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Raluca Ragab - In investing, as in life, there are very few things that matter

6 minutes reading time


Raluca Ragab is a growth equity investor partnering with extraordinary founders in Israel, Spain, Portugal, and Romania. Previous roles include Managing Director at Goldman Sachs and Vitruvian Partners. She also sat on the Board of Directors at  WalkMe and Mobileye.

Connect with her on LinkedIn.

Raluca, welcome to our chat and, of course, to our board of advisors. You have a dream career path by all standards, so let's expand on that. What’s your narrative, your growth story? 

I started as an investor in the most mature, largest companies, the ones that are already publicly listed on the stock exchange in the US. But that was a very academic exercise - in the sense that you're far away from the day-to-day decisions they have to make, you're looking just at the results. I spent 14 years doing that, managing a portfolio of publicly listed equities, first in New York and then for ten years in London. 

And then, I started to realize that I wanted to understand more about the mechanisms of action and what's below the surface? How you're going to move the needle on revenue or EBITA? I was just looking at the tip of the iceberg, the results.

So I started working with private companies, which are less mature; they're still going through many daily decisions and questions about their strategy and where they’re going. And then I realized I liked that quite a bit. I started working more closely with founders, advising them, being part of their journey as they build their companies, and learning.

What I like about this advisory business, and what I tell founders, is that they think they're getting more out of me. Still, I think I'm getting much more out of the interaction because I'm learning more about building businesses.

Investment and advisory are not something children grow up wanting to do. What was on your roadmap back then?

Every day, on my way to school, I was passing by the Law Department of the University of Bucharest. And I was convinced I was going to be an international affairs lawyer. And that I'm going to solve all the big problems in the world. I love politics; I love international relations. And I've always had a very global mindset. 

But, when I left for the US, I landed a finance internship by chance. Once there, I loved everything about it, and I changed my mind: I became an investor. 

You wanted to solve all the big problems in the world - how have you tackled that dream?

It's a matter of impact. The impact you can have on a big company or global issue is not that big. You can make a bigger impact with a minor player that then grows. You can add a lot more to a small organization, which is why I think I've been attracted in the end to startups and scaleups. And I went from companies valued at hundreds of billions of dollars to companies that are maybe hundreds of millions in valuation, at best.

How do you choose which startups to get involved with?

The dominant variable is people. You can have a fantastic business proposition or operate in a great market. But if you cannot you can look up to those people, if they are not inspirational, then I think it's not worth it.

And again, I just learned that when you are successful, you think that there's only one way to be successful. And it's beneficial to look at other journeys and see how people arrived at a beautiful point, following a very different path. 

What the business does is secondary because if great people are around, even if you started down a path, you will pivot and change your strategy, but you're always making the right decision.

And I appreciate founders who are honest with themselves, who can change their thinking based on new information and new data points, who can look and say, “I've made a mistake; there's a better way to do things,” Not that many people have that.

Beyond the people, what attracted you to FLOWX.AI?

For 14 years, I’ve analyzed the most prominent companies - banks, energy companies, and telecom companies.  I have spoken to hundreds of decision-makers there. And I see the same topic again and again: their growth is limited by the fact that they come from a very chaotic, fragmented, old-school technology stack. 

And they have this patchwork of software that makes it very hard for them to operate in today's world, to compete with a digitally native business. 

The problem you're solving is helping these large businesses leapfrog into the 21st century, helping them interface with their customers as if they were digitally native, which just resonates with me instantly. And the problem is enormous, and everybody's facing it. 

I think that there is an incredible potential out there; you're effectively moving businesses from the 20th century to the 21st century, enabling a massive part of the economy to compete again because there are banks that are losing customers to Neo banks. In every vertical, there is a challenger that doesn't have that legacy and can compete very differently. So you're enabling a considerable part of the economy to survive, effectively. 

I've looked at a lot of tools that tried to do this. I've invested in a $90 million round in a digital transformation player in Israel - which doesn't do what you do but ultimately tries to tackle the same issue. I've evaluated a lot of tools, and they're all incomplete.

What FLOWX.AI brings is a much smoother solution, with an efficient layer that isolates the Past from the Future, if you will. You're also buying them a lot of time to fix the bottom part of their infrastructure, to slowly start replacing it, rather than immediately rendering it obsolete. And you're doing it faster and with fewer resources because these businesses lack the talent to make a lot of these projects happen. They are not ultimately tech companies, however much they would like to be, so they don't attract the best talent. They are constrained in terms of their tools and talent. So it has to be a solution that works and is very easily implemented. 

What about banks? They do seem to have a lot of resources

They have the benefit of a stickier product. People don't change their bank accounts. But even though people don't switch their primary bank account, they tend to do all their other financial transactions on other apps. So you lose the customer engagement, the customer intimacy, and their data. Revolut knows what I'm spending my money on when my bank doesn't have a clue. And it's an entirely different experience. So maybe, as a bank, you have the original account, but all the incremental value and data for this new customer is happening on the neobank platform. 

How do you manage the big, strategic view vs. the day-to-day operational aspects?

As an advisor, you have a little bit of a luxury of not having to have the answers for everything, versus the company management where you have to make 2000 decisions a day, and people expect the right one to be made. And those decisions range from strategic to more day-to-day ones.

As an advisor or as an investor, you focus on fewer issues at the time. Not everything is exploding at the same time.

And so, as an investor, the one thing that I learned in my career is that there are very few things that matter and move the dial. 

And so it's really about identifying what matters right now. Which one is that card that tumbles the entire castle if you pull it out? Find it and focus on that. 

Also, I run a daily prioritization model. And that changes every day and even sometimes during the day, so it's about a lot of very tight time management - what is, the most important thing that I should be looking at what, what should I not miss.

You can't be involved in everything, you can't be making every decision, and you have just to pick your battles. This brings me to the delegating topic.

When you have decisions with a relatively narrow range of outcomes, delegate; at the same time, there's a much more comprehensive range of outcomes in other decisions. And those should be the ones we're focusing on.

Hopefully, those are the big ones. Hopefully, those are the ones where your input is critical. And then there's a long tail of nice-to-have; I'd love to be involved in this. But the truth is, I shouldn't. 

What's your definition of success in your role?

In this role of advisor to founders, it's really about whether you can move the dial.

Success is just getting to that level of trust, where founders and managers come to you with every question they might have, even if it’s a silly one. And they can have an honest conversation; they can be honest with themselves, honest with me about the real issues.

Because they often find themselves in very lonely positions where customers, employees, or partners expect them to have many correct answers. And they don't have a space where they can feel safe to take the time to ask what am I doing? Am I doing this right?

And I don't promise to have any answers. But I want to create a space in which we can think through things together.

To me, success as an advisor is to create that space and help them reach better conclusions because they feel unencumbered by the baggage of having to have great answers. 

And hopefully, like this, better decisions and better ideas emerge. It’s about creating a better thought process if you will.

I've noticed that we often conflate the outcome with the quality of the decision. But they are not the same, and instead, you should focus on the quality of the process.

Absolutely. When I was a junior in banking in New York, I was told that I would never be paid for the conclusion I drew in the first four or five years, but only on how I reached that goal. What assumptions went into the decision? Because you're maybe still immature to reach the correct conclusion. But the beliefs you're putting in and how well you research the data points you gathered were much more critical.

In general, the right decisions and the correct conclusions will be drawn, but don't judge on one by one set, one by one basis; just judge the process over time. We'll always get to the right place with enough iterations, but it has to be the proper process.


This interview has been edited for brevity. May 2022.

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