Jake Aaron Villarreal: I'm Jake Aaron Villarreal, born and raised in Silicon Valley. Here to take you behind the scenes to show what it's like to be a startup founder, the journey they're on, the problems they face, and the products they build that are shaping industries. I'm excited to have with us today, Ofer Ronen, founder and CEO of Tomato AI. Ofer, welcome to the show.
Ofer Ronen: Thank you. Great to be here. Thanks for inviting me.
Jake Aaron Villarreal: Well, thanks for joining. Uh, Ofer has got a storied career. He's been um not just the CEO of Tomato AI, whose solution softens the accent heard on calls using general AI or Gen AI, he's previously led Contact Center AI work at Google. In addition, he sold two startups to Google and IAC. He mentors entrepreneur st- entrepreneurship students at Stanford over the last 12 to 13 years and occasionally invests in startups. occasionally, but I've seen the list and it's a lot and they're the good companies. So, he's done a great job there, too. Um, before we dive in here Ofer, where are you joining us from today?
Ofer Ronen: So, yeah. Uh, Jake, I'm in Silicon Valley, so an uh appropriate place for for this podcast in the East Bay, a town named Danville.
Jake Aaron Villarreal: Hundreds of AI startups are launching every month, battling to build their founding teams. As a leader, your job is to get results. When it comes to hiring, that's where it gets tough. So, you go out and you try a recruitment firm, but they don't understand your story. They're off target and when they send you candidates, it's a waste of time. We believe you should never have your time wasted. That's why we launch Match Relevant, cuz your story is more than just an open role. It's your founder's journey, the problem you're solving, the product you're building, and why it matters. When we work with companies, we make sure we understand your whole story. So, we go out and do a search, we're on target, it's worth their time, they're interested, and more importantly, it's worth yours. And when it comes to hiring engineers, we work to make sure we get it right by deploying a team of seasoned CTOs that have built some of Silicon Valley's best companies. They can collaborate with you in the technical interviewing process. They can be a sounding board or they can run it for you. When it comes to building teams, there's no time to waste. Let's make it count. If you have a role that needs to be filled, book a time with a hiring guide at matchrelevant.com and learn how we do it.
Very cool. I know Danville. And that's where all the successful entrepreneurs end up. So congratulations. We love it here.
Ofer Ronen: Yeah.
Jake Aaron Villarreal: Well, I'm from Silicon Valley as well and uh really love hearing where companies come from and the pulse of technology whether it's in Silicon Valley or outside. It doesn't matter so much anymore, but certainly does help when you're there. Um let's dive a little bit uh into your, your background, your origin story before we kind of get into your company. So kind of walk us through where this all started. How did you go from becoming a kid to eventually becoming an entrepreneur investor and what was the track to get you into technology?
Ofer Ronen: So, um I have to admit I grew up in the right environment for that to happen. My dad uh, we moved to the US from Israel so my dad can get his PhD in electrical engineering and then I had an older brother who was big on computer science and went to Carnegie Mellon for computer science. And so that's like the environment I grew up in. Uh but I would say there was no influence related to entrepreneurship that came elsewhere from a relative that had a business, not necessarily a high-tech startup, but I grew up seeing that and and really was curious about um becoming a business person. And then in college took some entrepreneurship classes and tinkered a bit with that. Uh only after accepting my first job in uh after school uh about a year in I was like "Okay, I'm going to do it." I quit and I uh yeah it was like on a, on a certain birthday I, I decided "Okay, I'm going to do it," and then a month later I was back at my parents' house um starting a company.
Jake Aaron Villarreal: I've been there before, back at the parents. And you start, you got to start with you know all the advantages you can get.
Ofer Ronen: Yes. Including saving costs.
Jake Aaron Villarreal: Um, but that's really, really cool. Um, you know, technology is always changing and evolving and, you know, I look at it as, you know, how can you take technology and solve problems that matter, you know, really understanding the problem that you're looking to solve today with Tomato AI. I'm excited to get into that. But really, you know, if you look at businesses, there's a lot of problems they have and if you can use technology to solve them, that's great. What problem are you solving with Tomato AI?
Ofer Ronen: Well, I have to admit I I have some context. Before I started Tomato AI, I worked for years on Contact Center AI at Google. And um they have an incubator called Area 120 where I did two Contact Center AI startups. So I had all this understanding of the space. And my, I have to give credit to my co-founder I worked with at Google who had the idea for Tomato AI. Tomato, tomato. We reduce the level of accent heard on calls in real time. The the insight there was that there's so many people in the world we could activate and bring online and and just grow the whole ecosystem of call centers worldwide by making folks sound uh more like what the listener is used to hearing. So in our case, let's say making someone Indian and Filipino sound more Americanized. Um so, so just having been in the industry, I was like, "Wow, that's a big idea." And I could do like the back of the envelope math. I like to do large deals. I've done like 300 million plus deals in the contact center space at Google. And that was my North Star: "Can I do a nine figure deal uh with this, with a business idea?" was my litmus test. Uh and and I could do the math and get there with this on the high end. Um so, so that was like a big motivation and I was like "Okay this doesn't exist," like it was a new area. I like to do new things.
Jake Aaron Villarreal: You know, when you talk about Google and Contact Center and AI.
Ofer Ronen: Yeah.
Jake Aaron Villarreal: Uh it sounds like a lot. How many years were you at Google?
Ofer Ronen: I was seven years at Google. It's the longest job I ever kept. Um because I have a string of startups I've done and often my happy place is when I'm doing a startup, the zero to one experience especially. Uh but, but they let me be a CEO of a startup. So, so that kept me there for a while. Uh and that was after selling a startup into Google. So I just kept the entrepreneurship journey and became an uh "intrapreneur," I guess is the term, for a few years.
Jake Aaron Villarreal: Can you share some of the numbers when you were at Google with the company that you were building inside of Google?
Ofer Ronen: Yeah. Yeah. You know it was a really fun company. You know, in the last couple years, the virtual agent space really heated up with with ChatGPT and all that, but that was the space I was in for many years at Google. And um we built voice and chat virtual agents for companies like Verizon, big companies, Fortune 10 companies um that have a ton of calls coming in and very complex conversations. Um and so that specific uh internal startup called Chatbase uh would take millions of past conversations between humans and use that to create a robust virtual agent. It was like a big data analysis kind of uh capability. So that, that was the effort, but it was, it was a good challenge. And uh what I loved about it is that there are so many people, everyone in, everyone uses one of these big cell phone companies and and we end up working with a number of them. Um and so I could really feel the impact uh on people.
Jake Aaron Villarreal: Yeah. Why is this space important to you?
Ofer Ronen: Yeah. So actually what's really cool about the new work I'm doing, which is like in the voice AI, accent AI space is that if you really think about it, our ability to communicate effectively with people really can be transformative in our lives. And so if we can make people everywhere in the world better able to clearly communicate, their economic opportunities grow tremendously. Uh, and so there's all these like connections we can make, job opportunities we can create by putting it out in the world. Um, and I'm excited about that.
Jake Aaron Villarreal: Yeah. You know, I spent some time, I took a year off and traveled around the world and I wanted to understand the trends and the technology to come back and build my own company. Uh, and found out the most important aspect of a company wasn't the technology or the trends I was looking for. It was really the people behind those companies.
Ofer Ronen: Yeah.
Jake Aaron Villarreal: And I spent some time in the Philippines and you walk down, there's rows and rows of call centers and BPO facilities. And you know it's changing their lives when they're there learning a new service, how to communicate differently. Um so I can understand the value of what you're building. Walk us through the product a little bit of what a BPO would be getting from Tomato AI.
Ofer Ronen: By the way, I love that you traveled for a year. I also traveled for a year, 24 countries after one of the exits. So, we probably have a lot to talk about there, but let's go back to uh business here. Um, so in the Philippines, uh, if you look at rural Philippines, they have thicker accents and they, they're less often getting these jobs. And and we can unlock rural uh, towns in the Philippines and elsewhere around the world by making them sound more like main, you know, main cities like Manila uh, kind of agents. So, so we can close that gap in that country.
Um, in terms of like the way the technology works, uh, it's something that you install on a PC and it takes like three to five minutes. And then it picks up the voice from the mic and uses what's called a speech-to-speech uh, voice AI model that transforms the voice uh, based at the phone level. It's trained on hundreds and hundreds of accented speakers and so it knows what to do um uh based on the training data uh, and it just works for any new speaker. So that's one, one of the things when building an AI company is or any company is you want it to be low friction to onboard. And by making it just work magically for any new speaker uh that will help it spread much faster.
Jake Aaron Villarreal: Yeah, I understand the benefit of the employee, the one on the calls that doesn't really speak English perfectly or whatever language perfectly. What's the benefit for the BPO company that they get?
Ofer Ronen: So BPOs have a very competitive landscape and they are always looking to differentiate. And if you can at let's say a lower price point offer higher quality product, uh more trust, more intelligibility by the agent hired, uh improve the KPIs for for this industry which are like customer satisfaction, lower handle time, less callbacks. If all those metrics get better and you can keep the price lower, uh that helps you win accounts and keep existing accounts. Now, with that said, I do believe that over time agents will get paid more as they use this uh because they'll get get better results. They're selling more. They're converting or, you know, getting better scores. And so both can be true: like you're, you're going to overall as a BPO offer a better product and your people over time will get better pay.
Jake Aaron Villarreal: And for the listeners that don't know what BPO is, it's Business Process Outsourcing. It's the big call centers or the big organizations that bring in their local talent to support outsourced or offshore services to US companies or UK companies or any other country's um companies. So really cool. I know it's been around for a while, but this technology is going to be game changing for a lot of industries. Who cares most about your technology when you're out there selling now that you're, you know, yeah, presenting your product?
Ofer Ronen: Um this morning for example I was on a call with a regional telco that offshores to Philippines and it was their Head of Innovations and AI was their title, uh that well, organized the meeting, invited other constituents, the Head of the Call Center, also networking, various uh folks they thought should hear this. But they were so excited about the potential here because they realize it can really be uh game changing in the sense that uh all of a sudden it's easier to hire more people. It's easier to like gain customers. All these activities that uh really matter to them day in day out.
Jake Aaron Villarreal: Yeah, that's that's, it's interesting when you start selling into a new sector or bringing in a product into the market, you know, the landscape of who you're selling to, and you might think it's one person and it ends up being a totally different leader in the company, or it might be selling to Congress at some level within a company that you don't know everyone has to buy into. So it sounds like an enterprise sale, but yeah, being AI, I'm sure you're getting a lot of traction just based on that alone.
Ofer Ronen: Yeah, definitely. Like there's a lot of interest as we all know right now in the, in the AI space and, and companies are looking to pilot and try solutions and so that only helps uh you know us get into into deals. Um, one of the other cool things about this versus previous ones is there's no rip and replace. Like with other solutions I've had, "Oh, okay, you got to get Nuance or someone out that's entrenched and has its champions." But this is usually a new type of category of solution. And so that accelerates the sales cycle. No rip and replace.
Jake Aaron Villarreal: Yeah, that's great. What's a lesson that you've learned from your previous startups that you've run?
Ofer Ronen: Yeah.
Jake Aaron Villarreal: That's been helpful for this one.
Ofer Ronen: Yeah. So, we know there's lessons learned about ways of being and how to manage through a startup. Startups are a roller coaster and they're not for everyone. And daily you get all kinds of news and often with early stage startups it's like tough news to work through. And, and as the CEO it all comes to you, um the toughest ones. So, I've learned over the years to enjoy the process, appreciate uh that I get to do this and and keep my optimism and push forward. Um because, you know, sometimes like all of a sudden you finally you you get there and all, and things are starting to work and tick and, and the news, the good news starts rolling in. So, um, so I have that perspective um which is much needed especially for deep tech startups. We're two years in, you know, we've worked so hard on the tech, come so far um, and and required a lot of patience.
Jake Aaron Villarreal: Yeah. You know when you create a company and you create a startup you have to be strategic and a lot of times companies talk about a moat or what can you do that's going to keep the competitors from just copying what you've built.
Ofer Ronen: Mhm.
Jake Aaron Villarreal: Um, sometimes it's good to not share that information and sometimes it doesn't really matter because you're so far ahead. It is what it is. Can you touch on that a bit?
Ofer Ronen: Yeah. Um so the moat has to do with original research and development we had to create using PhD scientists over year, over the cap, couple years because there was no off-the-shelf or solution out there you could enhance or tap into. And so a lot of like earned uh research. And another moat is the data moat. So, how do you build up a capability around data that's a competitive advantage where you're getting data that's hard to get and and it's uh properly cleaned up and, and uh and what is the data even that that would work best. The type of data, that's also earned. Like it, it took us a while to like learn about the the, what the data should be and how to clean it and where we, we can get it. And and that takes time. Um, and then yeah, like you alluded to earlier, the team. So you need world-class people. You really need like the best people in the world on your team. And so we've been carefully curating and building up our team. And it helps that between us, we've sold like four startups and have had a lot of credibility. That helps attract talent. Uh, and we created a culture that also is one where people want to work. Uh in our case, remote first. We have our fun offsites where we ride tractors and shoot bow and arrow and all kinds of stuff like that. But uh it's uh for people that like that uh flexible, you know, remote kind of office experience or experience.
Jake Aaron Villarreal: Yeah, that's really cool. Um what's your favorite part of the startup experience? You've had three, four. What uh, what do you like best?
Ofer Ronen: Okay. I I won't lie. I distinctly remember the days when I sold my startups, you know, those highs of the exit. Um, but that doesn't last, you know, that that that is like a high that, you know, is there for maybe a couple of months. You're like, "Wow, I'm so awesome." Um, but, but uh, so that's one thing that I'll point out, but it's uh not the ultimate reason. Um I I love the impact. So, every startup I've done has touched millions of people's in one way or another. And, and it's just hard to even like imagine that like, that you can affect millions and millions of people. Uh there's not many jobs outside of tech where you can do that. Maybe in media.
Jake Aaron Villarreal: Yeah.
Ofer Ronen: But it's, it's not uh often that you can say you did that. And so I love having a positive impact. And in this new startup, you know, we have a very powerful mission and, and excited to realize that.
Jake Aaron Villarreal: Yeah, really cool to hear that. Yeah, the money matters at times, but it's not all about the money, which is, which is the important aspect. Um, what's the biggest challenge you're going through now as a company?
Ofer Ronen: Yeah. I would say like one of the things as a founder and CEO of a company that you're always thinking about is runway and, and you know that next funding round. Ultimately, like my job as CEO is to secure runway and, and to make it uh as long as possible without overly diluting too soon the company. So, finding that balance. And so, um, yeah, I just did another, uh, raise to give us a bit more time to build up the story for the next raise. But it's almost like these are the chapters that you think about as a CEO and, and, and you're never done. You're always thinking about, "Okay, what's that next chapter? You know, this one I can close and what's the next one." So, I would say like that is top of mind and, and an art. It's not just a science. So you can like get better at...
Jake Aaron Villarreal: Yeah. You know, every company at some point, maybe the younger ones, not so much, maybe a little bit longer tenure organizations go through this more, but pivots and shifts and having to realign your target audience or maybe just adding more technology to your platform. Has there been one or two, if in this company or if not in other companies that you recall going through that really was a process to get through and kind of how you came out the other side?
Ofer Ronen: Yeah, I've pivoted a couple times uh and, and I'll share the one maybe at Google and the internal startup. Um, so we were building analytics for chat bots and and we were doing it uh years ago. Like uh when Facebook just came out with their chatbot conference uh platform and, and we ended up having a million bots using our analytics. Wow, sounds awesome. But it wasn't easy to make money. It wasn't a good business in the in that sense. So we had nice vanity metrics and uh and so we made the decision to pivot into building bots in a data-driven way. What I described earlier, uh and away from the analytics. And that made all the difference. Within uh a couple years we closed over half a billion dollars in deals for this you know, based on the pivot. So, um and this one was a pivot that was like not a huge pivot. It was still in the same realm, but we had to like retool, you know, rebuild. Um, and and it wasn't easy because we had to convince our internal investors that we're going to do this uh, you know, with all those vanity metrics looking so good. Uh, we had we had to switch.
Jake Aaron Villarreal: And money, money becomes important to the investors, right?
Ofer Ronen: Yeah.
Jake Aaron Villarreal: Yeah. That's, that's, that's great to hear. I know we've gone through a few ourselves and it's never as easy as you think and takes longer than you expect, but when you get through the other side, you've, you've learned so much more and you're appreciative of the learnings. You don't want to go through it again, but you, you can't pay for that. You have to kind of just go through it. Yeah. If you come out the other side, you could really use that. So, that's, that's great to hear. What are some of the um, the biggest breakthroughs that you've had with your current company personally or as a company technically?
Ofer Ronen: Yeah. Um okay. So first of all, I would say a lot of stuff that happens at startups is incremental and then before you know it, you're like, "Whoa, we have this awesome tech on our hands." Uh but, but it's uh painfully incremental often where you're working towards a target that um you know once you get there the pro-... so I'm talking about deep tech right now like, but yeah, you get an AI startup like, where at some point it becomes good enough they can like go into the market and, and not churn through customers too fast. Um so mostly that's been the experience with this startup where there wasn't like a moment and all of a sudden and we were there. Um so gradual progress.
Um you know, otherwise yeah, if I was to think about a breakthrough, I I'll go back to an earlier startup. So I sold a startup to IAC, the parent company of match.com, ask.com and many other brands that we know. Uh and that startup I initially had a very manual way of like on-ramping customers and um it was all this friction to like get people to like try out our solution and it was painful. Um and then we decided to come out with an API. And, and, and that, that happened by going to a conference. I started describing an API before we even wrote a line of code. I was like, "Oh, this is how you can work with us," and I described an API. I never got... they got really excited. And so I went back to the team after the conference like, "Oh, we got to build this API. I told everyone we have one." Um, and that API all of a sudden changed the game. Like we turned on one customer, we got to $4 million ARR.
Jake Aaron Villarreal: Wow.
Ofer Ronen: Um, and, and without the API, it wouldn't have worked. So, couple lessons. One is sometimes, you know, make it up as you go. Get feedback on something maybe you haven't built yet. Uh, and in person helps a lot for like the back and forth. And second, really think about onboarding friction, which I touched on before, and more scalable way of, ways of working with customers. And go to conferences too, right?
Jake Aaron Villarreal: Yeah. Yeah. You never know who you're going to meet and what's going to come out of that. We're a big proponent of that. So, yeah, exactly. That's really cool. Um, great. Uh what do you know now that you wish someone would have told you about before you started this deep tech startup?
Ofer Ronen: Yeah. Um that there'll be a lot of... if you're doing your own models like AI models, that a big part of your budget will go towards training models. Also buying data, but the training part is significant. Um and unlike a typical startup, we need to raise maybe 30%, 40% more uh to cover some of that expense, which is unique to AI startups with foundational models. Um so that's a learning, but then it becomes your moat as well. We're talking about moats. Not every team can raise enough money to do a deep tech startup and to you know train models like that. Um and um you know there's two kinds of teams. There's the teams that have track record and the teams that have traction. We're the track record type. We've sold four startups and so we could raise $12 million to date, you know, on our credibility. Again, a moat uh that, that a lot of teams couldn't do. Um so uh play to your strengths. Uh yeah, and with AI startups raise more money.
Jake Aaron Villarreal: Yeah. Well, they're raising a lot and we can see it. So, it's really exciting. You know, this transformation in technology, it's, you know, we've waited 24 years for it. You know, we went through the dot-com boom and, you know, you had cloud computing and you had mobile and you had, you know, a lot of different, you know, transformations, but this is the one that's impacting it seems like almost every industry. So, really cool to, to hear your story. Um, and more importantly to actually see your product. If you go to the website uh Tomato AI, you can click on a button, hear someone speaking, and then click on the other button with your technology and it's as if they are, you know, all of a sudden Americanized or they just have that technology that's helping them through. So, uh, proof is in the pudding, but we love what we've heard from what we've seen so far. What's on the roadmap for you as you as you go forward in 2024 and into 2025?
Ofer Ronen: Yeah, a lot of this work is to uh unlock it for different markets and so we're focused on the biggest call center markets: India, Philippines, Pakistan, um, and then we'll unlock other markets uh one at a time. And so a lot of the work is to do that within English and then to go into other languages like European ones. Um so, so I would say like that's a big focus in the like near to midterm. Longer term there's like other capabilities uh we could build in. Like uh improving the grammar in real time and, and localizing it. Uh but, but you know you got to take one step at a time with, you know... another lesson is focus. Uh if you spread yourself thin you don't end up being the best in the world at you know that one thing you're known for.
Jake Aaron Villarreal: Yeah, I like that focus. We hear that all the time. So, well, really great to to have you on and uh for if anybody wants to find you or find your company, Tomato AI, where do they go?
Ofer Ronen: So, for sure go to uh Tomato AI, to our website, and you can u reach out to us there. I'm, I'm seeing all those communications and you know and can respond. Also, I encourage people to go to LinkedIn. That's a good way to get in touch and uh find me. Ofer Ronen is my handle, my full name. Uh and excited to like see if I can be helpful to folks in your audience.
Jake Aaron Villarreal: Yeah. Well, thanks for joining. Really appreciate you having the courage to come on and tell your story. And to all the listeners for listening. It means a lot to me. You spent your time with us today. I'm your host Jake Aaron Villarreal signing off for now, but can't wait to catch up with you all on the next episode. Until then, take care. If you like what we're doing, don't forget to subscribe, leave a review on Apple Podcast or wherever you listen, and follow us on YouTube, where we go behind the scenes to learn what it takes to be a startup founder.
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