Reut One – A CRM Pioneer in Israel / Hila Yaakobi

reut one formed through the merger of two companies: reut net, which was involved in internet, and ums, a company owned by yosi and ziva yehudain that was involved in crm (customer relationship management). ums (today the crm division of the new company) was founded 15 years ago and was a pioneer in israel before the field even had a name. we spoke with yosi yehudain about the company's operations, its value in the market and its unique management system

what led to the merger between the two companies and the inception of reut one?
the two firms were private companies operating in the smb market. our vision was to create a wall-to-wall, one-stop-shop solution for small and medium businesses, including internet and crm services. the merger was executed at the end of 2006.

how did the company turn into a crm pioneer?
fifteen years ago, before the term crm came into being, these systems went by all sorts of names. they were called marketing management programs, sales management programs or telemarketing programs. we developed a system for our internal needs. this software came into being out of our need to document customer relations and create a single database that we would all draw from. i developed the first version using dos and, without intending to do so, the program turned into a product that we started to sell.

yosi yehudain, ceo, and ziva yehudain,
 vice president of development

how did a program for internal use turn into a product sold on the market?
in 1985 we took part as a software house in an exhibition held in israel and decided that we wanted to exhibit not just ourselves, but also a product we had developed. we took our internal system, gave it a name, follow up, printed a nice-looking sign and sold the product for $199. by the second day of the exhibition we had already sold 20 programs. at that point we reigned in the horses, sat down to draw up a proper characterization, contacted customers and asked for their cooperation in brainstorming to fuse all of the various needs and create a better system – and that's how the product came into being. later we transferred the software to a windows environment and conducted numerous developments on it. this product went from an in-house product to software installed at 1,200 companies and serving 15,000 users.

did you have competition in the local market?
we were all alone in the market for eight or nine years. in 1993-94 two small companies emerged that competed with us, but both of them vanished from the local market. until the year 2000 we were the only player in the field and in 2002 there was a gathering of giant companies in israel who first introduced – or so people thought – the field of enterprise crm. matrix brought two labels and then the world's largest crm company, siebel systems, came to israel.

how did the entry of foreign companies affect you?
although the products were intended for the enterprise market they created a lot of awareness in the market and helped provide exposure.
this wave helped us define ourselves and focus as a company involved in crm. it helped us label ourselves and our product [follow up crm]. between the years 2002 and 2005 we managed to penetrate more deeply into the israel market and reached over a thousand companies. over the years competitors rose and fell and then in 2005 microsoft entered into the fray, which shook the israeli crm market to the foundations.

why was there so much concern over microsoft's entry?
there was a palpable sense that like in every other field microsoft entered, it would sweep away everything in its path. in the face of such a threat we took a number of strategic measures. the first of them was essentially, 'if you can't beat 'em, join 'em.'

how was your connection with microsoft forged?
we were contacted by microsoft israel representatives who informed us they planned to bring their crm product to israel. they contacted us as the leaders in the field in israel and proposed we help them introduce it. for us, just being contacted by microsoft was an accomplishment in and of itself. we were sure this move would come at the expense of our product and during the first year we had a lot of questions regarding the ramifications of this step.

how did microsoft's entry wind up affecting you?
we saw their product, familiarized ourselves with it and were more at ease. the initial version was very basic and we saw that our product was light-years ahead of it. and unlike other areas microsoft entered, wiping out everybody there, this field was already 70% taken, leaving them a relatively small market segment. also, it was microsoft's first time in the area of applications. until then they had had no contact with the end-user and suddenly there was a need for installation, training, assimilation and close customer support. all of these factors led us to reformulate our label and to an understanding that our most valuable asset is the know-how and experience we've acquired, since the product is independent. we adopted microsoft's product and started selling it, too.

that wasn't a conflict of interests?
it may sound strange, but no. every field of enterprise has many brands. for instance there are a lot of cell-phone companies in operation, and the same applies in computers, and really every other field. so in the field of crm, why can't i sell two different products under two separate labels?

how did your cooperation with microsoft turn into an advantage for you?
we changed our positioning of the company, adopting both of the products, which are very different from one another, and this move gave us substantial added value since we were able to offer our customers two products, allowing them to select whichever best suited their needs.
so far we've been very successful in selling the two products and at the same time we keep developing our product at a tremendous pace, releasing a new version quarterly. the product's power lies in that we've adopted and implemented every idea, every little request or requirement that could be relevant to all of our customers. you could say that 70% of our product is the handiwork of our customers themselves.

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the company's additional operations, internet operations, was a legacy brought into the merger by reut net. does the fact that you and ziva came from totally different fields work as an advantage when it comes to internet operations?
the internet world is chaotic. the competition against companies can be ephemeral, and unlike the crm world, which has just eight or ten players, here there are hundreds and it's very hard to vie in this market. for me and for ziva, internet is a whole new world that we had to learn from scratch. we come from the world of applications and we were surprised to find that the internet world is not perceived as an applications world.

what is the added value that your company brings to the internet world, which is so saturated?
we brought our applications worldview to the internet world. with the merger we received a big dowry that included an excellent staff that developed company websites, e-commerce sites and applications in the internet world with several products in the production process and another 700 sites already posted. we decided to focus all our strength on bringing the products that we have in various phases of development to completion. our strategy said that in order to be competitive we had to be faster and use fewer programmers.

and how do you do that?
we discovered that reut net had a product it had developed over the years called vsite, which allows users to set up a nice web presence site, including all elements, in less than four hours. the advantage of this tool is that feeding the contents onto the site and selecting the number of pages and the menu contents is done by the customer itself, without restrictions. we sell the customer a site that already includes back-office software (used to feed in the contents onto the site) at very low cost. using that same foundation we set up e-commerce sites and more complex sites. the goal is to reduce the need for development and make website construction faster and less expensive.

which other ideas did your meeting with the internet world lead to?
as crm people we took all of the websites that have been developed so far, studied them, mapped them out, surveyed and characterized all of the customers and discovered that within this pool we have three potential products. the first is a reservations system for 13 hotels in israel that was developed by reut net. we combined all of the solutions in the field of hotel management into a single system, improved it, gave it a label and called it my hotel. the second product, gocrm, is a product for managing direct-mailing and newsletter campaigns, and the third product, which is still unfinished, is an archive management program whose advantage over existing archive programs on the market is that it's networked, i.e. it's accessible to the whole world, meaning you don't have to physically come to the site to work with it and it spares you the need to print in order to distribute the contents. the product is in the process of development and we plan to release it in the coming months.

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how many staff members does the company employ?
twenty-five people. the internet department in haifa has 12 employees. administration, sales and the crm department have another 13 employees at the company offices in rishon letzion.

does that mean much of the time and many of the employees you manage by remote control?
i go up to haifa once or twice a week. we also use tools such as video conferencing and messenger communications software. i've found this to be a tremendous work tool. immediate and very convenient. i conduct a lot of conversations with the employees during the course of the workday. every problem, every questions, every consultation is done through this channel and the briefs from these conversations serve as the protocols for summaries of development meetings.

what's the company like?
we're very close-knit. even people who left us ten years ago still keep in touch with us and are invited to make a toast with us to mark holidays. the average seniority here is 8.5 years. we're still a small company and so the staff members know one another quite well.

how do you retain employees for so many years?
i attribute that to the homey feel. people feel at home here. they advance and develop themselves and we put a whole lot into them.

what opportunities for growth and development do company workers have?
when they first start out we teach all our employees about the world of crm. later they're constantly learning and advancing. every crm installation is a whole world unto itself. you learn about a new field, a new company. it's a school that's hard to find elsewhere. we have an enormous range of customers, from those who sell bathroom products and a company that sells dental equipment to ibm or keshet. it's so varied that you never feel you're standing in place. you're always learning and always starting something new. it's very enriching and creates a very broad spectrum of specialization.

how would you describe the company from the staff's perspective?
people are glad to work here. there's a very open atmosphere and they know they're responsible for their actions. they have freedom and the ability to have an impact. they feel what they say has value and they have respect for themselves and their workplace. one thing that's important to me is that the worker knows exactly where he stands. if i respect him he is aware of that, and if i have a problem with him, he'll know about that, too. everything's out on the table. i generally try to convey messages with some humor. i'm not a manager who yells and bangs on the table.

is that typical of management here?
hierarchy, compartmentalization and positioning doesn't exist here. i don't recall saying to someone, "this is what i want," or "what i say goes." we don't have that here. things would be a lot easier for me if my title didn't appear on my business card. at many companies the ceo is just a ceo, whereas i'm a computer professional. if there's a problem in installation, i go to install. i have no problem with that. i'm here and i don't feel embarrassed doing that. i've remained a technologist and i'm still very much involved in architecture and try to have as much influence as i can. i'm learning a whole lot. i, myself, took microsoft's crm exams because i believe you can't manage if you're not familiar with the work taking place out in the field. i believe a ceo has to know his field of enterprise backwards and forwards. when employees see that i have no problem taking care of the simplest installation or the slightest glitch, it also has an effect on them.

how do you select which people to bring into the company?
naturally, ziva and i are looking for people like us. unpresumptuous, not out for status; decent people who we have good chemistry with. ziva and i continue to interview every candidate ourselves, regardless of the position to be filled. know-how and experience carry a certain amount of weight, but above all we want good chemistry and the right personality. an open framework like ours is not right for everyone. someone who lacks self-discipline can't work with us. we're not people who check our workers under a magnifying glass. we strongly believe in a worker who knows his limits.

do you plan to expand the company and recruit additional workers?
at the beginning of the year we thought we had realized our growth potential for the immediate future, but as it turns out we were wrong. the first quarter of the year brought a strong demand both for crm installations and internet services, so we're recruiting more people. it wasn't planned, but we're inundated with projects. the growth is natural growth, as a result of projects that came in, without us lifting a finger in some cases. our last four sales were to customers who heard about us from other customers.

what's your vision regarding the internet world, the crm world and the company?
the crm world is currently merging into the internet world, especially on sales sites. this is a very synergetic field, so know-how, understanding and internet developers are becoming very crucial. my vision is that toward the year 2009 we reach a size that will allow us to accommodate all of the demands. at the same time i don't want us to grow beyond a certain limit. our greatness lies in our smallness. we're dynamic, able to respond quickly and change, and i want to keep it that way. personal contact with the customer and the employee is important to me. i don't want us to turn into a large, bureaucratic company.


for the hebrew article