How has Schema achieved so much attention so quickly? Simply put, Schema’s products are technologically superior in a wireless market that is saturated with competitors. Yosi Ben-Dov, Schema’s CEO explains: “Schema is the only company that offers a completely integrated and enterprise-wide approach to network optimization. For wireless networks, this means increasing spectrum availability by more than 30 percent, with no additional infrastructure costs.”

Eyal Kaplan, general partner with Walden, was able to see Schema’s potential at the early stage, even though the company had focused on a different market niche and had only taken initial steps in the wireless communications industry. “Schema provides an excellent case study of how a VC can bring an outside perspective to a start-up to help it regroup. We were very impressed by the company’s technology and products, as well as its value proposition, but felt that it wasn’t properly positioned,” recalls Kaplan. ”As a result, Schema wasn’t capturing its revenue potential. With our input, the company reworked its business model and repositioned its products and revenue model. We learned how important it is for a VC to look beyond a company’s business plan and to ‘think out of the box’.” With its new revenue stream and business model, Schema was able to capture a bigger piece of the wireless pie.

A History of Change
Since joining the company in 1999, Yosi Ben-Dov introduced a series of changes into the company’s marketing and sales strategies. Ben-Dov is a CEO who welcomes change. He came to Schema from Amdocs, where he managed an internal start-up that grew from 30 to 300 people in less than one year.

In fact, his professional career has included changing industry more than once. Ben-Dov completed his Ph.D. in operations research from the University of California, Berkeley. After a stint of teaching at both the Hebrew University and the University of Pennsylvania’s Wharton School of Business, he began his professional career as a Managing Director of the Financial Strategies Group at Prudential Securities in New York. In 1991 he returned to Israel and joined the Rappaport Institute of Medicine (affiliated with the Technion’s Medical School) as Deputy Director, where he focused on commercializing various medical projects in progress.

The Walden Connection
One of these projects was Carmel BioSensors, a start-up based in Haifa. After a while, when the company was growing, Ben-Dov got an offer he couldn’t refuse – to join a fast growing large Israeli company --Amdocs-- and start-up a new business unit. He did, however, keep in touch with his Technion connections and he became involved as a Board member with Karmel Accoustics, a medical technology start-up. At one of the company’s Board meetings, he met Eyal Kaplan from Walden, then Board member. The Board meetings at Karmel Accoustics proved to be a very beneficial encounter.

A few years later, in 1999, Kaplan approached Ben-Dov about joining Schema. “I was familiar with Ben-Dov’s background in operations research, but even more so, with the work he had done at Amdocs,” he notes. At that time, Kaplan was working with Walden’s recent investment – Schema -- to shift its focus exclusively to the world of telecom. Kaplan immediately recognized that Ben-Dov’s personality, academic background and industry experience were a good match with Schema’s needs.

At the time, Ben-Dov was very satisfied with his position at Amdocs, managing a growing division. “Although Amdocs was an exciting place to be, I was tempted by the challenge of leading a small company. The timing was less than ideal: Amdocs was soon to go public and we were planning my daughter’s wedding, but Kaplan’s less-than-gentle persistence prevailed,” he recalls.

The Paradigm Shift
Ben-Dov joined Schema in August 1999, when the company was in the field of solving difficult mathematical problems for the defense industry, the logistics industry and the wireless industry. “At the heart of the company were its good mathematical algorithms. However, there was a problem with the concept--it was too difficult to sell. It needed a concrete application tailored to a specific industry. The company didn’t even have an RF engineer by training,” said Ben-Dov.

“Schema’s marketing slogan at the time had been “optimization experts.” With Walden’s input, we implemented two major shifts in marketing. We moved from being optimization experts to defining ourselves as specialists in “wireless optimization.” We began to hire RF experts, sales teams with this expertise and account managers from AT&T in N.J. The other major shift was moving the company from software development to offering a total solution, including software package and support, such as implementation and customization services.

Kaplan’s past experience with Geotek provided critical connections in the wireless industry. He also encouraged us to focus on long-term building, as reflected in our business model. Our model is still quite unique to the industry. Many software companies charge high fees during the first year—with up to 15-20% as maintenance in following years. Schema takes a long-term, more conservative approach of charging a yearly lease, spreading the cost over 2-3 years, with options to extend. This reflects our philosophy to build for the long term.” The risk is that it allows us to go a year without high visibility, but I feel it makes us stronger over the long term. This approach is also reflective of Walden’s investment philosophy as well.”

Total Solution Approach
“Walden encouraged us into expanding the notion of TRM (Telecom Resource Management). We restructured everything--from our own marketing perception to the message conveyed in our brochures. The message was to be one of cost savings: we began to target CEOs, CFOs, and network managers instead of engineers. Our first major contract with Bell Atlantic in New York opened up a whole new market for us and we realized we were in the right direction,” explains Ben-Dov.

“My contacts in Amdocs led to initial connections in the wireless world, but we found the message got out quickly. One carrier quickly leads to another in the wireless world. Verizon, Cingular showed immediate interest,” noted Ben-Dov. "In May of 1999, Walden led the third round of funding. Through our connections with Walden, the team helped us bring on our fourth round investors, BRM, TL Venture and Enertech. Clearly, personal relationships created this network.