Jake Aaron Villarreal: I'm Jake Aaron Villarreal, born and raised in Silicon Valley, here to take you behind the scenes and show what it's like to be a startup founder, the journey they're on, the problems they face, the products they build in an effort to make our lives better. I'm excited to have with us today Naama Bak, the co-founder and CEO of Understand Tech. Naama, welcome to the show.
Naama Bak: Thank you so much, Jake. Happy to be here.
Jake Aaron Villarreal: Well, happy to have you. Before we jump in, where are you joining us from today?
Naama Bak: From the south of France, a city called Nîmes, very far from California, but almost the same weather.
Jake Aaron Villarreal: Well, I know it's a great country. It's a great place to be. And [clears throat] there's a lot of people that come to Silicon Valley from all over the world. And I kind of go back between Laguna Beach and Silicon Valley. And there's a lot of French and a lot of people from Europe that come to Laguna Beach all the time. So pretty uh, pretty well versed with that back and forth uh, diversity and international traveling. It's really fun to, to be here and also to be where you're at.
Before we jump in about your current company, Understand Tech, tell me a little bit about yourself. How did you get into technology? What was the inspiration to jump in, and we'll talk a little about your company, but what was the path that led you to starting Understand Tech as well?
Naama Bak: Sure. So you said you are born in California, born, raised in California. I was actually born and raised in the south of Morocco in a small city called Dakhla. It's a very known city for kite surfing.
Jake Aaron Villarreal: Yes.
Naama Bak: There is no tech there. There is no big Silicon Valley company. It's only a small city, people doing you know surfing and things like this. So I, I, I was born there, raised. Then yeah, mid of uh the 2000s like, I came to France to do my engineering school. After my engineering school in computer science, I have done some business degree and then I joined a tech company, Orange and Academia in France. This is where I was doing research on cyber security and stuff like this. And then I [snorts] joined a company which is, it's a European company but it's more American culture, called NXP Semiconductor, and this is where my career really start to, to, to begin. And I have held multiple roles from product management, product marketing, business development, and they learned a lot about the US because I was covering America's region for 5 years, and this is really where I get most of my knowledge in business network. And this is where, where tech come from as well.
When I was at NXP doing semiconductor, those company, they have a lot of products. It could be thousands of product, right? And I was taking more than 40% of my time was traveling sometimes to the US to teach people, like customers, something that exists inside a document. It's a data sheet, it's an app note, it's a source code from something. And the only way to scale that knowledge was to hire more, but not everybody can, not every company can hire and hire. And so that, that knowledge that I developed across multiple year, it was very hard to scale it even if we have done training to sales people. And this is where the idea from Understand Tech came in.
And I was doing some AI on the side on the weekend, and I typically knew from the start that it could solve that problem of knowledge that some people have. Now with virtual subject matter experts powered by LLM, you, you, you can solve those problem. And I just decided to go with a friend of mine who is, who was my biggest customer by the way when I was at NXP. He's based in Philly. We decided to go and create the company and this is how it started. The company, it has been two years now. Uh, we are more than 10 people, and we just achieved 500k ARR just this quarter with big, big names just after one year's like product launch. And so we're really scaling a lot, and this year we believe we're going to close the year by more than a million ARR.
Jake Aaron Villarreal: Wow.
Naama Bak: That's not...
Jake Aaron Villarreal: Yeah, it's exciting. It's an exciting time for a lot of companies, a lot of product visionaries that can bring ideas to market relatively quickly and test it and see if there's a market for it. Sounds like you're finding your market and in revenue, which is exciting to hear. Talk about your background a little bit. You said semiconductor, and you talked about reviewing content or training people up on maybe what documents are saying or what they actually mean. At one point, you said that GenAI could replace a lot of different types of people and different types of skills. What is your product doing now? Like, give us a use case of where it's helping an organization. $500,000 is a lot, you know, if you think about it. For some people, and for others, it's not that much, but you know, what is it that you're solving for that customer today that's helping them realize an efficiency or an accelerating something that they couldn't do before?
Naama Bak: Sure. Let's come back to that same semiconductor industry. So the problem we solved, which, which is very hard, is, is distribution. So when you are a hardware company and you build hardware, you have two channel. You can sell direct, and there [snorts] you have an account manager, you have a support dedicated resources with each account. That's fine, there are some problem, but that's fine. And then half of the business of majority of those company, it's done through mass market. Meaning customer that you have no clue who they are, they are served by distributor. Distributor like thing like Avnet, Arrow, Future. So there are a lot of them there, they are massive. They, they distribute a lot of product, but those customers typically to... so those distributor to sell your product, the information need to be easily accessible. I need to access easily to your data sheet. I need to understand your product. I need to be able to compare product, to compare your product against your competition. You need to be able to get a presentation for a specific customer, like let's say I'm seeing Bosch or Honeywell. I need to build narrative.
And this is where the things start to be bad because that process is a mess. You can't have resources available 100% of the time just to answer the distribution question. So they, they, they built some, some setup to do this, but that's a huge problem. And the one who solved this problem, meaning the semiconductor, it's the one that, that win really from revenue. And so we solve this by creating what we call a sales channel enablement portal. It's a portal all powered by AI. So we, we're going to put all the products of the company behind them. We have LLM, so the distributor come, ask question just using natural language. "Prepare slide. I'm going to see Honeywell. Can you give me a presentation?" Boom. The guy going to give you a fully tailored presentation to Honeywell with the product from that customer. Okay. "Now I want to understand for this Honeywell uh device, what is the tear down. So we need the, the chip that they are inside. I can replace them with new, new one that we're going to give you this by going and doing some deep search with multiple agent that we have inside the internet looking to the FCC document, stuff like this." So a lot of tool that's going to boost the, that sales process and have the distributor uh to access easily to, to the, to the, the semiconductor uh documents. And so at the end we see impact on the revenue directly from those semiconductor company. So this is just one of the example. Definitely the baseline is our platform which has RAG, LLM. So it has a lot of pain shifting, but this is not what the customer, they care about. What they care is really this application layer that we provide.
Jake Aaron Villarreal: Got it. So, I know we talked about the semiconductor industry and you give a great example of that. I could see a lot of value as a distributor. You might have multiple products, multiple vendors, multiple sales calls you're on, and you need to have the information you need, and you know to get in front of a customer, you want to be prepared. So, if you can give them that content that they can present and it can help accelerate a sales cycle or close a deal, I could see that's real tangible value for a distributor. Is that your ideal customer or are you focused in other markets as well?
Naama Bak: Yeah, good question. So, naturally because I come from that world, I know more problem to solve versus a standard tech guy. So, yeah, it's our primary market, but then definitely we have three other markets. Number two, it's standard organization. That's another mess. So, we are talking about million of documents. Each of them is more complex than the other one. And so same thing, we, we, we address them with, with uh, a lot of, a lot of tools and we work with biggest, biggest standard organization.
The third market is the device manufacturer. Still on the hardware, but now it's not the semiconductor, not the chip inside the device, it's the complete device itself. You know, they have similar problem, but there it's more engineering productivity. So we have tool that allow to do test case generation. So from a spec of product, you, we unest that spec and then we give you the test cases in one hour. This process, you know how much it take, Jake, today if you want to do it with engineers? Sometimes 12 months with multiple people. You know how much it take to do it in our side? Hours.
Jake Aaron Villarreal: Wow.
Naama Bak: So we break down that complete process and this is something we built from scratch with organization where we learned with them the problem and we enhanced this with a lot of iteration in 9 months. And at the end, now you have a tool. You put your spec, you have requirement, you have test cases, you have the script and you just go and execute. And nobody want to do the test cases by the way, because it's very painful. Now we have this that can do it with you. So yeah, the third market. And then the fourth market, which is mainly regulated industry, so accounting, we have some accounting customer, HR, are because those they care a lot about security and they cannot just go and throw up their document inside Anthropic or OpenAI. They need control. They need security, and that's one of our value proposition.
Jake Aaron Villarreal: Wow. You got multiple angles to your platform based on different use cases and different customers. So really cool. How do you manage the focus on who, who to target and how to do the outreach? Because to get above the noise of a product is one thing in this new world of AI, but to go into four different categories really, or channels rather. You're taking on a lot for a small team. What's working for you?
Naama Bak: A good question. But just to go back to what you said, it's multiple angle. You're right. But there [snorts] are still two common things that we repeat. Control and application layer. That's what we do. The control is the baseline. Security, sovereignity with the platform. Everything can run air gap, can run in a box. I showed you this last time. Combine it with the software layer which is tailored to every customers. Then [snorts] that's, that's what get our success.
How we do it, how we scale, because you're right. We are just about 10 people. You can't, you can't compete with the race of somebody like Anthropic, OpenAI. So we started at the beginning, and here I'm telling you the garage thing. We started to build app manually, like for every customer we're going to see their problem. We're going to build this app that address this problem with one condition. "Hey Mr. customer. This going to be very cheap for you, but you're going to allow me to sell the same app to another customer." Okay, so this is where the repeat motion come. So we invest once with one customer. They definitely pay some NRE to help us do this, and they take the same app and they repeat at other customers. And because you make it with one customer, you understand the problem, you understand the scale issue, you understand distribution, you go to the other one, say, "Hey, I have your competitor using it, and then I can, here's the app ready to go."
So that's what we have done to start. But now [snorts] we are going to more a real scale motion. We developed a tool that allow to build app from scratch just using a prompt. You come as Jake, you say, "Hey, I want to build this app that does this and this, that connect to the system." You know, I think you should know about Lovable and uh, there are a lot of, so we build this internally that we are using to accelerate our own work with one specific: everything should always run air gap. The tool can, should run air gap and should not rely on any public tool. I should be able to run it within a box, within my on-premise, within my VPC, and this would allow us definitely to scale to thousands of customer much easier.
Jake Aaron Villarreal: Wow. Talk about that a little bit. AI in a box is that something that is, I don't know what was the strategy behind that because today a lot of companies are building, they're connecting to the big LLMs. They're in the cloud. Is your product or platform specific to like within the enterprise of the customer you're working with? Does it actually go out to the cloud as well? I mean, I'm not an engineer, but maybe just walk me through that a little bit.
Naama Bak: Sure. Let me show it to you. By the way, I have one here. I think everybody should know this box. So, we just put a sticker on it. But if you are watching Nvidia, this is coming from Nvidia directly. So, Jensen made us a lot, a huge gift when he released this one last year because simply the market shifting clearly to on-premise now with LLM. During the last I think 15 years, everybody talking cloud. If you say you are doing on-premise, you're going to say, "Are you crazy?" But actually that shifted now specifically because of this geopolitic thing. Europe want to sovereignity, US want of, and so we had a lot of customer they say, "I like your stuff but I cannot afford to run this within AWS or Microsoft. I don't have devops team, I don't have resources to run this. Do you have a solution for me?" At that time Jensen from Nvidia, they announced this box with Elon Musk, said then this is exactly what we need.
We take this box which was meant for a lab, this is how they marketed at the beginning, and we customize it from software perspective. And then I sell this as a real server where you can have 50 people connected to it. So now I can go to an accountant company, I can go to a smaller team within a big company, "Hey, you can do on-prem without investing million dollars. You, you invest a few tens." This is typically between 15K and with LLM, with everything inside, just with blocks. Put it on the electricity, connected to your internet and done, managed by us from software perspective. No devops required, maintenance, security, everything is done by Understand. And it's a, it's actually Nvidia loved it. We were concerned at the beginning that Nvidia say, "Hey, you are not allowed to do this." But they saw us in an event in South of France and, "No, actually you are doing good job because we are creating value on top of their box." And now we are, we are trying to work with them to do some co-marketing together.
Jake Aaron Villarreal: Wow, that's really cool. Hold that box up again for the listeners driving down the road that can't see it. This is about the size of like a...
Naama Bak: my hand.
Jake Aaron Villarreal: Mac... Yeah, like your hand, like a Mac Mini. It's like it just looks like something that you could...
Naama Bak: much better, much better than a Mac Mini Max.
Jake Aaron Villarreal: You could plug into the wall and you're up and running. That's incredible. So...
Naama Bak: it has, it has... Sorry to interrupt there, but the beauty that Nvidia made, and again this is not something we invented. They created this connector, 200 GB per second. You just put this connector here, and then you add another box, and then from 50 user now you are going to 100 user, and you can do this up to three box you know, so you have a real...
Jake Aaron Villarreal: that's great. Technically, who's the, who are you selling to in an organization and how is it the engineering teams? Is it anybody that's operating the organization? Who are you selling to specifically in a company?
Naama Bak: You mean the box or the Understand like solution globally?
Jake Aaron Villarreal: Yeah, when it comes to the box and you know the solution probably I would assume would be the business users, but from the, from the box, the technical side, are you selling, is that going to like the CTO or like who, who's interested to know about it?
Naama Bak: So it depend. So this has a lot of success with SMBs. So SMBs is going to be the IT team where they are looking for a sovereign on-premise solution, but they cannot afford to buy a huge Dell or HP rack, you know, big, big machines. That's our target. Then within the larger, large company, that depend to each team. So it going to just qualify, but the people who going to really drive demand, people who are doing for example patent. When you are doing patent and you want to use AI, it has a huge value on search, on writing. But the day that you use ChatGPT you lose the patent, because the confidentiality is the heart of a patent. And so the patent team could drive definitely demand for us.
Coding, engineering team who are coding. As you know, everybody use cloud code, they use Cursor, a lot of tool, but there is very expensive because it's token based. You paying functional token. They use the box because the [snorts] box we don't charge per token. It's a subscription for fixed subscription and you can wire like, like fire million of token. You're going to pay exactly the same thing. So it's more from cost reason than, than efficiency, because the boxes has a GPU 120 GB for people who are interested. And you can have multiple reason and you can just go similar way you are doing with cloud code, you do it locally, securely, with no cost in term of number of line of code you are writing.
Jake Aaron Villarreal: Wow, that's amazing. So, no tokens, no extra charges that you're not surprised by at the end of the month when your engineers are reasoning and developing and testing and you're seeing these bills that start to rise you didn't account for. This is really controlling your cost at the same time being able to continue to stay at pace and innovate in AI.
Naama Bak: And security. Exactly.
Jake Aaron Villarreal: With security on top of that. So whether you're in an industry that security is important or an industry that it's really not that important, it's still a good solution to look at from just a cost perspective.
Naama Bak: Yeah, absolutely. I, I mean, even large company, we, we did not believe that at the beginning there will be a market, but actually there is. Because just the headache of getting IT to approve your system is so huge. You know, you have audit documents. But when you come with a box and it's fully air gap, but then you remove a lot of those layer, you know? So it helped the team even internally to go faster on adopting AI, because those large company, even if they know AI is very, very useful, the policies, the processes killed it. Sometimes you spend over 18 months before you get in. I'm not talking about selecting your solution, just to get qualified with procurement, with, with legal, with, it's a lot of blah blah, a lot of processes. And the box accelerate that process because everything is air gap.
Jake Aaron Villarreal: Yeah. What's the biggest challenge for the company today where you're at, at the stage you're in?
Naama Bak: Challenge is always resources, Jake. That's I think a common problem as a, as a leader typically. You need to balance of growth and hiring, right? You can grow a lot, you may go and hire a lot, but you know, as every growth, there is as well a downside. So, and we try to balance and so we try to do with less. So meaning we have more than what we can handle and it's really resources. Uh, definitely time, that's the biggest problem and I think a lot of startup will, this will resonate to them as it's, it's resources on time.
Jake Aaron Villarreal: Yeah. Well, you know, we're hearing so much about on the resourcing side and the people side. It's one of the biggest challenges and the biggest opportunities for all companies. You know, no company exists without great people. Identifying who they are and bringing them on board at the right time is, is always a challenge. But for the companies that do it well, um, they're seeing a lot of growth and success right now. And uh, for you, having had other startups and been in, you know, technology for a long time. Talk to me about what's worked for you when it comes to hiring. Because you've got 10 people. I'm assuming they're good and you're building on top of that. What's working for you in terms of identifying and hiring the right people? What's your strategy?
Naama Bak: Well, first of all, I will not, I will not say I had no clue, but I had some, some perception about what is the good profile, but actually turned out it's completely false and wrong on what I had in mind and what's the reality, and I'm lucky that we haven't made a big mistake on the, on, there was maybe one, but in the tens they are, they are rockstar. And without them the company would not been here. So I mean yeah, and let me know if I don't answer the question there. But the, really the way we have done it and this is systematic now. We, we try, so there is the technical aspect, so the resume of the, of the person, what he has done before. But actually, the feeling it work more than the technical background for us. For example, some of my dude here, I can tell you there is no company that would hire them from the first interview. Just that the way they speak, the way they, they, they, they are wearing, uh, you know, now I'm talking about the standard company, but turn out they are the best people. Actually, we spend a lot of time just trying to understand if this is a good fit for the company from behavior perspective, from mentality perspective, rather than technical, which, which anyway, even if somebody does not do some, something, as long as they have the good mentality they, they going to learn. And that was our uh driver, which we haven't really set with my co-founder, it was just doing it on the, on the fly, we're not big company with processes. They turned the, the thing that help us to keep most of people that we have hired. We had only one intern that we, we, we stopped to work with, but everybody who joined the company since 12 months, they are still here and they are super happy.
Jake Aaron Villarreal: Yeah, that's great. Talk about the one that didn't work out. What did you miss?
Naama Bak: Well, I'm going to tell you maybe last, but the feeling was okay. The resume was okay, but, but unfortunately the person haven't had enough experience to use AI tool in a better way, let's say, let's say this way. So in other word, you throw up something like cloud code or, or OpenAI into the hand of a young, a young engineer who has no experience, you can create a huge mess. And that's what happened typically. So creating code without review, pushing thing to, you know, production system without review. Even the review, we have done it, but we were two at that time, just three people. You can't afford to do a real review like what you are doing. And so that, that was the biggest issue. And we, we tried to fix it, but you know that it didn't work out. That was a, that's as well a learning. So we establish a process as we go. Now, every single line of code, whatever you do with AI, because we're an AI company and everybody have to, must to use AI, but every single line of code that go to production is verified and reviewed by other people.
Jake Aaron Villarreal: Really cool. What's the hardest early hire you've made so far?
Naama Bak: Early hire, you said.
Jake Aaron Villarreal: Yeah, like early on. I know you're still early. You've only, you know, 10, 10 employees now, but what was your hardest early hire?
Naama Bak: I think she going to see the, the video. Clara, one of uh, so she's our rockstar on marketing. She's my right hand on everything I do in business.
Jake Aaron Villarreal: Hi Clara.
Naama Bak: Hi Clara. I don't know what I can say, what I cannot say because this is going public. But I'm going to, I'm going to say the story Clara though. So when I met her, she was still, she's just finished at school and she was looking for a job. My wife put me in contact with her and then, "Okay, let, let go with us to this event." That was the first meeting. I don't know her before. "Hey, you know what? Let's meet in an event," and my co-founder was there and I think she believed I'm crazy or something. The dude that, he doesn't know me and he's inviting me now to go for a two days trip in an event in Cannes, south of France. But it turned to be the best test you can have. I seen her with customers. I seen her how she can adapt and learn very quickly. And then definitely after the two days we can see there is a clear fit between her and the company, what we want to build. But we didn't have money to hire her at that time, and she was just contractor. And then when we had money 6 months after, she was already on another job. "Oh Naama, I can't move. I just, I'm happy here." And man, I, I, I, I struggled for 3 months. And Clara, I think you know the story. Uh, and then one day I say, "Okay, let's have dinner and simply have a discussion." And I think she understood what we are going to and she simply quit and joined us and she is my best hire as of now. Definitely a rockstar within the team from energy, from work perspective.
Jake Aaron Villarreal: Yeah, really cool. I love those stories. You know, I've interviewed 30,000 people and all sorts of different interviews uh start and end, but they're all a little different. What we've found, and this is, I want to share this with, with anybody, is that the companies that we've worked with, and we're in the people business of helping them build and grow, is the ones that have scaled and done it well, they've hired right. And what they've done, it's really two things they got right. One of them was they were clear about who they were, their identity, their culture. And culture can mean a lot of things to a lot of companies, but part of it is how you operate and how you think. And in this world of AI, are you systems thinker? Are you a problem solver? Are you an engine builder? Are you a creator? And can you do the job?
So, kind of aligning your culture with what you need them to be like is kind of the first step. The second step and the last step is to make sure that they have the competency to do the job that you're hiring for. And if you can get those two things right, 90% of the time it's a fit and those companies scale. Everything else from our position is kind of noise. You do the interviews to make sure that you get clarity. Do they, can you trust them? What's your gut tell you? Are they saying what they actually have done? You know, you, you do all the questions too, and you check the references. If you can just kind of keep a focus on those two items, you're going to do well. Lots of companies that we've seen have scaled significantly and those are the two things they focused on. So, that's just what we see.
What you're doing, it sounds like you're, you're doing a great job. You're off to a good start. You've got, you know, a team in place. This next 12 to 24 months look like for you in terms of growth, and if there's roles that you want to talk about, feel free. If anybody wants to find you, you know, it's no cost to anybody. It's just you connecting with candidates. So talk about the kind of roles that you want to build to close the gap as you grow.
Naama Bak: So let me talk just about the vision first and then definitely there is an opening and I'm happy that you suggested that we can talk about it. So while everybody is fighting today on AI on the infrastructure layer, we clearly understood based on direct customer conversation, I mean direct customer segment, that the fight is not on the LLM layer, it's not done. It's mainly on the application layer, on the software that come on top of it. Specifically after four years or five years now that ChatGPT exists, everybody now understand how to take an LLM, execute it, run it, you know, chatbot, stuff like this. But what enterprise need, I'm not talking about consumer, they need tailored application that connect to their knowledge, to their processes, and solve real problem for their sales team, for their engineering team, for their product team, legal team. And that's what Understand Tech is doing now, and we are one of the first that is attacking this market.
We want to be typically in 15 months, what, one year and a half, in my head I was thinking French, 18 months, the 365 app store. You know when you connect to 365, you have PowerPoint, Excel, you have, you know, every function has something. That's what we are building: an app store of business app where every enterprise function will find something that going to boost their productivity. Okay? We already started today, we have more than six app they are used widely, by the end of the year we want to have 30 app, and then next year actually we have even a marketplace. So that's what we are going to, and to execute this, definitely we, we're going to need resources. And today, one, it's we are looking to a system architect. So somebody who is really like a geek who know front-end, back-end, LLMs. He, he's typically horizontal. And the second role we are looking for is a technical business development. I'm spending a lot of my time doing quotation, working with customer to understand their problem, suggesting app. And that's spending a lot of my time, right? And I'm only myself. So we need somebody who going to typically help me there and be my right hand on this aspect on semiconductor industry and standard. So he need to as well to have knowledge on that market.
Jake Aaron Villarreal: Really cool. That's great. Talk about location. Do you want them to be in France? Do you want them to be in the US? Where do they need to be?
Naama Bak: So this is a difficult question. If you ask me, I want them to be here close to me with the team, but uh, I know that's not all the time possible. So we favor, by the way, uh, physical location because when you are a startup, we have whiteboard everywhere here, uh, and that you cannot replace it with whatever uh, remote uh uh tools you have. But for the BD role, so technical role definitely here. For the business development role, uh, it could be exception that somebody could be in the US, wherever in the US, because that's anyway BD, so whatever. So there it's, remote is acceptable, but for the technical role, definitely in the, in the office here in south of France, and I, I will not try to sell you south of France. It's one of the best place in the world.
Jake Aaron Villarreal: I believe that. Really cool. That's awesome. Naama, really cool to hear your story. I like the AI in the box where everything's secure. You can plug and play. It's up, it's running, and there's not a lot of security issues. So, those are, I think, things that I'll remember and I'll share with, you know, our community as well. In terms of if anyone wants to find Understand Tech, where do they go?
Naama Bak: Understand.tech.
Jake Aaron Villarreal: Understand.tech. There you go. I like it. Well, Naama, thanks for coming in and sharing your story. Appreciate you spending your time with us, and to our listeners, it means a lot to me you spent your time with us today. Our community is growing significantly. We've almost 100% in the last 6 months, which is really fun to see. So, thank you for listening and your replies and the community. Um, I'm your host Jake Aaron Villarreal signing off for now. We can't wait to catch up with you all in the next episode. Until then, Naama, the world, take care.
Naama Bak: Thank you. Take care.
Jake Aaron Villarreal: If you like what we're doing, don't forget to subscribe, leave a review on Apple Podcasts 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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