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Profile: Making Contact in the 21st Century
by Pam Losefsky
How does a guy finish his MBA and launch an Internet start-up at the same time? Arnon Dinur could tell you, if only he could remember. "It was a blur," he says of the last year of his life.
Typically, he'd spend Monday through Wednesday evening in Austin taking classes, then he'd hop the 'nerd bird' to Silicon Valley where he was establishing Contact.com (previously NetinTouch Corp.). He took advantage of the three-hour flight to catch up on his studying.
One particularly harrowing week Dinur scheduled an appointment in London and another in Israel three days later, but between the two business calls he had an important class. "I had already missed two of Sandefer's classes, and if I missed a third I'd have been kicked out of the class," he explains. "So, I flew in from London for the class and out the same day to Israel."
His classmates graciously accepted Arnon's unpredictability in the last two semesters of school. "We knew he couldn't meet for group projects, so we'd do many things without him and just show him his part of the presentation on Sunday night," says friend and classmate Luiz Viotti who now works for PriceWaterhouseCoopers. "He's very fast on his feet and he could get up to speed very easily. He would always stand out with his enthusiasm and energy to 'sell' the ideas he was presenting."
Even when he did make it for group meetings, Dinur was often distracted. "Arnon was always with the mobile and had conference calls with lawyers, accountants, and investors," Viotti remembers. "We had to understand that he couldn't delay those calls because of our meetings. We certainly cared about our schoolwork, but we knew that at that moment the most important thing was the call."
At the writing of this article, Contact.com was set to introduce its first product in a matter of days-a revolutionary Internet-enabled contact manager that allows users to be in touch with their contacts always. The product is a rich medium combining pictures, voice, and other types of data while safeguarding privacy and intimacy level with other people. Dinur's own frustration with his inability to inform people of changes in his life (like moving to California for a summer internship) or to match names with faces played a large role in the product's conception. "I had a rolodex, a list on my cell phone, information on the computer, and so forth, but I never had all of these lists in one place, updated, enhanced and containing all the information I needed," he says.
Dinur founded the company with his cousin Eyal from Israel, who had already experienced success when the company he worked for was purchased by Cisco Systems last year. The two first raised about a half million dollars in seed capital, which they used to recruit a technological team. Then came another $1.4 million from a British investor and $0.8 million from an Israeli investment bank-all before Dinur graduated from the program.
Something else he did before graduation was to ask fellow Texas MBA Eduardo de Castro, now Contact.com business development manager, to join his venture. "At first I thought he was kidding," remembers de Castro. "But I found myself flying out to San Francisco the following weekend to meet the 'guys.' I liked what I saw-the people, the talent, and the product-and that was before the serious funding came in." De Castro quickly developed a passion for the product. "I really like what I do," he says. "This is why I went to business school."
Other graduate school friends sometimes wish they had been tapped to work with him too. "It would be great to be working with Arnon," says classmate Simon de Montfort-Walker, who describes his friend as a 'big picture guy.' "I think he's going to do incredibly well. It's a brilliant idea-the kind of idea that does well-it's simple and uses new technolgoy to solve so many problems."
"Probably the most important thing I took away from business school is that you really need to understand what creates value for the customer," says Dinur. "It's so basic, but think about how many times you are not satisfied with a product or service. Every time that happens, someone has not thought all the way through what you, the customer, want." Contact.com, on the other hand, answers a universal consumer frustration.
One might ask, if the venture was already off the ground, why bother finishing business school? "I know there are plenty of people who start businesses without MBAs, but I think it adds a lot of value," Dinur insists. "When you know what you're talking about, that gives you confidence." He believes it's not necessarily the tools you pick up, like finance or accounting, that make the difference. "You can hire someone to do those things," he says, "but to have a global understanding of business is very important." Steven Tomlinson's course gave him the ability to analyze the competition; Prabhudev Konana's course provided an understanding of how technology can be leveraged for competitive advantage; Jeff Sandefer taught him how to create value and understand customers needs; and Tim Ruefli's class yielded a $10 million investment.
Indeed, the overture to a $10 million financing round, announced in July, began in his High Technology Entrepreneurship class, during which professor Ruefli asked him to present his business idea to the class. Still in the early stages of launching the company, at first Dinur was reluctant to reveal his idea to a classroom full of MBA students. But finally Ruefli persuaded him. Roland Galang, sitting in the class, remembers, "Arnon's presentation lasted nearly three hours, but the class was spellbound. After he showed the demo and explained his vision, it was totally clear to most of us that he would be successful."
Apparently, it was also quite obvious to another classroom observer-Tom Herring, Ruefli's co-instructor, a member of the UT Information Management Steering Team, and a venture capitalist with Polaris Venture Partners. He pulled Dinur aside after class.
Contact.com completed the financing round, invested equally by Herring's Polaris Venture Partners and Accel Partners in July, just two months after Dinur graduated from UT. Both Herring and Mitch Kapor of Accel (and founder of Lotus Development Corp.) now serve as active board members. "From our first meeting, I was impressed with the shared vision of the Contact.com team, as well as with their technology and strategy," says Kapor. "Contact.com will revolutionize the way people communicate."
Dinur's latest coup: enticing Andy Halliday (former VP with Excite@home), Adam Hertz (former VP and head of engineering with Excite@home), and Omer Malchin (former VP of marketing with Netflix.com) to join the Contact.com team. Combined, the three senior managers left more than $20 million in stock options on the table when they decided to switch high tech allegiances. "Walking away from a substantial position at Excite wasn't easy, it's a big personal investment in a new company," says Andy Halliday, now Contact.com President and CEO. "Arnon already had a great concept and strong backers, both of which were in place well before I had any influence on the company. But what really tipped the scales for me was the clear sense that both Arnon and Eyal are fast racehorses with a will to win."
Business manager De Castro is very aware of the sense of opportunity, of 'frontier' that working for a start-up affords. "It's not vague at all," he says. "You feel it every day." And of course, there is the potential for a huge financial payoff.
Will Contact.com be the next Internet start-up to make it big?
Dinur isn't popping champagne corks yet. He says he's prepared either way. "There were many moments that I thought things wouldn't happen, but the risk is part of the adventure and failure is an integral part of success," he expounds. "If you don't know how to fail, you will never know how to succeed. This is business after all-it's not your health, it's not your life-it's fun. I'm having a lot more fun now than I ever had at a 'real' job."
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