Upgrading Goldman Sachs from being a customer to an investor is not an everyday occurrence — particularly if you have spent a good chunk of your life on a skateboard or surfboard, rather than in a board room.
But that’s a trick Gary Hoberman managed to pull off earlier this year when he persuaded Goldman to be the lead investor in a $22 million raise for his software firm Unqork.
Hoberman was a sponsored skateboarder in the 1980s, but joined the corporate world in the 1990s. He rose to high-powered roles at MetLife and Citi Group, before founding Unqork in 2017, a startup he runs out of New York City.
Unqork provides a so-called “no-code” software platform that lets companies, such as banks, develop enterprise apps without needing to write any code themselves. This frees up their software engineers to focus on other tasks that do require coding.
The other distinctive feature of Unqork is its pay-as-you-go model. Unlike traditional software providers, it only charges companies while apps are live in development. This means companies can alter those apps while they’re still being developed, and can ultimately avoid being saddled with technology that doesn’t work as they envisioned.
‘Building software’s kind of like constructing a house’
Speaking to Business Insider, Hoberman uses a vivid metaphor to explain where previous generations of software development went wrong – a metaphor he says helped secure Goldman’s investment.
For Hoberman, traditional software development is like building a house. You may be delighted with the design, only to be disappointed once it has actually been built. Maybe you don’t like the way the windows look, or one of the rooms feels too small, or the hallways feel too wide.
In the same way, a client can be very happy with a software developer’s plans for a new enterprise app, only to realise the app isn’t what they wanted once it is actually built. Maybe it feels too clunky, or it runs too slowly, or it doesn’t capture all the necessary information.
Of course, the problem is that once the software has been built and implemented in the traditional way, it can’t be undone without lots of time and money – just as a house can’t be quickly or cheaply altered once built.
Hoberman explains: “The reality of life – I’ve seen it at every single company, every time – is that after the three years [of building] is up, and I give you the keys to the house, you’re going to immediately tell me ‘that’s not where I wanted the windows.’
“Until you walk through and know where the windows come in, and have lived there a day or two, and have experienced the sunlight in the morning, you actually don’t know if it’s what you want.”
“We created Unqork to resolve cross-industry problems that I guarantee, if you interview any CEO or CIO, they would say ‘yes, that’s exactly what we see.'”
Yet, although this house metaphor helped secure investment from Goldman Sachs, Hoberman’s initial conversation with the bank was nothing to do with financing.
Goldman Sachs was the first company that asked to use Unqork’s platform without Unqork’s team
“With Goldman, our original conversation was purely as a client,” he recalls. “We weren’t looking for investment, but the value that they brought to us – and we had a choice of investors, the best names you could imagine – they basically looked at our technology and said ‘this is what we’ve been looking for, for 20 years.'”
Unqork’s original service was to build an initial system for a client, such as a bank, and then hand it over to that bank and teach it how to add new functionality.
“But when Goldman Sachs came in,” Hoberman says, “they said ‘look – the one thing we want is you to commit to making this platform something we could use without your team.'”
Goldman began testing the software and Vice President Sarah Shenton said it “is one of the closest to a real, no-code, low-code platform that we’ve seen.” It ultimately persuaded Goldman to invest.
“Goldman Sachs, like every other client, throws at us the most challenging proof of value,” says Hoberman. “We welcome the skepticism and love watching the client’s face when in a day or two it appears before their eyes.”
“Subsequent to that [Goldman using Unqork as a service], the goal was ‘we’d love to be part of your company and invest,’ and that’s when we started the discussion towards the Series A.”
Hoberman adds that Goldman is far from Unqork’s only big-name client. As well as banks, Unqork’s platform is also used by several major insurance firms, including Liberty Mutual — Unqork’s first-ever client — Principal, and John Hancock.
“We’re now certifying hundreds of clients and hundreds of consultants on using this tool, and we do thank Goldman for that push,” he says.