In this episode, Annika interviews two of Formaloo’s four co-founders, Farokh Shahabi & Mehrnoosh Barartpour, about why they started Formaloo in the first place and what are their plan for the future of Formaloo.
In this episode, Formaloo’s co-founders talk about how they want to change the future of data analytics and how did they turn this into a successful and growing business.
The idea of Formaloo, that data analytics should be so easy for everyone and everyone, not only data scientists should be able to do it, makes Formaloo a unique startup for Annika to interview.
As Annika is doing this interview in the January of 2021, Formaloo has more than 12,000 clients from 14 countries, and every day, more businesses are trying to use data analytics to grow, without even knowing the basis of that.
At the end of the interview, Annika asks them how they see the future of the data analytics industry and how small businesses can compete in the world of data.
Here is the text version of the interview for all of you as well, we hope you enjoy it:
Annika: Hello, everybody, welcome to join us here in the studio! We´re here to talk about a startup company called Formaloo. Here we have two of the co-founders, Farokh Shahabi and Mehrnoosh Baratpour. The two of you, with your other two co-founders, started a company called Formaloo, which offers its clients data analytics to understand your business and your customers. But before we talk about Formaloo in more detail, first of all, we´d like to hear more about you – where do you come from, what are your background and experiences so far? Let’s start with describing what’s your personal story? Where did you grow up? Where do you come from?
Farokh: Hello, everyone, I’m Farokh Shahabi, I’m the co-founder and CEO of Formaloo and I’m very happy to be here. I’m from a city called Shiraz in Iran, and I grew up there. Later on, I moved to Tehran to study. in Tehran, I founded my first company there, and later on, I founded my second company in the UK. After that, I went back and started a startup. Those companies had both been servicing and development companies. But this time I started my first startup. It was the social network and I co-founded with one of my friends that I previously worked on.
My previous venture, a Social Network, took up and it grew to a large number of users and it won a lot of prizes. It became famous around the region. This was the era before smartphones were very popular. So we were a very web-based social network.
Five years later we saw the rise in smartphones and we didn’t have the capital to move our company to the next level, investing to create a great mobile app, a super fantastic mobile app like what was happening with WhatsApp, Telegram, and other messaging services that were back then. So we decided to sell and exit from the company, we decided to sell it to a data firm. So basically back then we were developing our own data mining algorithms and our data mining engine.
This data mining engine was very interesting for a lot of bigger enterprises who wanted to implement that these data algorithms to themselves. We found two companies that were very interested in our products and we licensed our product to them so they can use it in their own software.
And that’s put the end of the first chapter.
A year later, I co-founded my second startup. It was called Eventbox, it was an event management SaaS for international conferences and exhibitions and once again, we implemented data mining into our system to get new users and to get a lot of new exhibitions to sign up with us. It went great. And we won a lot of prizes and a lot of audiences from different countries, especially in Iran, because it was launched there as well.
And in 2016, we got a prize from the Ufi, UFI The Global Association of the Exhibition Industry, for our work with data analytics in the event industry.
After that, we grew the business further, we bought a smaller startup in Iran so we can advance our operations as well as our online and services. After a while, our customer base grew so much that a larger firm bought us and merged with us. They were organizing the event and we were just providing online services for them and they wanted to add Eventbox services and our consultations to their basket of products.
So that comes down to 2017 and at the end of 2018. With the team that we were building from the first to a startup, the team was the same and we grew in numbers and grew in talents. And then Mehrnoosh joined us as our operations manager. And we start working on Formaloo.
Formaloo started not as a business, as a side project in our team so we could give free tools for the data collecting for different businesses and clients that we had back then, and so they can solve the problems that they were facing.
Later on when we saw the feedback from them and how much they loved it, how much they used it in different ways, the ways that we didn’t anticipate, that we hadn’t even imagined, we saw that ok, NOW we can do it as a business. So we launched it and we worked on it a lot harder and launched it as a business and we started working on Data-Collection.
A year later, data collection services grew a lot and we implemented our data mining and data analytics algorithms to eat at fair as well. And we liked the Formaloo CDP (customer data platform) so we can address the problem of the data analytics for the small and medium businesses and small and medium enterprises.
Mehrnoosh: At first I started my career as a developer. I used to be a backend developer in different companies. I wasn’t basically an entrepreneur, but I was developing software on a freelance basis or in companies. Then I learned that I can do operational jobs very well and I am really good at organizational tasks. So yes, that was the beginning when I met Farokh and our team. So we created Formaloo and I became the operational officer, chief operations officer. And I think I’m really good at organizing.
Farokh: we call her our mother of the organization.
Annika: Definitely, you need one.
F: Yeah, and that was the exciting journey of a starting point.
Annika: Did I understood it correctly, you started working together for the Formaloo when it was already created. I mean, Mahnrosh joined you later. Is that correct?
F: Mahnrosh joined us when we turned Formaloo into a business. Before that Formaloo was a side project as a free service. We weren’t focused on that. But when we decided to grow it as a startup, as a business, Mehrnoosh joined us.
First of all, we talked about building an international business, not like my previous startups in the Middle East. So we started Formaloo outside and we located the team and everything to international so we can have international clients and international business.
A: So you actually found the idea of offering the customer data platform service during your data mining service provided – you saw the needs and then you followed the path, right?
F: Exactly. In the past 10 years, we worked with maybe like ten thousand SMEs and SMBs and we saw a very, very specific problem that they all had. Every company, every business, and no matter the enterprise or SME or any team had the same problem. They had a lot of data, they accumulated a lot of data. They collect a lot of data, but they didn’t understand it.
So basically what they did was they hired an additional external firm to do data analytics for them, which usually failed because the translation of data analysis is very different from a data analytics firm to a business.
The second one they tried to hire people, data experts, data scientists into their own team so they can do data analytics for them in their own team. But they failed as well because it takes a lot of resources and a lot of know-how to do data analytics as well.
And then they ended up either doing some crappy jobs for them or the enterprises tired of spending a lot of money on them, discontinuing them.
Mehrnoosh: Yes, it’s because that data is something, and insights from data is something else. And you have some data, a lot of data, and you can do a lot of things with it. And there is a vast world of data analysis and you can get any insight, anything. A lot of stuff can be exported from simple data. So you can know your customers. What are they doing? What do they want? How do they go, how? There are a lot of questions answered out of data, out of simple data. It takes a lot of energy to know what you want and how you can extract inside out of data.
Aniika: How did you turn it into service? How did you find your first customers and what were the first results back then? Or did you have to rethink the service? What were the first steps back then?
Farokh: At first the enterprises that worked with us on previous projects, on our previous ventures, and came to us, they wanted us to solve some of the problems for them. For example, they said that our drilling is not growing from our existing users. So we are losing our existing customers. We are very focused on getting new customers, but not as focused as we want to get the existing customers to buy from us again or we have trouble translating the data we have to real insights that Mahnrosh just mentioned to real actions. What should I do with it? I’m in the business and I’m blind basically on what’s happening in my business.
A lot of businesses have a very, very simple problem and that can be easily solved with a free tool so they can create their own databases to create and collect data on a standard version so they can get it done with their own data team. So after first of all, we launched that service for free.
Basically, we wanted everyone to use it and to empower their business.
We got a lot of good feedback from that and a lot of people did some things that we didn’t anticipate or that we didn’t imagine. And after that, they asked us for a lot of features. They were saying, Can you do this? Can you add this? Can you add that on after? And they said we will pay good money for this if you have this and we will pay good money for this. So after a while, we thought that OK, let’s do it as a business. Let’s do what we did best before on data mining, on previous ventures, on the different enterprises, and introduce it into Formaloo. So we implemented data mining and gamification to Formaloo to create a Formaloo customer data platform.
A: And how the two of you actually share the duties? The co-founder of AngelList, Naval Ravikal, has said that the idea of the founding team is the two individuals with a history of working together. And it was mutual respect. So one should be good at building products and the other one should be good at selling them. How about you? How do you get your things done and how do you offer the service the best way to the customers?
M: I think it’s kind of a compliment, we complete each other in some ways because Farrokh is very good in the big picture and he sees the big picture perfectly, there’s no doubt in it. The rest of us are not especially the technical guys are very in detail. And I’m kind of in detail in between that – somehow and big picture and somehow in detail. And that’s how I manage to bring the big picture into some detail.
And the technical team brings it into a more detailed process. And I think it’s very complementary between us in this way.
F: Yeah, it’s very good that we work with each other before we started the Formaloo. So we worked and I mean we knew each other before so we knew each other’s quirks on how we work with each other. So we are working with each other for more than five years now.
So on different ventures, on different projects. So we ultimately know each other and how we work. So the division of labor is very straightforward. But in a startup, at the start of life, the division of labor never really is a specific term. We do everything that we can that helps Formaloo to grow. So everyone will do everything. We are not traditionally in our roles, only doing what we are told or only doing our task. We are doing everything and we are helping each other in any way we can.
A: Sounds like an ideal team. Yeah, so what have you achieved by now? What are the biggest benefits and outcomes for your customers and what are the results that you are most proud of by yourself by now?
F: Our first challenge was getting different customers from different countries, from different industries to use Formaloo and to use Formaloo for their own benefit.
This was our first challenge to actually go on to their market. And this was especially a big challenge for us because we didn’t have a big budget. We bootstrapped the company ourselves. We didn’t have the investors that start. We didn’t have any outside money. So we bootstrapped the company and we said from day one that we want to be a cash flow positive company. We want to grow from there our own revenues.
So first of all, this was very hard. This was and this required a lot of sacrifices. And the second part was that for Formaloo to truly work, it should be a platform of success for its users. So our clients should grow when they’re using Formaloo. Otherwise neither they will succeed, neither us. Our success is entangled with the success of our clients. We grow when they grow and we fail when they fail. So that was the first thing that we focused on how to grow our clients.
These were the things that we focused on from the start of the company. And we wanted for our team to grow as the business grows as well. So we focused on the development of personal development, team development, the development of skills so we can address new customers. What we achieved so far is that we got huge on there. A lot of the things that we will be done so far.
A lot of the things that we didn’t work and we discontinued it and a lot of things worked and we are focusing on them. And just now we reached 1.5 million customers analyzed, which is a huge milestone for us. We help our clients analyzing one point five million customers and we signed more than 12000 clients.
A: What are the next target countries you have been thinking about?
F: So our biggest market is the US. It’s always been because our target customers are mostly e-commerce businesses and B2C startups, they use us for different reasons.
E-commerce businesses use us to getting their revenues up, to getting growth in their own revenues, from using their data. Startups, on other hand, use us to ask for user engagement to get their monthly active users up. So our first biggest market is the US. We want to penetrate that market more closely and we want to be one of the top players there in the next year. And the second market for us in Europe. So we can grow what we’ve built so far into the new markets, big new enterprises.
A: The startup world can be tricky and hard, sometimes you need a lot of endurance developing your product and facing the hardships you also mentioned. What keeps you going?
M: we have a big goal, which is to make that data science change for businesses and that’s like a star in the sky has started for us. And basically, we live by it and we sleep with it. We breathe with it.
And it’s like our main goal to achieve to change that data analysis on this world. Like in the past days, nobody had a computer in their house. It was a very rare thing to have a computer or a laptop in your house. But later it became very popular, very random to have multiple laptops in the house. Or let’s say for businesses, the same thing happened. It was really hard to create a website. You had to be a developer to create a website. But now you can create a website without knowing any code, without being a developer. So we want to do this for data analysis so every business can do their own data analysis, because there is a lot of data in the world and in any business, in any life, in anything. And it’s being wasted. And we don’t want them to be ways that we want to use our data for growing and for being a better person, for being a better company, for being better anything.
A: Is it that you are like translators? You want the data to be translated for the customer’s benefit?
F: Yeah, exactly. We don’t want data analytics to be something exclusive to data scientists and data analytics because everyone should benefit from that. Every business, even solopreneur businesses can benefit from data and they should. And we want to embrace that and change the way that data analytics is done today. Yeah, in the future it would be very different.
A: Good, if you have such a long history for the Formaloo, even previously, you have a lot of experience. Can you give to the listeners the one thing that you would never repeat? That was the thing that went wrong. And then one tip about something that one should definitely do when starting a new company or developing a service.
F: What I saw in a lot of startups that I´ve been working with, that has caused a lot of problems for them – and what I experienced myself in my past ventures- is that the team is the most important thing in the startup.
So if you have a great team, if you have a very, very trusted team, a great team a very unified team, and that you have a very nice and very oriented goal that they share with each other, then you can do anything. Maybe this idea is not working and you change it. You pivot it into something else. Maybe this business is not working. Maybe this is not the right time, but the team will accomplish great things.
This is what I experienced in the last five years with our current team that we have in Formaloo. We accomplish great things. Sometimes not a lot of things go your way, not a lot of customers will buy your products, not a lot of great feedback, but you can pivot because the team is great.
Everything falls down when the team is not great. You can have a lot of revenues and you will bankrupt in the next two months. You can have a lot of great teams, but the morale in the team is low. So the first thing and the most important thing is the team! And you can figure out the next and the ideas that venture later and you can change it any time that you want. And that is the only thing that every successful startup shares – it´s that their team is great.
M: Yeah, and I want to emphasize the importance of a team because if anything goes wrong, you can change. But if your team is wrong, you should stop everything because you cannot do everything yourself. And you need someone to help you to build something together because building a startup is teamwork and you may have the wrong business model. You can change your business model. You can pivot.
You may be out of money. You can find some money from somewhere. You can build something that makes money. But if you don’t have a team, you stop everything, find a team, then start doing. I exactly want to emphasize the importance of this.
F: The second piece of advice that I like to give, is that the Internet is a democracy. Maybe we don’t have a lot of this in the real life, but the Internet is it’s a true democracy. Either the customers love your products or they don’t, it’s not going to change anything. You can´t change it.
No amount of money, no amount of capital, no amount of branding will change what people like and don’t like. They either like your product or they don’t. So instead of investing a lot and spending a lot of time on the product that you are not comfortable with, you are not 100 percent sure that it’s working – get the feedback quickly and you can change it as you go on. So people will say they like it or they don’t like it and nothing else matters, actually. If you get the product out, if you get your idea into the operation, into execution as soon as you can, when it’s not fully cooked, it’s not ready – get the feedback. You can save a lot of time, a lot of money, a lot of capital. And time is the most important thing in a startup house. So anything else is replicable, but the amount of time you spend on your ventures cannot be on the.
A: What is the thing that you would definitely not go for again, the one trap that you fell in but know you have the know-how and you know how to skip it.
F: One of the things that I actually did multiple times in previous ventures and what I think is one of the mistakes I’ve made several times (because I have a technical background as well) is that I like having great things and perfectly finished things. And we have a saying that the perfect is the enemy of good. So if I want my product to be perfect, I have to spend a lot of time on it. I have to do everything great and it takes time. But when I do that, I’m losing time, I’m losing money and losing capital, and I’m not getting feedback from its users. Maybe I will create these great things that everyone will enjoy and have a lot of features that nobody cares about. And the people don’t like it. Maybe they do. Maybe they don’t. And I don’t know. And I’m risking a lot. So starting big and starting with the perfect product is not a good idea.
Starting small, actually getting a crappy product out to test to feedback – it’s much, much better because you can learn. Instead of just imagining what users like, they will tell you point-blank, I don’t like this and you should change this. And then they will tell you much, much sooner than you would know when creating a lot of things in the past and creating sometimes a lot of features that I knew that people wanted, but they actually didn´t. They didn’t care at all about those features. You make a product great. You make the product a lot more sophisticated, very good and very advanced. But they didn’t care because they liked something else. They will do something with your product that you didn’t imagine before. So let them and let the users of your products run your business, basically.
A: What you´re referring to, is design thinking, right?
F; Exactly. For example, in one venture I spent 6 months creating a great product that wasn´t built before and none of the competitors could have competed with it but after that, I saw that not a lot of people actually used that extra feature I had worked on a lot. So, my competitors that did a crappy job – they won! because they didn´t do a lot of things and they came out 6 months sooner. So they won the users from me because I was late.
So, listening to the customer feedback is the most important thing and listening to the feedback is the only thing that creates greater startups. The greatest startups know the feedback before people say it. What people want and what they told you as feedback – it´s not what they actually want, it´s what they need. So you should answer it as what they imagine. Not what they are saying but what they are thinking about. How you can solve the problem yourself, not the thing they´re asking for.
M: What I wouldn´t do anymore? When I joined the team I saw the pattern that the technical team contacted directly to Farokh and Farokh gave them the big picture and they had to go and make a product out of it. That was the wrong way. The technical team didn´t get the details, because Farokh was not mentioning the details. I think it´s very important to ask good questions.
I started to teach the technical team to ask good questions about the big picture. I think it´s very important that you know the details. You might have the big picture but you don´t know how to get there until you know the details and you´ll know the details when you start thinking about them. But in case you don´t give the developers team any details, you just give them the big picture, they need to assume they know what is expected. In case the developer team doesn´t ask “how should this work”, “how should this start to work” etc they assume they already know how it is meant, but actually they might assume it wrong. And later when taking a look at the solution you´ll start having questions like “why is it working this but not that way?” It is an additional cost for the development team because you have to start over again.
So I think it´s very important to start from the details or in the case started from the big picture, the picture has to be made into smaller detailed pieces.
A: How much do you connect with the customers directly?
We do. We do the support ourselves so we´re directly connected to the customers. They ask their questions, they give feedback, so it´s our everyday job.
F: We´re constantly getting feedback from them and see where they have questions. Where they have the questions shows the flaws in the product – they didn´t understand it and it´s not the fault of the customer, it´s the fault of the product – it should be more simple or explanatory in servicing that kind of business. That kind of communication should be as clear as possible within the team and with the customers. We´re constantly changing the service and addressing new issues basically. Every product that is great, should be simple and it should make something that is hard, simpler. And there is always a way to do it simpler.
Annika: Thank you for the insight and more detailed overview about the customer data platform startup Formaloo.
For further developments and upgrades, please do check Formaloo´s website (https://formaloo.com/) and also keep an eye on their social media channels in LinkedIn, Twitter, and Facebook.