.
Final Advice for Founders
Sean: You are clearly enjoying what you’re doing. You and your co-founder have already been through the fire once, so it’s a little different dynamic. Any final advice for founders?
Moe: Stick with it, but start selling as early as possible. You know, you want to be honest with your customers about where you’re at in your product and not oversell your product, but you want to start selling as quickly as possible. The best indicator of whether you’re onto something is if people are willing to spend money–not say they’re going to spend money, but actually spend money. Don’t be fooled by “This is a good idea!” Look for “How much does this cost? How do we get started?”
But this selling is not the true enterprise selling that starts once you have a defined product, understand your market, and have a clearly defined sales process you can replicate. This selling is discovery-driven. It confirms that your target customer needs your product and is willing to pay. As a founder, you must be prepared to close the first $1 million worth of business yourself because you can’t just bring in a salesperson to solve it for you. You need to understand customer needs and what they will spend money on. It’s a set of very fluid conversations you must be part of. Then, once you have sold your first million dollars worth of business and your customers are happy, renewing, and ordering more, you can bring others in and train them.
Sean: Moe I am really glad you were able to joint us today, thanks again for your time.
Moe: Absolutely. Thanks Sean.
I found Moe’s view of the Weeldi customer service group as integral to discovering and verifying customer needs compelling. I had made two related points in Customer Care:
- My advice to founders is to value the perspective of functional experts but to be careful not to lose your curiosity and your empathy. Appreciate a holistic or systems view that incorporates how the different roles need to harmonize and support each other to provide customer care. And to remember that everyone can provide insights into customer needs if they retain their curiosity and ask questions while they focus on the specifics of their role.
- I think there has to be an ongoing, intense curiosity and care on the part of everyone in the startup who touches the customer about how to create value or how to remove things that are limiting or restricting the value customers will get from the product.
I also liked his view of Weeldi as augmentation, not automation: it’s not “Robotic Process Automation.” Instead, it’s “Human [Process] Augmentation,” where Weeldi keeps the operations team in the loop to refine, improve, and extend the processing model. It frees up their time from parsing websites and filling out web forms to give them more time for more humane interactions with prospects, customers, and partners. They can also pursue questions that may unlock insights about new business opportunities.