Interview: The Art of Startups
By Russ Rizzo
Cheetah CEO Na’ama Moran discusses her journey
Our writer-in-residence, Russ Rizzo, sat down with Cheetah founder and CEO Na’ama Moran to discuss her journey from an Israeli turkey farm to Silicon Valley and the pivots that followed. They discuss parallels between startups and art and what it’s like to raise money. Cheetah is an e-commerce company delivering supplies to restaurants and hospitality businesses. In light of the ongoing crisis, the company announced in March that it is opening its warehouses to the public, giving families an additional option for access to affordable food.
Russ: When did you get interested in startups?
Na’ama: I love to create and always have. As a child, it was mostly around art and theater. Today, it’s products, companies and experiences. From an early age, I’ve enjoyed assembling groups of people and creating something from nothing. That’s what makes me happy and satisfied. I’ve always had a strong independent streak. I like to work on my own schedule. So entrepreneurship is a good fit for me.
I grew up in a small village in Israel, and my father was an entrepreneur. He inherited the family turkey farm and citrus orchards and was always running his own businesses. He had businesses in agriculture, managed a bakery and later traded commodities.
As a teenager, I was much more into art, theater and dance than technology. I produced the big end-of-the-year theater show at my middle school. I was the writer, director and producer, and I also acted in it. I enjoyed the process of coming up with ideas and executing on them.
I got interested in startups after dropping out of high school. I was attending Tel Aviv University and met a group of Stanford graduates who had sold a dotcom. They told me about the excitement of Silicon Valley, and that sparked my imagination. I remember their energy and their spirits. This was in 2000, just after the market crashed. Still, people were very excited about what the internet was going to do for everyone. That got me interested in learning about technology. I said, “I think I should move to the U.S. It’s where the opportunity is calling me.”
Russ: What did you do next?
Na’ama: I was able to transfer to Cornell. When I finished school, I looked for work at a VC fund to learn about the business and also make some money to support myself after school. A friend of mine said, “Oh, I have a hedge fund job for you. ” She probably didn’t exactly understand the difference, but I needed a job and took it. My boss ended up becoming my first angel investor.
I moved to the Valley in 2007 and started my first company. It was a very small startup with the vision of enabling people to search their personal data on their phone. Phone technology was very different back then. I raised money from well-known investors like Peter Thiel and Mike Maples, who went on to become one of Cheetah’s biggest investors. Unfortunately, my startup didn’t have enough traction to survive the economic downturn. I returned money to investors and took a hiatus to learn programming.
For a couple of years, I immersed myself in studying computer science and programming. I would never hire myself as a programmer, but I learned enough to hold conversations about architecture and technology platforms.
Russ: Tell me about Cheetah.
Na’ama: Cheetah is a vertically integrated e-commerce company selling to restaurant and hospitality businesses (and as of mid-March, to consumers as well). Restaurants have been purchasing supplies ever since restaurants have been around. We’re recreating the model from scratch with a technology approach, to increase efficiency and transparency.
If you are a restaurant owner, chef or caterer, you can download our app, create an account and place an order—and that order gets shipped to you the next day. That’s a very different experience than working with Sysco. It’s also a lot more convenient than going to Costco, or Restaurant Depot, yourself, which is what a lot of independent restaurants do. Cheetah gives them price transparency, immediacy and everyday low pricing with the convenience of next-day delivery.
Russ: How did it start?
Na’ama: A friend was launching a business and convinced me to start it with him. We were working with small business owners and merchants to help them understand online advertising. That business got acquired by Groupon about a year and a half later, and I made some money. I decided I’d use this money to start my next company.
During that experience, I got acquainted with the day-to-day struggles of restaurant owners. It was fascinating to see that, even in the middle of Silicon Valley, restaurant owners still placed orders by phone or fax. It was extremely disjointed. There was no single place to find products and pricing, and there was no price transparency. When I spoke to restaurant owners and chefs, they always had something negative to say about vendors they dealt with.
I said, “Wow, this is a huge market. How come it hasn’t been disrupted by internet technology yet? How come they’re still going through sales brokers who aren’t providing honest and good service to their customers? How come there are no online systems to search for products and place orders and manage payments?” In 2012, I traveled around the country learning about the industry. I went to trade conferences, networked with all types of people, including independent restaurant owners and the chairman of Sysco, the largest foodservice distributor in the country.
I concluded that no startup was taking on this challenge, and I didn’t see the incumbents being able to take it on.
Russ: You clearly have a passion for this business. Where does it come from?
I know firsthand how difficult it is to run a small business. You run around like a headless chicken most of the time, and on your own dime. You don’t have VC backing. It introduces a lot of stress to a family life. Unfortunately, my dad died of a heart attack at the age of 52. A lot of it was stress caused by his work. So this is a personal passion of mine to work with these types of business owners.
I’m also very interested in food and the food supply chain. The world’s population is only growing, and we need to keep eating. I had a passion for helping small businesses; an interest in working in an industry with a huge impact on the environment; and I saw a big market opportunity. I’m an ambitious person. I wanted to build a very large company, and that’s what I started.
Russ: Cheetah was the result of a pivot. Tell me about that.
The first iteration that Morado invested in, Sourcery, was an online database of products and suppliers. I raised money from Morado, Y Combinator and some others, and we were off to the races. About a year and a half into it, I realized something odd: I had a ton of interest from the buyer side of the market, but the distributors were giving us hell. They didn’t want to share their pricing information online and wanted a salesperson to maintain the relationship.
I concluded that changing behavior of incumbents was going to take too long. They didn’t have huge budgets to invest in technology, and they didn’t feel like they needed to. That’s when the seed was planted: In order to change the supply chain, I had to recreate it. We had to become the supplier and offer a new model for distribution.
The good news was that Amazon had written the most stunning playbook in the history of e-commerce—searchable product recommendations, visibility into payments and shipments, and so on.
Up until 2017, my co-founder Chris and I were running both companies at the same time. He was operating Cheetah, and I was running Sourcery. Sourcery pivoted into an invoice management solution. Cheetah really took off, so we decided to sell Sourcery’s assets and use the money to capitalize Cheetah.
Russ: You could see the Syscos of the world didn’t want to change, and so you became their competition?
Na’ama: One hundred percent. That’s exactly what we did.
Russ: That was a major decision, saying goodbye to one company in order to grow the other.
Na’ama: It was one of the most stressful times in my life. We had to reorganize the company, which meant getting investor and shareholder approval. I had to explain why we were moving from a high-margin software business to a low-margin logistics business. That’s not an easy thing for a software investor to digest. It also was about a year after my baby was born.
Russ: How fast did you grow?
Na’ama: Cheetah has been under the radar since we launched in 2016. We have 200 employees and we’re doing millions of dollars in annual sales, but I kept it under the radar because the company has gone through multiple major transformations over the last couple of years as we’ve quickly grown.
Russ: What’s it like to raise money?
Na’ama: This could be a whole interview in and of itself. I raised millions of dollars, and let me tell you, every time it was hard. It was never easy. I never had money showered on me or offered. It was always hard work.
I follow a very structured process and treat it like enterprise sales. I generate leads and learn what I can about their needs. In this case, I mean the individual investors, not just the VC funds. Then I get introductions. This is where early-stage investors like Morado can be really helpful because you’re starting from zero and don’t have the network. And it’s super important because investors take introductions from people they know. They hardly ever respond to a cold call or email.
Russ: Tell me about working with Morado.
Na’ama: Morado has been amazing throughout. Mike has a lot of experience in M&A, and Ash has incredible experience with product and technology. They give you the independence and autonomy that you need as a founder. They let you run, and they’re always available with advice if you need it.
Mike helped me out quite a bit when I was trying to sell Sourcery. They were one of my very first investors. They’ve backed me up through a major pivot and sale and on every round. I really appreciate that.
Russ: Do you see parallels between your love of art and startups?
Na’ama: There was a short period of time in my life when I thought I would be a full-time artist. As I view it, running a startup is not that different than creating a theater production or a work of art where you have to assemble a group of people to do something beautiful together.
Russ: How do you manage stress?
Na’ama: I’m shocked that it’s only been four and a half years since we launched Cheetah, because it feels like 10 years. It’s been so intense. Looking back, I handle stress much differently today than I did two years ago.
It actually was a really good thing I had a baby at the time, because she gives me perspective. People like me—workaholics who have our identities wrapped in our companies — take it the hardest if the business doesn’t work the way we want. I decided I needed to change my interpretation of success. A lot of times we think of success as a big exit: an IPO or acquisition. Obviously, I would love for that to happen. Through multiple failures, I learned that not everything is under my control. What happens if all of a sudden Amazon or Sysco decided to crush me? What if customer behavior changed for some reason?
I redefined success as creating the most transformative, positive experience I can for my customers and my employees. These two things are in my control.
I have relentless discipline around time management and understanding of what I need to do for personal care. If I don’t exercise, I become impatient. So putting that time on my calendar and sticking to it is fundamental. I spend a lot of time with my daughter. That also means that I’m often putting her to sleep and then working through the night. I’m willing to pay that price.
I believe you can have it all—you just have to pay the price for it.
Russ: What do you think your dad would make of all this?
Na’ama: I think my dad would be very excited and proud to see what I’m doing. He understood what it takes to do what I do. My mom is the most risk-averse person I know. She still asks me why I’m doing this. But my dad would understand exactly why I’m doing it, because I got my drive from him.