Valuation Is a Milestone, Not a Cause for Celebration, Says Sisense CEO

A hot minute after Sisense joined the unicorn club, CEO Amir Orad explains why it took the company 15 years to catch on, why he is in no hurry to go public, and how his product helps Netflix, Tinder, and Indiana’s organ donor network optimize their operations

Sophie Shulman 15:4109.02.20
In January, a $100 million investment from New York-based venture capital and private equity firm Insight Partners admitted Israeli business intelligence company Sisense Ltd. into the unicorn club. The investment gave Sisense a valuation of $1.1 billion, nearly double the valuation it garnered just a little over a year prior when it raised an $80 million round that valued it at $600 million.


“Valuation is a milestone, not a cause for celebration,” Sisense CEO Amir Orad told Calcalist in a recent interview.


Sisense CEO Amir Orad. Photo: Tomi Herpaz Sisense CEO Amir Orad. Photo: Tomi Herpaz



But for Sisense, a valuation of over $1 billion means something else than it does for other Israeli unicorns such as Lightricks Ltd. or Lemonade Inc. Founded in 2004, the business intelligence company is an industry veteran, one that has already lost three of its original five founders. Orad, who orchestrated the company’s recent round, was brought in four years ago to grow it from a promising company to a delivering one. With him at the helm, Sisense reached over $100 million in annual sales, is now growing at a double-digit rate, and is only a step away from profitability.


Insight, which has around $23 billion in assets under management, has lately become somewhat of a SoftBank in Israel, acquiring Israeli IoT security startup Armis Inc. for $1.1 billion and investing over $2 billion overall in companies like Israeli gaming company Moon Active Ltd.,, and Lightricks. Valuation is not something that Sisense has tried to maximize, Orad said, but a result of its need for more funding to increase its business. While flattering, it also piles on the pressure, he said.


Insight co-founder Jeff Horing, Orad said, is a very vocal investor. “I sat down for lunch with him, and he made the decision straight away. He is very experienced and very decisive.”


Sisense has raised over $300 million since its foundation. Following their recent investment, Insight holds “double-digit percentages but less than half” of the company. The five founders hold a small amount of securities. Early stage investors such as Bessemer Venture Partners, Battery Ventures, and Opus Capital, also have a stake in the company.


According to Orad, Sisense’s slow rise could be linked to the immense investments the company made in establishing its technology over its first five years of operation. Their product, he said, started selling well a decade ago, but did not really “blow up” until about five years ago. “Only then did the market reach a point where, on one hand, data became complex enough, and on the other hand, cloud services matured enough to support such solutions,” Orad said.


What is it, exactly, that Sisense does, and why is the company’s industry segment so hot right now? Sisense’s technology enables companies to cross-reference an unlimited number of data and receive in return business insights that are simple to both understand and execute. It is, essentially, one cloud-based software that replaces entire departments of mathematicians and engineers. All the customer needs to do is correctly identify the data it owns and the right questions to ask—and then, the sky's the limit.


With such a wide-reaching product, Sisense has a diverse customer list, which includes, among others, Netflix, HBO, Spotify, General Electric, Rolls Royce, and Tinder. The system is blind to the customer’s area of operations. “We are like Intel’s Pentium, you can do what you want with us,” Orad said. “Every company in the world is going to integrate analytical systems to survive. Look how Netflix changed the television market because of its reliance on data segmentation. Those who won’t utilize big data will die.”


Netflix uses the system for more than just offering people content recommendations, or even deciding what productions to go forward with. Into something that resembles a virtual grinder, Netflix inputs a multiple of viewer data, Orad explained—not just age and gender, but, for example, what the weather is like where they are.


Tinder uses Sisense’s technology to do a sort of quality control based on the number and quality of hookups. “There is a lot of public information people don’t notice that can be gathered,” is all Orad was willing to say on the subject.


Freight forwarder company Flexport used Sisense’s system when strikes in Hong Kong nearly shut down the ports there. “The CEO asked its data department to bring back an answer within an hour to these questions: would it be better to ship the cargo on expensive flights, or accept a fine for delays? Make slow transport by trucks or lease a ship from another company? Our system provided a quick analysis of the expected costs and damages for every scenario. In the past, you would have needed 20 mathematicians and three months.”


Sisense is good for more than just helping companies maximize profit, though. The Indiana Donor Network managed to double the number of organs donated since utilizing the system, according to Orad. “The system tells the employees who should receive donations, when it is best to approach the family, and what phrases to say to increase the odds of agreement,” he explained. The system is also used by employees and volunteers of mental health helplines, to learn what to say to callers. Freud himself couldn’t have done it better, Orad said: “as genius as he was, Freud did not have the memory of 100,000 conversations, as the app does, and he could not break down hundreds of millions of interactions and analyze the correlations between them.”


Orad, 44, is a veteran of Israeli tech, having started at the tender age of 16 when he wrote business management software for his uncle’s insurance agency. He used the few thousands of shekels he received for that job to buy a stronger computer. “I recently found out that software is still being used,” he said. During high school, he was already doing computing projects for the Technion Israel Institute of Technology, which is how Unit 8200, the Israeli military's equivalent to the NSA, heard about him.


“They called my house and told me to come to some grove I did not know to meet with a man I had never heard of,” Orad described the process that landed him at the heart of the army’s tech operations, where Gil Shwed, Shlomo Kramer, and Nir Zuk already were. He stayed there for six years.


After he left the army, Orad spent 16 years in New York. A friend told him about a group of people that founded a cybersecurity startup called Cyota, and were looking for someone more tech-oriented to join, he recalled. Among those already on board were Lior Golan, today chief technology officer at content distribution company Ltd., Michal Tsur, later one of the founders of New York-headquartered video creation and distribution company Kaltura Inc., and Israeli politician Naftali Bennett. “The timing was unbelievable,” Orad said. It was 1999-2000, they were all young, and the funds didn’t last. On top of that, the CEO was floundering. “We realized we needed to replace the CEO, and tried to decide which one of us should take the job. Bennett was chosen unanimously.”


“He is not a tech person, but he is a leader,” Orad said of Bennett. They worked together for seven years, up until the company’s $145 million acquisition by Nasdaq-listed RSA Security LLC in 2005. “It is still a multi-million business inside RSA,” he said. “Anytime an American connects to the bank or any other organization and gets an SMS code, he is using a Cyota invention. Had we existed today, we would have been a unicorn.”


Orad stayed at RSA only two years after the acquisition. “After RSA was sold to EMC, I understood that even if I double our sales, no one would notice, because it would be just one number on the sheet of the huge merged company.” At this point he was scouted to manage Actimize, a startup developing anti-fraud technology for banks. Actimize was planning an IPO, but was plucked at the last minute by NICE Systems Ltd. for $280 million. “In hindsight, it was too fast a sale, but NICE committed to keeping the business independent, and they did. The founding generation left, and I stayed there as CEO until 2014.”


After he left Actimize, Orad sat at home for almost a year, not sure about the next step and reluctant to launch a startup of his own, he said. “The success odds of a startup are not high. Economically speaking, it is better to be a hired CEO with stock,” he said. “Beyond that, Sisense is completely mine. When I started in 2015, it had 100 employees. By the end of 2020, there will already be 1,000.”


Talent recruitment is one of the biggest problems Sisense—which has offices in Israel, New York, San Francisco, London, Kiev, Melbourne, and Tokyo—is facing. “It is my most important weekly meeting,” Orad said. It is not unique to Israel—since U.S. President Donald Trump changed the immigration laws, many engineers are choosing to go to Canada instead, he said. In Israel, though, wages are just as expensive as the U.S., and prices are rising even in locations like Kiev, due to competition—also from other Israeli companies like Wix and Amdocs.


One of the ways to attract skilled people is to offer them securities alongside salaries and bonuses. But to make that promise viable, Sisense—which has been vocal about going public for a while now—needs to take the plunge and list.


When asked about a 2020 IPO, Orad demures. To list, a company needs to fill several criteria, he said. The first, revenue, Sisense already has, having passed the $100 million in annual sales mark last year. Other criteria are viability and profitability, and being a market leader. “Beyond that, you need to look around and look at market conditions and decide whether we want to remain private for longer.”



There may be another reason, though, for Orad’s ambiguity regarding a near IPO. In June, two of Sisense’s rivals were acquired for very significant sums. Looker Data Sciences Inc. was acquired by Google for $2.6 billion, and Tableau Software was acquired by Salesforce Inc. for $16 billion. Compared to those deals, going public according to a valuation of $1 billion or even $1.5 billion may seem like a waste.


“Choosing the right way to develop a company is a very personal, financial, and deep decision,” Orad said. Asked whether Sisense has received interest from buyers, he said that “people in the industry are always talking with everyone, as are we.”