42. Scaling Ecommerce to Giant Size & Taking Risks in the Future | Roy Rubin, Former CEO of Magento

Episode 42

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In his previous life, Roy Rubin co-founded and held the reins as CEO of Magento, a globally successful open source ecommerce platform that skyrocketed and soared across the world from its inception to its ultimate acquisition by the tech giant, Adobe. In his recent conversation with Karthik Chidambaram, Founder and CEO of DCKAP, we learn all about Roy’s amazing journey, his standout vision and strategy for ultimate success, and what he’s doing now.

There are a lot of lessons to be learned, from feeling things out during their starting steps, to the largely organic growth that surrounded the product, to the rapidly changing environment of ecommerce throughout the entire journey of building Magento, and what he did to help forge the path ahead. While his hard work and leadership was no doubt vital to catapulting the success of the brand and bolstering the creation of the world-renowned platform it has become today, Roy humbly refers to the robust community and the ultimate power of organic growth as its number one driving force.

Today, as the founding partner of R-Squared Ventures, Roy utilizes all the passion and knowledge that he’s gained working in the industry to offer advice and invest in various up-and-coming companies. He continues to inspire with his ongoing mission to take risks and support strong and creative teams in a wide variety of fields that are ready to rise up and disrupt the industry.

Karthik Chidambaram: Hello everyone! Welcome to a new episode of the DCKAP Driven show.

We are at Westlake Village, California, very close to L.A. Not very close, about 40 minutes from L.A. And we have a very special guest today, Roy Rubin, founding partner of R-Squared Ventures and popularly known as the former CEO and Co-Founder of Magento.
Roy, thank you so much for joining and great to have you at the Driven show.

Roy Rubin: Happy to be here. Thanks for coming down to Westlake Village.

Karthik Chidambaram: Thank you. Alright. You moved to the U.S. when you were nine years old from Israel. And then after spending about 10 years in the U.S. You moved back to Israel to study.

What's so special about Israel? And tell us about your early years growing up in Israel.

Roy Rubin: Wow, so we go, we go way back. You know, look, I think Israel at the time that I grew up, and I grew up there until the age of nine, was very wholesome, almost very naive in many, many ways. We would have, you know, a lot of freedom as children to walk around and discover things and, you know, this is pre cell phones and pre technology.

So, you know, we'd leave the house and come back a few hours later and nobody would worry about you and... It was just a very safe and humble environment to grow up in. You know, the transition to the United States at the age of nine was a shock. Because, you know, I came from a very middle class family and there wasn't much going on.

We'd play ball. That's pretty much what we did every single day. Just, you know, kick around a soccer ball. That was our, you know, that was our activity. You land in the United States, and I remember the first week my parents took me to Disneyland, and I was like, ‘Wow.’ That was a big thing. Or even, I mean, for me, the most vivid memory is actually on my birthday, which was about a month after we landed, my parents took me to a Toys R Us store, and I thought I was just in heaven.

I could not believe what I saw, because the, you know, toy stores back home were tiny. They were little, tiny shops, and here's this incredible, huge store with just every single thing you could imagine in every aisle. And, for me, just that was, I think, kind of the earliest memories of me moving to the United States. How different and plenty everything is, you know, versus back home.

Karthik Chidambaram: What's so special about Israel? I mean, I think about 60 percent of your investments are Israeli companies. Tell us about the startup ecosystem there, and why is that? Is there any secret sauce there? 60% of your investments are in Israeli companies.

Roy Rubin: Look, I think there's a very special DNA, you know, in Israel. If you think about sort of the history of the country, it's, you know, it's a situation where it is in the Middle East where, you know, the country is largely surrounded by enemies. Some, you know, obviously are no longer, but you know, it's a very- It creates a persona, one that is not afraid of risk taking, one that requires a lot of the younger kids in Israel to pick up STEM skills at a very early age because the country really invests a lot in ensuring that it is best-in-class and world leading in a lot of the areas of technology as it sees the value there is critical for its survival.

So between risk taking, entrepreneurship, the military, which is a requirement for every high school graduate in Israel to go through, that creates, you know, I think a lot of interesting dynamics around leadership and around soft skills, and also technical skills, you know, coming in from the military as well.

But when you kind of blend everything together and a really strong access to capital, a plethora of capital being available to fund ideas, you know, as well, it just creates an ecosystem and a DNA that is very unique. And for us, being Israelis, my partner and I in the fund, Roy Ehres, who has been a great partner and a close friend. For us, we obviously share the DNA and feel very comfortable in that environment. And we love spending time with the teams and really adding value and, you know, and supporting them.

It's not all we do. We do fund, of course, companies here in the United States, but we do see a lot of great talent coming in from Israel. And this, for us it's very exciting to, you know, to go back and support and spend time with the teams that are working on some very creative solutions.

Karthik Chidambaram: Yeah, it's very competitive and the competitive nature gets out the best in people. It's extremely competitive.

Roy Rubin: It is competitive. And for the right reasons, right?

You know, there's a lot of startups that form every year and only, you know, a select few are really able to raise capital. So it sort of breeds the best of the best. And it's been, you know, been a blast to just, you know, continue developing our relationships with the ecosystem and whether it's a, it's the venture capital relationships, but also the entrepreneurial relationships and continue to back teams that are just very creative and hungry. We love them.

Karthik Chidambaram: That's awesome. And, I've read a lot about your variant days when you started Magento, how you started as a services firm and transitioned into building products. And you used the Google AdWords to your advantage in the early days. And you created this wonderful open source platform called Magento.

Talk us through your early days of building Magento. I think that's something a lot of people would like to know.

Roy Rubin: Yeah. So, you know, I started- So, I came back to the United States when I was 23, and I did not have any money. And I needed to be a little bit creative on how I paid rent, right? So that's, that's the story of how I started the services company, which really began as a freelance business.

And I would go to college here in the United States, in L.A. in the morning, and then just do freelance work. Then I picked up being self taught, I bought these big, thick books, you know, at Barnes Noble used to be Borders, but... You know, Barnes Noble still has a few branches open, but basically a bookstore.

And I would learn HTML and JavaScript and CSS and all this kind of stuff. And then back in, I started programming in Perl. You know, it's a sort of pre PHP or PHP was just around the corner. But anyway, I picked up some skills and I started to do some services work. And eventually I found my way relatively early into the e-commerce world.

And that was, I think the- kind of an inflection point because it really allowed me to focus. Whereas before I'd kind of do everything, you know, content management and just every form, and odds and ends here. For the first time, when I discovered e-commerce, I was able to really double down and focus on a specific discipline and I knew nothing about it. But I started to pick up e-commerce work with some merchants that gave me a shot And that's how I first sort of, on the services side, began to, you know, began to work with merchants.

And you're right, you know, Google had just released AdWords and I started to pick up business through AdWords and it just like, it blew up, right? And I was able to really scale that services business while still at college. I went to UCLA. And that began to scale and we had 20-30 full time people already just servicing Open source e-commerce. But for me that wasn't enough, because I always had this interest in building products. And if you kind of rewind back to that time, this was the big Web 2.0 growth era. So, I'm dating myself, but, you know, this is the days where Flickr came out, and Delicious, and you had 37signals writing these great posts, and they were working on some really interesting products.

And I was sitting on the sidelines, like, consuming all of this, and saying, well, wait a minute, this is really fun and interesting. Here I am servicing clients, which is fine, but man, I think building products on the other side is where the fun really is. So I always had this interest, especially sort of seeing these great products come to market.

I had a great team, but I still struggled to, you know, believe it or not, it's clear that we built Magento, but it wasn't clear back then that we were going to go build an e-commerce platform. So, you know, we actually sat down -I remember this vividly- we sat down and, like, started to strategize and ideate around ‘what do we want to build’.

And only later we decided to go build an e-commerce platform, but we had some ideas. And, you know, nothing really was interesting enough or stuck or, I would sleep on it and wake up the next morning and say, ‘Nah, that's not interesting’. So, but ultimately we said, ‘Look, why don't we go build what we know how to build’, which is, you know, e-commerce.

We have a skill set, we have a, you know, a DNA, we have a team that knows how to do this. So it became clear over time that that's indeed where we wanted to go. And that's just how the story of Magento came to life, really, out of the services company.

Karthik Chidambaram: That's awesome. And, one thing, when you talk about Magento, you always talk about its community. And you guys built a very, very powerful and strong community across the world.

Tell us about the community building activities. What advice would you have for some of the companies out there, or product companies out there who are also looking to build community, like how Magento built it?

Roy Rubin: So, you know, it's a very good question. Because I point back to the early days. And I try to think about what we did right and what we did wrong.

But the community, I have to say, look, I want to take credit for it, Karthik, I really do, but it came on its own. And I think that's the fair answer to this. But there are some lessons learned here, right?

And I think, for me, the biggest lesson learned is, if you create a great product and you release it in the market, and there's strong demand for the product, both on the merchant side, in our case, and the developer side, but you have constituencies that are really eager for this product, and ultimately there are great revenue opportunities for all sides of the marketplace to double down on, then your job as a software vendor is honestly just to get out of the way and let the community develop on its own.

So, you know, we started with a few events. By the way, the first initial events were not even our events. I got invited to events, right? There was a gentleman, hopefully he's listening to this, Rico out of Germany, who invited us to, you know, an event. I think it was outside of Frankfurt, you know, this was like, oh my God, almost 20 years ago. This is insane, like 20 years ago almost.

But, you know, I got called like, right, I think the beta was still out, and Rico said, ‘Hey, we're going to get some people together in Germany to talk about this. Do you guys want to come?’ And I was like, ‘What?’ Like, I didn't even know people downloaded this stuff from in Germany. So, you know, we came and I think there's a photo floating out there. I remember this. But that was the first time that I started to really understand that, ‘Hey, there's a lot of interest and people want to collaborate and sit around the table and share experiences’.

And they're eager for this face time, to talk about the product. So from that point on, you know, every time there was an invitation and there was one, you know, I think in, Netherlands that came right after, and some other things that started to develop organically, we just came when we were invited and we started to collaborate.

And I think that got us, you know, got us kind of understanding that there's something bigger there. You know, eventually we'd put on conferences and sort of take a more active role. But it was the organic, bottoms up community building, largely by individuals that I think really understood the vision and where we wanted to take the product that kind of spearheaded a lot of what Magento's community has become over the years.

Karthik Chidambaram: Yeah, my next question was on events and you talked about events as well, and the Magento events are very popular across the world. Even as we are speaking, long after you've left Magento, there's one event happening in Indonesia, one event happening in Singapore, and that's amazing.

Is there anything you did or the company did to push that further?

Roy Rubin: Look, I think, I think we embraced it once we saw the interest in the community. But as you see now, these events are happening without any corporate guidance, without any corporate help. I think this is organic, right? I think this is the real story of Magento. A lot of organic interest in growth, I think, spearheaded by a great product and a very thirsty ecosystem that saw the revenue opportunity and the collaboration opportunities here.

And if there's anything that I think is a takeaway, it's ‘build a great product, and get out of the way’, because the community largely develops on its own. You know, even the Magento events, I- You know, it's kind of crazy, right? But I never wanted these events to be on us. Meaning I didn't want to be the focus and I didn't want my team to be the focus. I wanted the community to be the focus.

So oftentimes, I don't know if you know this, but oftentimes I would, you know, at the Magento Imagine events, I would give a keynote and I would run up to my room. Because I didn't want this to be about me, right? I felt the value in the ecosystem was about the collaboration of the individuals. So, I didn't want the attention. I didn't want to be walking the halls and grabbing people and the interest out of the room. I wanted the community to spend time on itself. I thought that would accelerate what we do. And the less that I think our team took the forefront of it, was a smarter strategy and it proved itself, I think, right in many ways.

Karthik Chidambaram: Build a great product, get out of the way. And I’ve also tried-

Roy Rubin: It’s very contrarian, I have to say. Because I think a lot of people think like we actually did a lot of this. And I would love to take credit, but man, I gotta tell you this, like the community is incredible because they largely led us to where, you know, the product in the community is today.

Karthik Chidambaram: That's also, I mean, it's great, and it's also taking the focus away from you. I think that's also a great strategy. I was always looking for you at the Magento events at Imagine, and now I understand why-

Roy Rubin: You couldn't find me. You couldn't find me. Look, I mean, I would take meetings, but they would be, you know, much more, you know, quiet and sort of on the side. You know, I did walk the halls every once in a while just to show my face. But ultimately, look, you know, there's so much, you know, people come to these events to really interact with their colleagues and I just felt like we were just distracting them. So, yeah, so I tried to get out of the way as much as I could.

Karthik Chidambaram: Awesome. Sticking on to Magento, were you involved in building the Magento Go product? It was a really nice product and, you know, competed with Shopify. And at one point you guys said, ‘Hey, you know, we're not going to do that anymore’.

Looking back, do you think there was a mistake?

Roy Rubin: So, it's a very, very good question. So, what happened was- So, if you sort of think back, Magento was released in an era where on-premise was the deployment, typically, of e-commerce websites, right? This is pre-cloud. So, what we delivered, ultimately, back then was a zip file, right? That was it.

And the infrastructure, the servers, the onboarding was really done by the merchant, oftentimes with a partner, and a hosting provider. Now, the world changed as we were building out the next generation of Magento. As we were coming to market, the world really changed. So, it went from on premise to cloud.

That transformation was disrupting everything in the industry. Not just in the commerce industry, but across the board. We saw the models of distribution begin to change. And we understood that we would need to adapt and change as an organization if the product will continue to be relevant in years to come.

So around 2009, I got a team together, 2009-10, somewhere there, I got a team together and I said, ‘Look guys, we're going to have to change as a business and we're going to have to disrupt ourselves’. And the way to do that is to go build a cloud platform. Which became Magento Go. That would be the future of the business. We would be a cloud company.

Now, I didn't want to walk away from the open source world because I felt like that is still very much in our DNA. But I felt like the story of open source was going to be very different once the cloud begins to take shape. So, relatively early, we began on this journey. I had a team working on it. And my most important component was that we developed- One, it's got to be a platform as a service, meaning that this ecosystem that we've developed in the on-premise world. Folks like you, back then, and others that built their business and their livelihood in extending the platform, integrating with the platform, et cetera, still needed to see Magento as a solution that they could have confidence in and create revenue opportunities from.

So we wanted to build a platform as a service. We wanted the extensibility component of Magento to be very much still around in the cloud. And we wanted to provide, you know, the same dynamics in the cloud as we did in the on-premise world. So we started, you know, we started building it and I remember the first iteration, I had the team, and we're just about to release it, and I had the team, I sat down the team and I said, ‘Look, let's go through it all’.

And what I did was I pulled up the Magento Connect, our app store marketplace, you know, this is 2009-10. This is early guys. This is like, this is like pre- all this Shopify app store world that exists now. 14 years ago, 13 years ago? Crazy. So, I pulled up Magento Connect, which was our app store for the on-premise. And again, my wish for this team that was building out the cloud offering was parity, right? So you could build any extension in the on premise world and you could move that into the cloud. It was a very, very big vision, but we knew exactly what we wanted to build. And we started to go through the top 20 extensions.

And the team said, look, I can do, we can do 5 out of 20. And I said, ‘that's not going to work. It's got to be 20 out of 20’. If the market will believe and will see that we can develop technology that has parity between cloud and on premise. That's the holy grail, right? That is how we bring everybody to the cloud.

But if we start to have different versions and this works and this doesn't work, I think we create confusion and we lose the opportunity to really migrate the ecosystem along with our technology platform. So, we killed the project and we started from scratch. And later, we released Magento Go, which we felt was ready. We released a version of it that would work for the smallest of merchants. And that was by design because we did not want to risk- This is so new and so fresh, that we did not want to risk going out and bringing on board bigger merchants. We said, ‘look, let's just start with the smallest of merchants, really build this, make sure the product works, continue to iterate and refine, and then just take it from there’.

And that was what was, you know, ultimately released. And this happened, you know, at a timeline right before eBay acquired Magento. And when eBay acquired Magento, there was a fight for resources and a priority, prioritization difference between what we wanted to go do and what I think the team at eBay wanted to do. And at that point, we kind of lost track of really building out what I and the team had envisioned. And sadly, it just did not get the attention, love, and resourcing it needed to go and, I think, deliver its potential, which was going to be, you know, a phenomenal cloud product.

So, that's the story of Magento Go. You know, ultimately, you know, we decided to kill it. We decided to kill it when I was still there because we didn't see a future for it. We just, you know, we knew it would take significant investment. We did not have the support of eBay at the time, sadly. And we decided to just lovingly, um, move away from it, knowing that there's going to be a gap here in the market. So that's how it ended. That's how it began, and that's how it ended.

Karthik Chidambaram: I always wanted to know the Magenta Go story, and it's great to hear it from you.

Roy Rubin: But let me add one more thing, because the transition from on-premise to cloud, beyond technology, was going to be in the business. Because, remember, we delivered a zip file in the on-premise world. Now, we deliver a 24/7 service. So we knew we had to transition the entire organization. This was like a groundbreaking move for us, because we now have to provide a full service versus just a zip file, ultimately.

So, I mean, and I'm simplifying it on purpose because it was, you know, I knew that support needed to be, you know, a different grade of support and infrastructure, and DevOps, and all the stuff that we never had in place. So we started to hire for those positions and build that infrastructure. It was, you know, it was a big transition.

We never fully saw it through. And that's a miss. When I look back, I think that if I would have had another one or two years, we probably could have had a very competitive cloud product in the market.

Karthik Chidambaram: Cool.

Talking about Magento, how do you scale the business, you know, both in terms of technology and also business development? Do you have any tips there for businesses out there looking to do the same thing?

Roy Rubin: Yeah. Look, I think with everything, I had wanted to hire strong leaders in the organization that would be better than me, right? So I had a great partner and CTO, Yoav, who really took that off my plate. So he, you know, he was able to hire great architects and engineers and really scale that organization. And on the business side, you know, I really tried to bring people that were just smart, right? Came with experience, were smarter than me, you know, experienced than me.

I didn't- I never built a sales organization. I never built a go to market team. I had some good intuition about it, but I was looking for people that could come in and really add value from day one, and push me, you know, and ultimately, you know, give them a long leash and tell them to go run and give them the support they need to do so. But again, get out of the way, right?

Because if you hire a great talent that is, you know, accelerating the business, I think as a leader, your job is to just, you know, continue to embrace and empower those types of leaders that can help create very strong opportunities. So, I mostly hired- You know, I was fortunate to hire great people and just get out of the way.

Karthik Chidambaram: Yeah. Hire great people, get out of the way. Yeah. Cool.

Well, that's great. So, I mean, as you know, DCKAP does a lot of work on the distribution side of things, B2B and all that. And we still think that this B2B space needs to be disrupted, and there's not a great product out there serving the B2B customer. What do you think that is, and what's the challenge there?

Roy Rubin: So I've been pushing you on this, right? We've been talking for years about an opportunity here. Look, I think it's complicated, right? There's so many use cases, so much, you know, workflows. It's a very different beast than your typical B2C implementation. That's the challenge, that's the opportunity.

But, you know, look, I think that there will be a company one day that will come to market with a product that is flexible enough, that is adaptable enough, that really answers, I think, what the opportunity is, which is a massive one. I'm excited to, I don't know, continue to see what you do, because I think you're definitely on the right path.

But there's others out there tackling this as well. You know, my good friend, Yoav Kutner, with Oro Commerce, you know, and others as well. Look, there's a massive opportunity here and, I agree, this is an untapped market in many ways still.

Karthik Chidambaram: Yeah, we are excited with what we are doing as well. I'll keep you posted on that.

And, Roy, what do you think are the new trends in e-commerce and how do you think businesses can prepare for it? Do you see any big change coming right now in e-commerce?

Roy Rubin: I don't see any big change. I think, look, AI is still up in the air. I mean, it feels like there's a transformational change here. You know, the question is to what extent?

So, I'm intrigued to see where that goes. You know, I’m spending a lot of time talking to entrepreneurs and companies and sort of thinking about providing solutions in that space. So, it'd be interesting to see where that lands, but outside of that, I don't know. I think, I think I'm still questioning.

You know, I get to sit today in a place where a lot of smart young teams are looking to innovate, and oftentimes I get phone calls and they try to pitch me on this. So I get a lens about, you know, where things are going. And there's a lot of exciting things, you know, unclear which ones are going to break through and win, but I've been fortunate to just get a view, and, you know, and see what happens.

But, you know, to sum that up, I think AI feels like there's something here. To what extent and to what degree, I don't know yet. Too early to tell. There's also a lot of people that are just doing stuff that is really not defensible or there's no real IP. So I'm trying to figure out, you know, what's there.

And I'm hoping to find the right teams and, you know, support them in some way, shape or form. Whether it's through our investment or just advice. Uh, that's good too, right? But yeah.

Karthik Chidambaram: Talking about your investments at R-Squared Ventures, you invest in a wide variety of industries, right? From Agtech to Fintech, or even the place we are sitting right now, we were booking the space using one of the companies you invested in, FlexSpace.

So, it's really interesting when you invest in different industries, how do you stay connected or how do you develop deep technical expertise in these industries?

Roy Rubin: So, yeah, you know, we have invested, you know, in multiple industries, both personally and through the fund. But I would say the fund is more focused on four key areas. Which for us are, Fintech and commerce, which is really in our DNA, marketplaces, which we, you know, we love, we understand.

We also understand how difficult marketplaces are, most importantly. And B2B SaaS, right? So those are areas that we feel that we intimately understand the dynamics and, you know, and the opportunities. When opportunities come to us on the periphery, and they do come to us, you know, we oftentimes look at the depth of the entrepreneurial team, knowing that we just don't know, like intimately the details. Like, we've done Agtech, we've done Healthtech, we've done Insurtech, you know, this isn't necessarily our DNA, um, but look, we, we look for strong DNA in the entrepreneurial team. We look for business models that we can understand, right?

If something is just too foreign to us, we usually just say, ‘Look, we don't really understand this’, and it's hard for us to get conviction if we don't understand the basics of how the business works. But there's a lot of similarity in a lot of businesses. You know, building a product, taking a product to market, who's buying this product, what are the channels of distribution, how is pricing figured out, how do you create an ecosystem around it, right?

There's some fundamental things about, you know, about businesses and a lot of the businesses that we've supported on the periphery, I think we really understood the fundamentals well. While we did not understand the technicalities quite as well. And, you know, we decided to invest, but those are rare, I have to say. I think as we get a bit older and more experienced, we tend to invest in areas that we just intimately understand, and really double down on that, and probably do less of the more creative outside the box things because we feel there's better investors out there than us in some of these areas.

Karthik Chidambaram: How do you find the founding teams, right? So for instance, can you talk us through an investment making process or a decision, a difficult decision you had to make?

Hey, you know- ‘okay, let me take a bet on this company, even though I don't have all the data’. Can you talk us through an example?

Roy Rubin: Yeah. So the founding teams, you know, often come to us. The others come to us directly because they've heard of us because, you know, one of our portfolio companies founders suggested that they talk to us, right?

So, you know, there's sort of, like Magento's ecosystem, there's an ecosystem out there that knows who we are and, you know, refers people to us. And, you know, we refer people to our partners and collaborators in this space, you know, colleagues as well. But everybody, you know, it's very friendly, I have to say.

You know, everybody kind of talks and, you know, it's not as competitive as you think, I guess, in some ways, because we're all trying to collaborate and really help each other out, sourcing the right teams and, you know, doubling down on opportunities. And oftentimes when we invest with other colleagues. So, you know, you're always trying to develop a community around it. What was the second part of your question?

Karthik Chidambaram: Can you provide an example? I mean, the second part of the question was, can you provide an example of a difficult assessment? Hey ‘I looked at different companies and I decided, okay, let me just go invest’. Any examples of that?

Roy Rubin: Yeah, you know, sometimes when we look at an investment, I mean, it's interesting because we can fall in love with the technology, but we can have some doubts about the market. Or we can love this market and maybe not have as much conviction about the technology or the team.

So, you know, you're trying to really sort of align all these things. A great team. Your conviction about the team building a great product, your conviction about the team being able to take the product to market. And then is the market big enough? Is it interesting enough? Is it, you know, is there enough business there to really reach venture sized returns? Because that's the thing as well, right? Sometimes there's a niche market, and you just don't really understand how big a company can get.

And when you're investing as a venture fund, you just, you know, you need a certain return profile because you've made promises to your investors that you'll return the money. And you know, and you want to do that, you want to do as best a job you can. So, you know, all of this has to line up.

So you know, we look at hundreds and hundreds of investments a year, opportunities a year. And we make a handful. I think last year in 2022, we probably made maybe five or seven investments in total. We saw hundreds this year. So far, we've made maybe a tad more. But in 2021 we made 20, I think. So it just depends.

And, you know, over time, you sort of understand what works, where the friction is. You know, we'd love to invest in businesses where there's tailwind, where they don't have to go and, you know, force a product down into the market. It's harder, right? It takes longer. So, you know, where there's a lot of demand for solutions, a lot of thirst for innovation, where the sales cycles can be a bit shorter, where the ACV, the amount of money customers are willing to pay is higher.

So there's a lot of dynamics that we sort of look for and start to map out. And we could be very analytical about it. But ultimately, a lot of times we invest very early, and we invest based on gut. So we throw all that away, and we say ‘look, there's a very strong team in a very interesting space, with a lot of creativity, and they'll figure it out’. And it's early enough, and who knows what's going to happen, right?

And when you look at the biggest companies in the market today, um, from Facebook to Airbnb to Stripe, and many others, a lot of times it wasn't clear that these guys can actually win markets, right? Like, you know, Mark Zuckerberg started his thing in college, right? Just at Harvard, right? Just his college buddies. And then it became, you know, much much bigger.

So, there's a lot of rationale, but what I want to say is, a lot of times you've got to throw the rationale out the door and just say, ‘look, there's something magical here about these people, and we're going to just support them’. And we do that often.

Karthik Chidambaram: That's awesome. Yeah.

So, you're an investor, a board member, and do a lot of different things. What does a typical day look like for Roy Rubin?

Roy Rubin: It's a typical day. You know, I wake up...

Karthik Chidambaram: What time do you get up?

Roy Rubin: It's funny. I'm not one of those guys that wakes up early and just, like his entire day- Look, I wake up, I don't know, 7, okay, 7:30 even. I mean, it depends because I have the kids, and I'm very involved in my kid's life, so... I make them breakfast, and I often take them to school with my wife, who's been a great partner. So, sometimes I take them to school, sometimes she takes them to school, and then I usually work out for a little bit.

So, my first call will be, you know, 8:30-9a.m. And I'll, you know, I'll try to probably take, you know, five to seven calls a day, roughly there. That's kind of the average. Maybe some days will be more, but it's harder to do more. I don't have, like... I get a little tired if there's more, um, but you know, five to seven calls a day.

And I would say it's a mix of new company pitches. So that's one thing. The second thing is it's working with our existing portfolio companies. That's another bucket. The third bucket is talking to our venture capital colleague partners, whether it's new folks out there that we're meeting or it's existing relationships that we maintain.

And then, it's my partner and I kind of syncing up every day or two. Just to say, here's what we've got going on and what we need to look at together, what we need to do separately. You know, we divide and conquer quite a bit. But there's still a lot that we try to collaborate on just to be timely and get back to people very quickly.

But that's kind of what it is. So it's, you know, talking to basically customers, our portfolio partners. And, you know, and colleagues, right? So it's, it's very much similar to what, the way businesses often operate, but there's a lot of talking, and I try not to travel all that much, although we do travel to Israel to meet with our portfolio companies face to face, we try to get there every quarter for about a week.

Yeah, that's a typical day.

Karthik Chidambaram: Yeah, and I also want to say that you also help a lot of entrepreneurs looking for advice, you know, I mean, so I appreciate that a lot.

Roy Rubin: Yeah, so I, you know, I try to meet with teams and, you know, and spend time, giving back and trying to help. I learn from this as well, like our conversations, I learn a ton every time, right?

I try to add value and help but, you know, I always learn and I'm happy to spend time with, you know, smart folks that just wanna have some good conversations.

Karthik Chidambaram: Cool. Talk us through some of your failures or learnings and what is that you've learned from your failures? How has that helped your entrepreneurial journey?

Roy Rubin: Failures and learnings. Look, I think that when we built out Magento- You know, it seems like it was just like all roses, right? From day one, but let me tell you something. It was like, it's like this, right? You know, every day you wake up, you know, you think you've got everything going on and it's all great. But, you know, by midday, like the world's caving in on you and it's not looking as great. By the end of the day, you want to jump off a bridge. So it's like every day was just a ton of, you know, tons of ups and downs. We've made some great decisions in hiring. We've made some very bad decisions in hiring, right?

We've made some great decisions in, sort of, building products, and we've made some poor decisions in specific areas where we invested and nobody really cared about what we were building, or it was just a waste of our time. So, I think the life of an entrepreneur and the journey is filled with ups and downs, and, you know, there's been failures. I can think of hiring failures that we did that I thought were just, that were going to kill the business, like honestly, right? Because I was so stressed out and just, I had to make a decision and, and it just even stressed me out more instead of really helping out and, and accelerating the business.

So, yeah, it's just, it's a, you know- My saying is, I lost all my hair running Magento. Because it seems like it was all just like, blowing up. But there's a lot of detail there. And, you know, there's days where it was dark. It was really dark. But, you know, I'm glad I persisted. Because, man, some days were tough.

Karthik Chidambaram: Cool. Tell us about your experience working with Mark Lavelle. So, at eBay, and he took over as the CEO of Magento after you. Tell us your experience of working with Mark.

Roy Rubin: Yeah, Mark was great. Mark, you know, led the acquisition by PayPal at the time; eBay and PayPal were together. So Mark was, I believe, head of corp dev at PayPal at the time, and he led the acquisition. Mark's an entrepreneur at heart, he was part of the Bill Me Later team, which was a, you know, a business that PayPal acquired, and that's how Mark came into PayPal.

And, you know, he led the acquisition. He wasn't involved at the beginning when we joined eBay. So he was, I think, more focused on other areas of PayPal. We began to collaborate back again when Magento merged with GSI, at the time, into eBay Enterprise. And I think Mark got more involved throughout that process.

But then I had left. This was 2014. And, you know, ultimately, 18-24 months later, the company was spun out and Mark led, you know, Magento coming out of that spin out. And we collaborated back again when he called me and asked me to come back on the board and, you know, it was great to spend time together on the board and work with the team, work with Mark, to continue, you know, building a strategy out for the product.

Karthik Chidambaram: You know, he's great. And one thing I really love about what he did is he continued to invest on the community Yeah, and that really helped Magento and ended up-

Roy Rubin: Yeah, Mark always got it. Yeah, I mean Mark always understood the value of the community, always understood I think the brand that Magento represented. He was a great advocate for what we were doing. You know, I always felt like there was a very supporting, you know figure and leader in Mark that really understood where we, what Magento stood for and that's something to be appreciated for, because it's not all that clear that you get somebody from the outside believing so much in the mission, and he was definitely that.

Karthik Chidambaram: Awesome. And after you sold Magento, you took a 18 month break, and you took your family and you toured the entire world. Tell us about that experience. How was that?

Roy Rubin: Yeah, so I sold, and then I spent almost three years at eBay. You know, look, this was, you know, about 12 years after I- Well, 12, yeah, roughly 12 years after I began my journey.

So, you know, I was sort of going full steam ahead for a very long time. And, you know, the eBay period was a tough period for me emotionally and, you know, it was, it just took a toll out of me because I had to really fight for things and it wasn't all smooth, I have to say. And, at some point I just said, you know, it's enough. Like, I have to just get my life back in order. I have to get my sanity back in order.

You know, I was going full steam ahead. I had two young children at home. I was rarely home because I was traveling and just trying to keep the lights on and making sure everything was still ticking. You know, I had a team that I cared for, of course, as well. So I just said, ‘look, I need to get out, and I need to go do something else’.

And for me, that meant to spend time with the family and sort of get my life back in order. And I asked myself, ‘hey, what's important for you in life?’ And for me it was spending time with my wife, and spending time with my children. And that's what we did. I left after the Imagine Conference in 2014. This was May. The kids were still in school. We took them out and two weeks later we got on a plane. And we came back home 14 months later.

So, you know, it was life changing for us as a family. I had no agenda. I had no calls. I had nothing, which was what I wanted. I wanted nothing. I wanted quiet and peace and to just spend every minute of my day with the kids. And, yeah, and it was a lot of fun. And, you know, we discovered new places together and we, you know, we bonded.

You know, in hindsight, it was the best decision we ever made, and I highly encourage people to do that. Take the time, I don't know about 14 months, but take some time away from the day to day, if you can, to do this with the family, because it's a real bonding and uniting opportunity that is rare, and I feel fortunate to have had this time in life to do that.

My son, now, is about to be 17. In fact, he just got his driver's license. He's gone. I will probably not see him again. So, um, you know, looking back, um, I had him hostage for 14 months. These days, he's just an adult already. And I feel like the time has, you know, obviously changed dramatically now and then. But we always have this shared experience to look back at. And it's been wonderful.

Karthik Chidambaram: That's awesome. Do you plan the trip? I mean, did you plan the trip? Like, what am I going to do the second month? Or, you know, is it just to go to one place and decide where you're going to go next?

Roy Rubin: We had nothing planned.

Karthik Chidambaram: Oh, wow.

Roy Rubin: We had nothing planned. We had the first, like, this is pre-Airbnb, I think, but I had the first, like, rental for the first week in Costa Rica. We started in Costa Rica. And we said, you know, we'll figure it out.

So, we- we're not big planners. We love being adventurous and kind of learning as we go. So we literally had nothing planned. In fact, we were closer to your part of the world. I remember this, I'll tell you this quick story.

We were in Sri Lanka. Sri Lanka, yeah. Eventually we got to Sri Lanka somehow. And we spent about a month in Sri Lanka. And you know, we said at some point, we're kind of done. Like we want to go somewhere else. And we thought about going to India, to Rajasthan, but we just felt like we needed to get the kids back to, like, a more Western environment.

So this was like, I think it was like a Tuesday afternoon and I literally bought the flight tickets for four hours later and I didn't know where I was going, but what I did was I pulled the weather map in Europe and I found the warmest place at the end of March in Europe. And I said, we're going to land right there.

It was the south of Spain, so literally from saying we need to move on, to being in the south of Spain, it was like 12 hours. So that's the level of, I think, flexibility we wanted in life to just not even know what tomorrow will bring. It was very exciting because like, you don't know where you're going to be tomorrow.

And, and that's, you know- not many of us experience this in life. I think we're all very planned and disciplined around that kind of stuff. It was the first time, and kind of last time I did, where you just don't know where you're going to wake up in the morning. And that creates, I think, a lot of excitement in life.

Karthik Chidambaram: I'm tempted to do this as well with my family. Yeah. That's awesome, Roy.

Roy, what language do you speak at home? Is it Hebrew or…

Roy Rubin: I do speak Hebrew at home. Primarily with my wife. My children kind of half and half, I think. So, I wish they, I wish we spoke all Hebrew with the children, but they, they're fluent and they understand and they visit Israel every summer and there's family and grandparents in Israel.

So that's, you know, I'm fortunate to have them spend this time with the family. But, Hebrew, yeah, I mean Hebrew and English, I guess.

Karthik Chidambaram: Yeah, that's awesome. Yeah.

And how do you stay fit? I mean, it looks like you cycle quite a bit, or…

Roy Rubin: I cycle quite a bit. Not as much as I used to because I've got a job now, but I used to cycle a whole lot. I live in this part of California, of Los Angeles, that is just magical, tucked into the Santa Monica Mountains. It's all hills and valleys and there's great cycling, you know, everywhere out my door. Both road and mountain and gravel, just incredible all around. And yeah, I lift some weights, but you know, it's important for me to stay fit.

And, you know, cycling's been a lot of fun. And I try to go on like two big trips a year. I have one trip with other VCs that I go on, that I was invited. It's great. And then I, another one that I do is for a non-profit that I'm involved with. So I'll be in Italy this year, in October, riding in Tuscany with a non-profit.

And then, I do an April trip as well with the VCs, and I don't know what April's in store, but, wherever it is, I'll be there.

Karthik Chidambaram: I'd like to end with this question. You read a lot and you also listen to a lot of podcasts. What book are you reading right now?

Roy Rubin: What book am I reading right now? There are two books that I'm reading right now. I forget the names though.

But one is on the relationship between the U.S. and China, and the risk of war between the countries. I'll send you the name later.

Karthik Chidambaram: Sure.

Roy Rubin: So that's one. [Destined for War by Graham Allison]

I love geopolitics. I just, it's always been of interest. And I'm fascinated by what's happening in China. The U.S. vis-à-vis our current geopolitical landscape and sort of a macro perspective on that.

And the other one I'm reading is about a boy that escaped Auschwitz to warn the world about the horrors that have taken place there. [The Escape Artist by Jonathan Freedland]

So, it's hard, for me, obviously being Jewish and having that background and, you know, having lost a lot of my family in the Holocaust. But this book was recommended. I saw something about it on Twitter and I started reading it recently. And it's about heroism and about leadership and about, you know, fear and uncertainty and dealing with that, and about bravery. So, I always like, you know, these types of books that kind of combine all of that.

Karthik Chidambaram: Yeah, I'm reading ‘The Monk Who Sold His Ferrari’, Robin Sharma, that's what I'm reading.

So, Roy, it's been an absolute pleasure talking to you. Thanks so much for making time for us and it's always a pleasure meeting you, and thanks a lot.

Roy Rubin: Of course. Good to be here. Cheers.

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Episode 42