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The Future is Climate AI Solutions | Rohit Toshniwal (Sprih)
102 Plays7 days ago
"Behind the scenes, it's a Climate AI. It's a very deep Climate AI engine that we have built, which drives all of these workflows."
Rohit Toshniwal pulls back the curtain on the sophisticated technology needed to tackle complex environmental challenges, highlighting how Artificial Intelligence is becoming essential for managing sustainability data and driving climate action. Rohit Toshniwal is a serial tech entrepreneur and Co-Founder of Sprih, which builds a Carbon Intelligence and Management platform using Climate AI to help organizations catalyze climate action. An IIT Kanpur graduate, Rohit previously co-founded Arkin Net, acquired by VMware for over $100 million, and helped scale that business within VMware to ~$250 million in revenue.
Key Insights from the Conversation:
👉Why tracking environmental and social impact is becoming critical for businesses, driven by regulations, investors, and customers.
👉 Understanding Carbon Dioxide Equivalence (CO2e) as a key metric for environmental performance.
👉 How strong performance on sustainability metrics can unlock preferential financing and attract talent.
👉 The role of technology, particularly Climate AI, in simplifying complex data collection, analysis, and reporting for climate action.
👉 Lessons from building and selling Arkin Net, and scaling it post-acquisition.
👉 The importance of long-term vision and the right partners for building sustainable businesses.
Chapters:
👉 00:00:51 - Intro: Rohit's Journey into Green Tech & Sustainability
👉 00:04:30 - Understanding Corporate Impact: Beyond Finance
👉 00:09:39 - Why All Companies Should Track Climate Impact
👉 00:15:07 - Deep Dive: Understanding Carbon Reporting & CO2e
👉 00:20:13 - Climate Performance, Capital Access & Business Advantage
👉 00:26:05 - Introducing Sprih: Climate AI for Carbon Management
👉 00:39:50 - The Market Opportunity in Climate Tech & Carbon Intelligence
👉 00:57:25 - Rohit's Early Career: From Cisco to Startups & VMware
👉 01:02:42 - The Arkin Net Story: Building & Selling for more than $100 Million
👉 01:06:30 - Scaling Post-Acquisition: Growing to $250M within VMware
👉 01:11:31 - Engineer's Take: How to Build a $250M Business
👉 01:18:29 - Building Philosophy: Focus on Roots, Not Flowers
#Sustainability #ClimateTech #CarbonReporting #ClimateAI #CarbonIntelligence #Sprih #FounderThesis #StartupIndia #Entrepreneurship #TechFounder #FounderJourney #BusinessStrategy #VMware #IITKanpur #NetZero #ImpactInvesting #ClimateAction #IndianStartups
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Transcript
Understanding Climate Jargon
00:00:00
Speaker
Before that, a lot of terms used to be thrown at me. Whether it is carbon emissions or ESG, it was very disturbing kind of a view. It always felt like there is nothing that I can do about it.
00:00:13
Speaker
Let me end with this question. Give me an engineer's take on how to hit $150 million dollars revenue. The economic model assumed that all the natural resources came for free.
00:00:26
Speaker
ah The water, the air, the minerals, we just assumed that they were for free. That is really how the economy has developed. If you live in Delhi, every winter you would realize the impact of climate change. And if you're a startup founder, you should realize that large consumer problems lead to multi-billion dollar business opportunities.
00:00:46
Speaker
And probably the area which will bring about the next billion dollar companies is climate
Guest Introduction: Rohit Toshniwal
00:00:52
Speaker
change. In this episode of the Founder Thesis Podcast, I'm speaking to a serial entrepreneur Rohit Toshniwal. Rohit sold his last business for more than $100 million dollars to VMWell.
00:01:02
Speaker
He's a hardcore techie using the power of tech and AI to help companies with ESG. What is ESG? E stands for Environment, S for Social, G for Governance.
00:01:13
Speaker
Just as P&L tells investors about the financial health of a business, the ESG metrics tell the world at large about how sustainable and responsible a company is. And increasingly, it is becoming a mandate to report your ESG numbers.
00:01:29
Speaker
Keep listening to figure out how ESG is the next massive opportunity for tech to conquer. I'm your host, Akshay Dutt, and this is the Founder Thesis Podcast.
From Infrastructure to Green Tech
00:01:47
Speaker
So Rohit, you are in what looks like a really lush green campus and you're also in the green tech industry. ah What brought you here? Give me a little bit of first context.
00:02:03
Speaker
ah Sure, sure, Akshay. ah So... and So it's it's an interesting, it's been an interesting sort of a story how we landed over here. ah So earlier I used to be in internet infrastructure kind of it. And at one point in time, I sort of took a break and that is ah where I met my co-founder Akash.
00:02:23
Speaker
ah Both of us left our sort of the deep tech jobs trying to figure out what to do next. And we landed up in a nonprofit that has been called 14 Trees that has been working on the issue of completely wasted land.
00:02:39
Speaker
And neither of us had come earlier from sustainability background or climate science background. And that is where we learned the ABCs of why it matters. So before that, when I used to ah look at some of these aspects like climate, and largely it got shaped during the COVID period. I mean, that was a period when it reset a lot of people, how they look at the nature, etc. and And I was one of them. And that is when um I reached 14 trees and started spending serious time over there.
00:03:10
Speaker
Before that, a lot of terms used to be thrown at me, ah whether it is carbon emissions or ESG or the world is going to fall apart. And while it It was very disturbing kind of a view.
00:03:25
Speaker
It always felt like there is nothing that I can do about it or we can do about it.
Economic Model Critique
00:03:30
Speaker
People who are not directly, let's say, involved in the climate space. But while working at 14 trees, we started learning the basics of what is what all of this means.
00:03:41
Speaker
ah Before that, my view of economy, and by the way, I bring a very economic view or a capitalist sort in front of view when it comes to doing things. And I've always believed that if you have to bring in big changes, ah the way to bring them in is is through economy and by providing capital and by focusing on the right sort of things.
00:04:00
Speaker
So once we were at Poutine Trees, we started learning ah that the economic model, in some ways, the way it has developed over the last 200 years, assumed that all the natural resources came for free.
00:04:13
Speaker
ah The water, the air, the minerals that are used in all the economic activity. We just assumed that they were for free, extractive nature of economy. And we would build on them and sell and generate profit kind of it.
00:04:27
Speaker
And the more the growth or the bigger the company, it really depended on how much extraction you can do about it. And that is but really how the economy has developed. And this forced us in this path where we are right now, ah where suddenly climate change and other things have become very, very serious.
00:04:45
Speaker
And all the scientists have started looking at it, while there can be differences in the time that it will take. ah for us to get to point of no return. Everyone agrees on those parts.
00:04:57
Speaker
And while this was going on, that is when the governments across the world sort of woke up to this, that the path cannot go in forever. And the realization that if we have to manage economy in a way so that it starts using natural resources ah also into the accounting, there needs to be a way to measure what a company is doing. And that is really what led to the start of what we call the ESG reporting, etc.
00:05:25
Speaker
So prior to that, um initially... What is the E, S, and G in ESG? So e E starts for environment, S starts for social, and G starts for governance.
00:05:36
Speaker
So what used to happen is earlier the companies were assumed to only work for the profit motive, that it is only the shareholder value and it is the profit that a company really needs to care about it.
00:05:47
Speaker
ah But then the realization came in that and as entities, the companies need to look at more. And ah this cannot be just the financial measures, but how a company interacts with its communities, ah whether there is an inclusiveness over there or not, equity there or not, when it comes to the communities over there.
00:06:07
Speaker
ah whether the governance structures, things like bribing or the practices which are there are important. So they were about governance. And the most important one being the environment. So ah what it meant is that if as a company I'm involved in any economic activity, then I need to start paying attention on the natural resources that I'm using, either directly or indirectly.
00:06:31
Speaker
And I'm supposed to report on them. Because if only when there is a good clear reporting of what I'm doing, can the two companies really be measured around it? And when we look that number of parameters, there um there can be more than thousands of parameters and it becomes very, very hard.
00:06:50
Speaker
So these standards started getting developed. So the idea is to get to a uniform, the way we look at, for example, EBITDA and other things, right? ah Currently, when we have to measure two companies on their financial performances, there are very, very standard ways and you can pick a
The Rise of ESG in Business
00:07:06
Speaker
report and read through it and figure out what's happening at the financial level.
00:07:10
Speaker
Similarly, we need a way to be able to measure the environmental performance of a company, the social and the governance performance of the company. And that is when the ESG sort of the reporting came into picture.
00:07:22
Speaker
So one question here. yeah is ah Is it a legal mandate? So, for example, there is a legal mandate for companies to report their financial numbers like EBITDA, the profit, all of those things.
00:07:37
Speaker
yeah And the balance sheet. is there a financial Is there a legal requirement to report ESG numbers? And what numbers birds are getting reported? so ah So, yes. and and And this will be a journey, ah right? like Like anything else.
00:07:52
Speaker
um ah So... economies across the world, I mean, Europe definitely took a lead on on some of this stuff after the Paris Agreement, etc. When the Greedle deal kind of it came and they came up with a CSRD requirement, which almost said that any company which is operating in Europe now needs to report CSRD requirement. CSRD.
00:08:12
Speaker
ah so So CSRD, ah basically what it says is ah that the companies now need to report on their sustainability. So it's a sustainability related report directive.
00:08:23
Speaker
that came out ah by Europe. And the way it mandated is that if there is any company ah working in Europe, now they need to report on what they are doing on the sustainability side. It's a very comprehensive report. and And of course, there were precursors to it and and there have been different versions around it.
00:08:42
Speaker
But you brought a good point. ah The way the financial reporting is required, it's not a mandate, but it was never not always a mandate kind of it, right? And if you remember things around the child labor policies, etc., it was not always a mandate. It took us a few good decades to get to a point ah where we are right now.
00:09:01
Speaker
Similarly, we are seeing similar kind of a progress happening when it comes to the reporting on non-financial disclosures as well. And the way it starts in any e economy is first you take the largest players and then you say you have to report.
00:09:17
Speaker
Initially, it starts with voluntary disclosures. and certain aspects of the disclosure, like what you are doing within your own premise and operations, and then you have to bring into the fold your supply chain. So it has been sort of a progression that has been going on.
00:09:31
Speaker
And that is how we are seeing it evolve. For example, ah we are in India right now, right? In India, the top thousand companies are mandated to report what is called a BRSR report. ah Similarly,
00:09:43
Speaker
Europe came up with the CSRD requirement. And similarly, other economies have been coming up ah with these requirements, which require companies to first, A, start measuring on them. Then B, start reporting on them.
00:09:54
Speaker
Then C, starting to get them audited. And these will be treated in the same way that the financial disclosures are. And then there are penalties and and other measures which come through any regulations, which are the ways, the way governments control on in what direction the companies need to move on to.
00:10:11
Speaker
So so that's ah that's one of the things. But going back on...
Impact of ESG on Business Practices
00:10:17
Speaker
One more question I want to get in. ah If I am a company which doesn't legally need to report ESG numbers, ah do I care about reporting them?
00:10:29
Speaker
Or, I mean, you know, is this just another checkbox for someone in the admin team to just fill out? ah Or, you know, do I care about my ESG report?
00:10:40
Speaker
Very important question, Akshay, over here. And so again, ah like like all ah hard questions, the answer is not a clear black and white kind of it, right? ah So while we talked about compliance, that has become a major push, ah which has brought under its ambit hundreds of thousands of companies across the globe kind of it right which becomes a big push but as companies start looking at it there are other aspects also which becomes very important reputation risk for example it's a huge thing and and largely because as you and i common man when they look around climate change i mean it is no more a theoretical thing almost everyone is aware about the change in the weather patterns
00:11:24
Speaker
ah the flooding and the droughts that are happening, the once in a century kind of events now are occurring more and more. And this has brought ah the aspect of climate and sustainability to what we call the main street in in certain ways, right? And where people care about it. So people have started ah looking at companies, their brands and reputation and started favoring companies, which which are seen as more socially responsible, more sustainable.
00:11:58
Speaker
And that has resulted in a lot of movements that have been are going in the world And especially um ah we there have been in our studies that say that the younger generation, they definitely are more aware of these things and at the same time they are also more hopeful that something can be done about it not not like that hey this is the way things have been going on for multiple generations and that is how it is going to happen so that is another area yeah you're you're saying that yeah esg should be something that concerns the cmo like it'll help him build a better brand attract gen z but not the cfo
00:12:36
Speaker
ah So but it's both. See, CFO cares about the regulation part of it. And that is why they look at it like the ESG aspects. um There are companies and investors who cannot look at you unless your ratings are above a certain thing.
CFOs, CMOs, and ESG Management
00:12:51
Speaker
Something that has happened with governance, etc. Right?
00:12:53
Speaker
All of these large investors have certain... ah rules around which company they can invest in and which company they cannot. And clearly it is going in that direction. The governments across the world have been through the banking system, etc.
00:13:07
Speaker
have started making finance available ah for companies which are going to be more sustainable. So in those ways, the CFO definitely and the CEO and the board definitely cares about it.
00:13:18
Speaker
For the CMO and the common man, while the term ESG might be sort of right and some of these recordings might be, but how a company is seen, right? Whether they talk about sustainability, whether they lead discussions with sustainability, etc. becomes very important. And I can give a couple of examples over here. Some companies, for example, Patagonia.
00:13:39
Speaker
right one of the ah fashion or textile manufacturers in Europe, right ah they are seen as a very environment-friendly kind of it. Similarly, ah companies like REI, etc., they have a lot of focus on environment and they have a very ah committed and loyal fan following, people who will go over there. Whereas other companies at times have ah seen a lot of backlash. For example, Volkswagen, when that issue happened,
00:14:09
Speaker
when they were not reporting um the efficiency of their cards, e etc. correctly, they took a huge hit. and And largely, a lot of this was also consumer-driven in many ways.
00:14:21
Speaker
ah The way companies ah build brand around trust, for example, Tata's in India, right? They have developed huge respect among among the populace because they are seen as a very social company kind of it. so So there are these angles.
00:14:35
Speaker
Then even, ah so this is from a reputation side of it. Then from hiring, when it comes to attracting talent pool, people are now wanting to work with companies which are seen as more forward-looking, future-looking, and clearly environment plays a huge part in that.
Carbon Footprint and ESG
00:14:52
Speaker
For a CFO, ah there are other aspects. So one, we talked about the compliance, but then there are actually physical risks that a company needs to manage. For example, if they have operations in certain places, their supply chains, I mean, with all the climate change, the climate yield has started changing significantly. The availability of the resources that economy has depended has become a little erratic ah depending on what you are looking at and those are also some real risks as a company that the company needs to look into and in order to ah like energy dependence right that is a huge area and ah while a lot of green energy has been seen as that any we need to be green etc there is also an energy dependence a kind of it that the companies have to really deal with and they are looking at some of these innovations in these spaces to help with them too
00:15:44
Speaker
The part in ESG is largely about carbon emissions reporting, like carbon footprint reporting or anything else also? So, ah E is actually much broader environmental, but ah The analogy that I give you is if you go to a doctor and and let's say you are feeling sick or not feeling OK, they first take your temperature. Right. it it It gives you sort of a measure whether things are OK or not.
00:16:09
Speaker
ah So environment is is very, very complex. I mean, it ah needs to look into the biodiversity availability of the species, what we are doing with them. ah But if you throw a lot of stuff at someone, it becomes very, very hard to comprehend.
00:16:24
Speaker
So the carbon equivalence, so CO2e, what we call carbon dioxide equivalence, has become a good sort of a measure, which is an easy measure to know how much ah quota we have left, how much, I mean, more extractive of the nature that we can be before we get to point of no returns kind of it.
00:16:44
Speaker
So that is how the carbon emissions has become sort of central ah when it comes to reporting, right? This is the first thing that I do. zoom of this CO2e, right? so so yeah what it means So what it means is the the Earth's atmosphere, as we say, um ah we are what we call Earth's atmosphere and Earth has been what we call the Goldilocks zone, right?
00:17:05
Speaker
You go a little here or there and the life would not have existed. All of us have read this in our books. ah High school science, right? when when When we did our schooling and all.
00:17:17
Speaker
And this balance has been very, very delicate. And you move this a degree here or there, and then there are huge implications on the climate system in the world.
00:17:29
Speaker
ah the ecosystems which have been sort of supporting the entire lives etc ah so over the last ah many decades as the scientists have been looking at it dave what do we measure what is that single thermometer kind of a measure that we do to say how bad is situation so the atmospheric temperature the average atmospheric temperature right ah compar in comparison to the pre-industrial revolution era ah is seen as that number. And you will hear these terms like, are we 1.5 degrees above the pre-industrial era? Or when are we going to hit the two degrees centigrade kind of it? And there have been a lot of simulations that have been done that once we breach these boundaries,
00:18:13
Speaker
but So this delicate balance in the Earth's ecosystem will get affected in ways where it will be very, very difficult or impossible to come back to point of no return. Sort of it gets becomes into that negative feedback loop.
00:18:28
Speaker
And in order to measure that, And carbon dioxide has been one of the gas present in it which traps heat and that is how the Earth's atmosphere get affected. Now, what equivalence means is when we look at other gases like methane, which is significantly more ample on a per unit basis kind of it to trap heat, etc.
00:18:46
Speaker
We convert everything into carbon dioxide equivalence. So it becomes an easy measure for a company to say, okay, on a per ton basis of whatever you are producing or a unit economics basis how what is your carbon emission so it allows ah like apples to apple sort of comparison between companies which are operating let's say in the same sector of course across different sectors ah these numbers will be very different for example an it company their emissions in a year might be something that let's say a cement or a coal company
00:19:19
Speaker
um might have in a week or a month kind of a time, right? but But if I compare to aluminum producers and I say that per ton of aluminum that you produce, what your carbon emissions, then I know where the two companies stand at.
00:19:33
Speaker
so So this is where the sort of the carbon CO2 equivalence has come in. And this has become the most common thing being talked about. Of course, When the reporting is done. ah So this sort of jumps into the summary, executive summary part of it.
00:19:48
Speaker
But companies are required to report other things also, whatever they produce or effluent gases or whatever be the side effects of their economic activity, et cetera. ah So that is what is required. All of these numbers are put together and this number is then brought up, which allows people for an easy comparison.
00:20:05
Speaker
And then there are other rating agencies like banks or financial companies. They will take some of these reports and convert it into a rating. For example, there will be a MSCI rating on sustainability, Crystal rating on sustainability.
00:20:19
Speaker
And the analysts within these companies look into all of these reports. in detail and give certain scores to the companies. And ah everyone would have heard about like these five star ratings, e etc. for different funds, which have been looking into their performance on the profit side. Similarly, on the sustainability side, these ratings have become important and the organizations have been looking at them. And ah similar and similarly, ah people on the reputation side look at their time how how much the company cares about some of these aspects.
00:20:50
Speaker
So these ratings impact a CFO's job, like like a Cricill sustainability rating. Yes. It would give you better rate of interest or you would be able to yeah attract investment from certain type of funds which have a mandate to only invest in sustainable companies.
00:21:08
Speaker
So I will answer
Spree's Role in Sustainability
00:21:10
Speaker
this way. So when when we started Spree, right, our goal was, how do we help companies change their direction from from the way they have been doing?
00:21:19
Speaker
And how do we incentivize them so that they don't only care about that certificate? Because then it becomes like a flight but to the cheapest certificate kind of it. Our goal was if we can make the CEO, the board, the CFO and other people more aware of the business opportunities that come ah with investment in carbon, climate solutions, et cetera, they will be incentivized to do more.
00:21:45
Speaker
And in in our journey, when when we started first, it was all about assessment as to where you are how much you are producing. ah When we worked with some of these companies, they said, ah you you have told me how much I'm producing, but is this good? Is this bad? How do I even understand that?
00:22:02
Speaker
That is when we said, okay, I will not talk in terms of what other companies in your sector are doing. If you are, let's say, in US producing aluminum, what are other aluminum companies across the world are on ah per unit, whatever unit that you care about kind of it.
00:22:18
Speaker
So this gives the company an understanding of where they are. Then we talk about various different regulations on where they need to be, ah kind of it, right? So using all of these things, we tell companies why it is matters.
00:22:33
Speaker
And along with it also comes the opportunities on how it will help their top line or access to the capital. ah For example, ah what you mentioned, is a very important thing.
00:22:44
Speaker
If your rating is, let's say very poor on the crystal side, there are a lot of investment houses Doesn't matter you're doing financially. They will not even look at you. By mandate, they cannot look at you kind of it, right? So that capital is never accessible to you.
00:23:00
Speaker
Similarly, governments across the world are making financing available at at more favorable interest rates kind of it, right? Or an easy access over there. Similarly, another angle which becomes very important, and and I want to talk about it because that is why Even non-public companies need to care about it. So what has happened is the companies who need to report, they do not only need to report what they are doing within their operating structure or within their control, they are also report required and responsible to report what is happening in their supply chain.
00:23:35
Speaker
So now now when an Apple says that they will only want recycled aluminum, let's say, for all their products, now that means that the vendors that they are looking at who are more sustainable, they will be preferred when the business is given.
00:23:51
Speaker
Same thing we have noticed with our customers so over the last two years. We have been working with close to a couple of dozen customers now. Of course, the journey started with one, then two kind of it.
00:24:03
Speaker
And there have been companies where we have been working with, these are like large private companies who are in the pharma sector, ah where they got mandates from the likes of like Pfizer's of the world to say that if by 2025, they are not able to report, then the business will get impacted. And again, Pfizer's of the world are driven by these regulations, right? Largely European regulations and other things.
00:24:24
Speaker
But this company, which is sitting in India, lab which is doing a formulation manufacturer, state-of-the-art facility doing very good work. now But suddenly, now they need to think about sustainability, which they have no expertise on.
00:24:36
Speaker
So they they got a bad rating. They worked with us. Kudos to them. They they applied every single recommendation that we talked ah about they put in place all the systems that we talked about and their rating jumped from very poor to the best rating that the pfizer gives to its vendors now becoming the most sustainable vendor and they were the first in india ah now in some ways guarantees business now because pfizer is on the lookout of companies which are doing sustainable business. The way they cared about like labor policies, child labor policies, et cetera, governance structure. Now they care about sustainable. Now it has become a business advantage, right? And, uh,
00:25:16
Speaker
By doing this, now they are guaranteed business. They are expanding. So business advantages. And once this becomes available or known to the people, that is when they are incentivized to do more. The business leaders, right? Now they come and say, hey what else can I do or to establish my leadership or go even further on my leadership, et cetera. So this becomes, I believe, the best kind of incentive model as opposed to a pure certificate kind of it.
00:25:43
Speaker
And this is where you will also hear terms like greenwashing, etc. right Especially ah like EPR, like end product responsibility, etc. Where if I am producing something, I also need to take care of the plastic that I generate, etc.
00:25:59
Speaker
ah Many times ah the regulations come early on. It becomes like a gaming system of sorts that hey whoever can give me the cheapest certificate over here, probably I'll buy with them because I can continue to do business.
00:26:11
Speaker
I think a little education goes a long way. ah When the business leaders, they realize that it is not just for compliance reasons, but for good business. ah Right.
00:26:22
Speaker
That is when I think the shift happens. And that's sort of the vision or goal of our company as well over here. How to help every single company on the planet find their path to sustainability.
00:26:36
Speaker
And ah but ah we believe that we will be able to do that when we tie it to the business value. Are you a consulting business or ah like a SaaS product? Or what what what is Spree offering essentially to customers?
00:26:50
Speaker
ah Good point again. So, and again, ah ah little on why we are what we are, right? So, as I said, climate science is not new. Last 30, 40 years, research has been going on. There have been niche consulting players out there who has been helping niche companies who cared about. And suddenly over the last few years, every company that matters is getting pulled into the fold.
00:27:13
Speaker
ah right And when we were looking to do something in the space, we realized there are not enough experts out there to help companies in their path to sustainability. And also our backgrounds, they all probably will speak about it in a bit, but all of us came from very deep technology background and had seen how technology can really transform how you do business. And here,
00:27:39
Speaker
When we looked at this problem, we felt this is really primed right now, right? Not only not just the that the cause is really, really important for all of us as a species kind of it.
00:27:51
Speaker
It's very important from a business angle perspective. And it's something that cannot be taken care of in the ways that things have been done always. So we put our heads together and we said, let's apply deep technology over here.
00:28:03
Speaker
And the idea is to build a product which can help companies. And companies will be at different stages with respect to their sizes, where in their journey they are. And the idea is how can we help companies or these experts, human experts who ah exist out there and make them 100x more efficient in what they want to do.
00:28:23
Speaker
So a company can start with our product, even if they have no expertise on the climate side. They just entered their operations data into our product, which is a SaaS offering over here. Behind the scenes, it's a climate AI. It's a very deep ah climate ah AI engine that we have built, which drives all of these workflows over here.
00:28:41
Speaker
And the system will tell them about all the things that they need to do, all the reporting that they need to do. um That is where
Innovations in Sustainability Reporting
00:28:47
Speaker
it is. Companies which have sustainability team members or they have been at least at a stage ah where they know that a team is needed.
00:28:55
Speaker
They're the team members use the product and and they become very, very efficient. They do not have any sort of a blindfolds kind of it. And we are also working with consultants over here ah instead of using Excel, which is really ah the state of the art right now. Right. Very, very complex Excel. That is where the data gets entered ah using various different mechanism mechanisms. Then the results come out.
00:29:17
Speaker
But it is very error prone. It is not efficient. It is not scalable. While you can do this exercise one time ah where it becomes a firefighting exercise, doing it on a regular basis.
00:29:29
Speaker
like quarter after quarter, year after year, it becomes very hard. And it's also very error prone, like fast fingering kind of issues become very, very common over there. So we said that there is a significant better way to do it and by applying technology. So now coming to your specific question. So,
00:29:45
Speaker
spree is a product company and we are building a climate ai based sas product ah where we work with companies we get all of their operations data whether in their staff systems or their transport systems or their distribution or manufacturing we pull all the data from various disparate sites disparate sources put it together and create a picture of where a company stands from their ah sustainability standpoint kind of it and it also allows them to figure out a path forward doing various different scenario analysis where do they need to reach 10 years down the line what it means for next one year what are the different avenues and then once and helping them set up targets against using globally accepted standards kind of it like there is a term sbti science-based targets kind of it so when commit to something you you go through these targets and then everyone else became become of aware
00:30:39
Speaker
that what you are committed to do and you are monitored on them. So we help them set them up. And then we bring the ecosystem partners together to help them achieve any of these things. At the end of it, what we help with is ah creating an action-orientedness. We sort of catalyze action.
00:30:55
Speaker
Then we help in our decision-making and all data management kind of it. But we just by ourselves, so we can tell you that where you are, solar energy is an option for you or water pre-harvesting is an option for you kind of it right or other companies are using these technology and processes like carbon storage policies so we allow companies to identify different technologies which are available but then we also bring the ecosystem partners together and allow them to discover that and while giving them sort of an idea using our models on the roi what kind of investments they are looking when will the investment pay back
00:31:35
Speaker
ah showing them various different opportunities in terms of government incentives, et etc. That if you do this, then these are the incentives which are available for you, depending on where you are operating. ah But since this is all very new, there is also a professional services angle to it, ah where we bring in the team of experts rather than throwing a product to them and saying this is self-serve.
00:31:55
Speaker
We work with every single customer of ours to get to a point where they are comfortable, where they are trained and using the product well. And then we let them do, but we will always be there. We sign up for their success, not just for using the product, but the way to help hundreds of thousands of companies is only going to be through the product. We just do not have enough people to go to each company is and and and consult with them.
00:32:20
Speaker
Okay, so correct me if I'm wrong in my understanding. You would ingest data like, for example, location of manufacturing plant, what is the raw materials which you can get from the purchase orders, what is the ah number of kilometers ah for which you have to transport the finished products or the raw materials, and so on and so forth. Yes.
00:32:43
Speaker
And ah this data is then converted into a CO2e kind of a metric, yeah but which is essentially the metric which then the company, if it was to do it through an Excel sheet, would take maybe 10x or 50x more man hours to actually do that because there is so much desperate data, which in your system, you have some...
00:33:09
Speaker
some sort of heuristic that for every kilometer of transportation of one ton of material, this much would be the CO2 emissions? or ah Is that how it works? So, ah no, very, very good question. And I know what's running in your mind. So I'll explain using examples, right?
00:33:27
Speaker
So this is how all the initial reportings were done, right? What you said. ah So there are scientific formulas, et cetera, to calculate. And again, they've been tested in the labs, et cetera, that When you burn, let's say, a certain amount of fossil fuel, what kind of CO2 emissions, et cetera, happen.
00:33:45
Speaker
Similarly, when you burn the waste, what happens, et cetera. So all of these ah research data sets are available. Initially, companies tried to do this, that, hey, enter in Excel, create all these complex formulas, and then do it.
00:33:57
Speaker
And they did it one year. Then they tried to do it second year. And then suddenly someone said, no, by the way, the rules have changed. The way the formula is working has changed instead of calculating this way. Now we are going to calculate some other way because in in the earlier ways, let's say your supply chain calculation was being double counted or different categories have been created and you need to report under them. Very similar to like accounting, right? There are different heads under which you have to report all the various different numbers. Similarly,
00:34:24
Speaker
in this environment reporting also those things are there now of going back to them that becomes a pain now you have got like hundreds or thousands of files to choose and then you say oh by the way which file do I need to do you have got like Thousands, there are companies, right, who supply chain, there are like 30,000 vendors kind of hit over there.
00:34:45
Speaker
And ah now you have to deal with all of those 30,000 Excel files, which were sitting either in mail or some SharePoint. and And it becomes a hell. and And it is not only one time that you have to do. Now what happens is, as things are becoming more and more common,
00:35:01
Speaker
the way we do our like advanced tax filing right you have to do every quarter now you have to report every quarter some of the numbers that you have to report every month kind of thing and so similarly world over there are different regulations over here and here now people are saying okay i now need the report not every annually and need quarterly but now as because of the other impacts that we talked about the ceo wants to know hey at the end of the year this is where i need to be now you tell me where i am right i've been three months into the year you tell me where is the a trajectory going i mean ah we have become very very smart in projecting the earnings per share et etc kind of it but when it comes to anything around
00:35:42
Speaker
ah sustainability, etc. It's still living in the like Stone Age kind of things over there. Now, so while the company were doing reporting the hard way, they were realizing this is not a sustainable way at all.
00:35:54
Speaker
And that is where a need for a much more sophisticated system came in. Now, initially, it was all voluntary. Then the auditors came in. Now, every time an auditor comes in, they've got like a sea of data, right? It was hard. So they will take random samples over here. And now they will say, show me the proof for this. Show me the proof for that.
00:36:12
Speaker
And again, a firefight happens and and the entire organization gets disturbed kind of it. So our whole point over here is what if there is a system? So you focus on your operations, what you are doing. The system is continuously ingesting all the data from your ERP systems, from your transport, from your distribution systems.
00:36:31
Speaker
It will never ask you terminology. ah which you were not aware of. It will never talk in terms of CO2E, right? It will will know, right, automatically, okay, you send some but material on a truck, which was of this year engine kind of it from year to year, and and then that is the rest of the system will calculate.
00:36:51
Speaker
And when the time comes to show the report, ah You don't have to do anything. You click a button and the report will come and you send it. If it's a board meeting, it will prepare the slides for you and and you present it over there.
00:37:02
Speaker
So it is not a disruptive exercise every board meeting over here or every quarter or even more what we are seeing. So there is one of our customers, right? and They are ah one of the U.S.'s largest aluminum manufacturer kind of it.
00:37:15
Speaker
And while they do all of these reporting, which they are required, now they get a ton of requests from their own customers because now their customers have to do their reporting kind of it. And they will say, hey, this is the format in which you have to give me the data.
00:37:27
Speaker
And if you have to do like 200, 300 of such requests every year, then you need a large number of people who are constantly doing that. And it is very error prone. For example, as we have been working with some of our companies, one of the things that we do is while we do not report for the earlier years, we take their earlier year data because it becomes a good benchmark to see where they are heading.
00:37:46
Speaker
And we have found mistakes in what they had reported to the regulators, etc. Because the systems have been sort of not yet fully developed kind of it. It's been sort of okay.
00:37:57
Speaker
and But going forward, these things will attract significant penalties kind of it, right? So here companies are saying, okay, we we need to help our auditors. With our system, the audit time goes down from like three months to three weeks, right? Auditor get huge amount. and And even before the auditor comes, it's like your tax.
00:38:15
Speaker
you You enter data in a TurboTax or a Quicken kind of it. And it will tell you all the areas, right, where there are red flags, which which you should resolve before submitting. Otherwise, it will attract chances of audit kind of it. Similar things we do with our companies.
00:38:29
Speaker
We take all of their data. We look at it from different angles kind of it and say, no, this is not matching up. Or for your sector, there is this kind of emission which happens in most of the companies, but you have not reported it.
00:38:41
Speaker
So we give them this opportunity. So they take care of all of it. And then when the auditor comes, A, they get access to the data very quickly. Now, it is not like an email ripple effect which happens. A request comes, then 10 emails go out, then 100 emails go out.
00:38:55
Speaker
Everything is present in the system. And we have seen the audit periods go down from like three months to three weeks kind of it. So it becomes very, very efficient for everyone. And on top of that, the real value that we see is when the business leaders realize that this is good for their business.
00:39:12
Speaker
ah For example, some of our customers, they had been doing multiple things, right? Without sort of reporting or without even knowing that it matters. Like some of our customers have been at Newland and they have been doing rain rainwater harvesting etc kind of way but they never reported they didn't realize that this is something that matters over here so we allow them to get an inventory of all the good things also that they are doing and now because the system sort of knows that what matters or not we ask them these questions by the way do you do anything in this space do you do anything in that space anything that comes over here so nothing is left and you actually get advantage of all the good work that you are doing
00:39:50
Speaker
And so when these reports go out, you you tend to get better crystal ratings, better sustainability, tax kind of it, ratings, et etc. kind of it. And it is overall good for the business. Interesting. Interesting. ah So I can see the parallels with the accounting and financial software like as the disclosure requirements become more complex, the data investors demand becomes more complex, you will need to give guidance and predict what will be your earning per share, for example. so you need more sophisticated tools to help you manage that. Similarly, as environment gets ah more important, you need so sophisticated sophisticated tools to help you manage your reporting around environment.
Spree's Market Strategy and Challenges
00:40:32
Speaker
um What is the market opportunity here? How much do you think would a company spend on environment-related compliance ah in a year? And what percentage of that spend could come to a platform like Spree?
00:40:48
Speaker
So again, ah this is also an evolving thing. and And I'll give a few examples over here. and And largely, a lot of times, it it depends on the threat to the business kind of it, right? The speed at which people are moving.
00:41:04
Speaker
um So when when we started, it was very interesting. um The earlier company that I did, we didn't even ah try to sell in India at that point in time. I mean, started the company in 2013, only did the sell initially in the US s kind of it. and here and And that was the true of my other other co-founders and others, right? Everyone was like that.
00:41:23
Speaker
And here, when this time when we were doing, we started in India. We went global later kind of it. And when we started, we were like, scal click on ah who will give money, will pay for something like this, et cetera.
00:41:34
Speaker
and But but they we realized that it's it's really how much it matters for the business kind of it. So I gave you example of ah this former company, right, which gets a note from Pfizer.
00:41:45
Speaker
They're really doing very good from business perspective and product perspective and all of that. But there is new certain angle kind of it. And ah ah you you'd be surprised at the speed at which we closed the deal. We got an inbound from them and again from the network. They learned that we are doing something very interesting over here, ah given our earlier connections with IT. So when we started, um the the first platform we deployed was at IT Canberra.
00:42:09
Speaker
And again, I.D. Kanpur was looking to become net zero over here. They had created a center of excellence, but they did not have visibility about their own data kind of it. I mean, great professors and all the understanding over there, but the data was missing. So it was almost like flying blind kind of it.
00:42:25
Speaker
So when we learned, we said, okay, we'll build something because that is what we know. We don't come from sustainability background, but we know how to build really great products kind of it. And and given the interest in the space, we said that is where we will start. So we implemented something, we put together a team and Adi Khan put it in and they got the numbers for the first time.
00:42:43
Speaker
They then presented in one of the conferences where they called a lot of people from bureaucracy and industry. And that is how a little word sort of went out. And then we got an inbound call from this company, which learned that we are doing something because they had gotten this note from one of their large foreign customers kind of hit about reporting.
00:42:59
Speaker
They called us. And they told us, hey, this is what we need. So Akash went there on Friday and on Monday they signed an agreement. I have sold enterprise software all my life, but this was the fastest deal that we had closed. So it goes about talking the urgency and the importance of it. By the way, this is not common.
00:43:19
Speaker
Then there are other spectrum also. Let's say you are in an industry of there and urgency is not there, right then you might want to wait and see what is happening over there. So we are seeing a full variety of companies, even within a sector, people who need it now versus who are going to do it later.
Client Engagements and Revenue Model
00:43:38
Speaker
Now comes the question of how big the space. I mean, Overall, we know that climate solutions, the way it is touching, the numbers are among us, right? all And we are already seeing in energy, in mobility, a huge investment kind of going on.
00:43:54
Speaker
This part itself, which is around, let's say, reporting and decision-making systems, etc. Here also, the size is increasing significantly because it is not just tens of thousands of ah public companies which need to care about These private companies getting into the fold, it means that just about anyone who's participating in the global supply chain, right, really need to care about it.
00:44:20
Speaker
yeah So that is ah what sort of the size of the mind. That is why ah we have been very, very excited about it. ah So the supply chain, so what happens is if you are an Apex customer, um let's say Unilever kind of it, right?
00:44:35
Speaker
You have the wherewithal to put together, let's say, a sophisticated IT system kind of it in place. You can put together a team. You can get some of the best experts as consultants, et cetera, to help you out. But your thousands of vendors who are supplying to you, and as Unilever, you are now responsible to report for them also. But they do not have these systems out there, ah right? Neither can they put these complex systems or build them. Neither can they get very expensive consultants, et cetera, over there.
00:45:01
Speaker
And that is where the opportunity for technology companies like us really come in, where we make it very easy so that they can focus on business. I mean, these are typically small companies, right? Promoter-driven company kind of it. The management will be like 8-10 people kind of it.
00:45:17
Speaker
Maybe doing... um 10 million, 50 million kind of revenues, etc. Or even less than that. but But they are required to know sort of report and all of it. So these companies also, it becomes ah very, very important for them and crucial for them.
00:45:30
Speaker
The price wise, I will say we are still discovering. I mean, together as an industry kind of it. And yes, there is some sensitivity, but there is willingness to do. Especially if you are able to unlock the business value also.
00:45:45
Speaker
then the ah then the ask is less about hey i don't need this i don't need that it is more about what more can i cost it's an investment then yes it becomes an investment and that changes uh kind of thing significantly uh i mean as an example this ah pharma client of yours ah how much do you earn from them annually so So our, again, ticket sizes, etc., we are also in the price discovery phase kind of it. But the pharma company that we talked about in the U.S., etc., it's like a 100,000 annual a subscription kind of a model. with that
00:46:17
Speaker
And what we are... 100,000 rupees? Dollars? Dollars. $100,000. are talking about that. Wow. That's really substantial. Yes. and but But it needs to be looked in the light of what the...
00:46:31
Speaker
courts, etc. are coming from some of these large consulting companies. What we are realizing is that it is almost like two and a half, three acts of this amount.
00:46:42
Speaker
right and a large and And there are reasons. right These are expensive consultants. The systems are very manual. You would typically be, let's say, ah going to an EY or something for this kind of yeah service. And obviously an EY or a deloitte would have yes pwc ewise deloitte kind of it too right so this is where ah we are seeing the trends so far and and and i am 100 sure that this is going to evolve because right now we are in the very early phases of this market i mean what we are seeing with ai right now right that's the talk of the town and and and things are changing very very constantly whether it should be a 20 a month kind of a service or a 200 kind of a month kind of a service so So this will sort of start adjusting, right, on how much one is willing to pay, how much it impacts, the I mean, your your revenue and and also a bottom line kind of it.
00:47:34
Speaker
But what is becoming important is that the people are realizing that this is important and the implications are big. And as as a company, I think we enter into the room ah what we are doing right now honestly i think we have just sort of looked at a thin slice of the opportunity right now i mean there is a huge and and this is not one or two year kind of a journey this is going to be a 10 plus year kind of a journey right i mean there are some very stringent targets i mean we as human species will need to meet if we want to keep
00:48:09
Speaker
ah planet Earth hospitable for the species kind of it, right? So there are 10 years kind of goals. Companies are formulating. They are still learning on how to formulate goals, et etc. So yes, right now we have started with measurements and these kind of reportings, etc.
00:48:23
Speaker
But a lot of decision making is going to come. And the interesting things are going to happen and companies get into like business process changes, et cetera, which really change how it's like ICE versus the EV kind of an example, right?
00:48:40
Speaker
Same thing will happen in Pretty much all the industries in material science, there is huge innovation which is going on right now. um what What do we do? How do we handle our manufacturing? Huge innovations going on, working on the efficiencies, the circularities, all of those things.
00:48:57
Speaker
As those things come in, the decision making is going to become more and more complex. it will not be possible to handle it using an Excel sheet while we can do some of them right now.
00:49:10
Speaker
But because that is where sort of the company's needs are. So that is why we are doing that right now. And that is what we are charging based on on the market right now.
Spree’s Future and Global Expansion
00:49:20
Speaker
But over the years, I will see a lot more sophisticated things come in and a lot of other sort of the add-ons and services ah which will ah need to happen.
00:49:31
Speaker
I want to understand the current state of business. so Have you crossed, like, say, a million dollars, Yairar? And by when do you think you'll hit, like, say, a million? So I'll answer it in a little bit more, ah give you a little bit more perspective on it.
00:49:49
Speaker
So we started around three years ago. And and at that time, we we didn't start with a PowerPoint or a monetization plan, right? At that time, it started more with something is happening.
00:50:00
Speaker
We don't know what is going to happen, but we were sure no one else also knows what's going to happen. Right. So these are very interesting times when there is a lot of chaos. People have their opinions. There is no established path. You talk to various different experts and they seem to be contradicting each other.
00:50:15
Speaker
on how the future will play out kind of it. and And I believe these are the times when some of the largest companies ah lay their foundation, right? Whether you look into the search time, right, in late 90s, early 2000s kind of it. I've seen waves in the virtualization industry. We are seeing a lot of chaos around the AI kind of it, right? A lot of disruptive stuff happening.
00:50:36
Speaker
And ah so so when we look at that, it becomes sort of a very, very interesting thing on how this entire thing is going to play out.
00:50:49
Speaker
And so it's in that aspect that I look. Okay. Okay. Got it. It's super interesting. oh ah how Are you still largely India-focused or global? Or what is your revenue split between domestic and international? So the first two years, we were only in India. But early last year, ah we decided to change the structure.
00:51:11
Speaker
and we became a global company and uh and that is when we started focusing on on the u.s market last year kind of it and so we are close to a couple of dozen customers at this point in time and and it again has been a very conscious decision on on the choice of customers and sectors we are working across various different sectors pharma chemical manufacturing paint uh aluminum cement and uh uh even ah like VSI kind of things, et etc. also, right?
00:51:42
Speaker
And the goal here is that we can articulate the problems very well. We are sitting with these companies, understanding what their real pain points are and solving them. And we don't want to just replicate a little success that we have and continue to do on that. And the whole idea is, can we walk slow now to build the right muscles to be able to run very, very fast later?
00:52:08
Speaker
And we are taking a very long term view of things over here. It's not a two year, three year kind of it. As as I was saying, when we started, there we didn't even know how what is it that we are going to monetize and all of that. and but But we started because we felt there is an opportunity over here.
00:52:24
Speaker
And as we are learning, a lot of very interesting things are coming. We are getting lot of extremely positive feedback from our customer who are using our product. And saying that this is solving real problems, I talked about the supply chain part of it. We are having some very interesting discussions and very engagements in very complex supply chain kind of places where they have to deal with like thousands of vendors over here who do not have any system. And how do you get the data in easy, seamless ways, which which can really, really scale.
00:52:57
Speaker
So that's sort of where we are. So the opportunity is big. And ah but but we... plan to sort of build things, build the foundations, and and then pick up speed at certain point in time. Right now, we are still in those phases.
00:53:14
Speaker
Okay. Okay. Interesting. So, you know, you are a serial entrepreneur. ah You had a venture before this. ah Can you kind of like talk me through what the venture was, what you learned from it?
00:53:28
Speaker
ah You know, the lessons learned from the first time. Sure, sure, sure.
Rohit's Career Journey
00:53:33
Speaker
So again, ah sustainability, while I had been passionate about it's only been last, as I said, last four years kind of it and that I got into it.
00:53:43
Speaker
And before that, I was a very bits and bytes kind of a guy, ah what I call all All my previous professional career was around building internet infrastructure kind of companies.
00:53:56
Speaker
And um I could literally read hexadecimal.
00:54:01
Speaker
that when When we talk, there are certain calls and it all gets converted into hex kind of it. And looking at it, I figured out what was going on over there. So that's been sort of my background. So I graduated from Idy Kanpur. I did computer science in 1999, then went to Silicon Valley, worked for a couple of other. my first company was a very large company, Cisco. I mean, that is like like Google's of today, etc. kind of it my dream company.
00:54:25
Speaker
ah But very soon I realized that probably I'm not cut out for a large company. ah right that that even if i don't show up probably it wouldn't matter kind of it and that was a very unsettling feeling and also at the back of my mind it always was he i wanted to do something of my own right that is what i was always sort of inspired by those kind of people entrepreneurs right they always attracted me and kind of it so uh very quickly in less than a year i moved to a startup work there ah learned a lot learned a lot you realize that uh
00:54:57
Speaker
you know nothing kind of it when you work with some of the best people. like And that's been one of the things I've been very sort of ah privileged in a way that I got an opportunity to work with some of the best people across across the board kind of it.
00:55:08
Speaker
So first startup, it was a great engineering in startup. I mean, we built a future product, which was many years away kind of it, et cetera. But we burned $100 million for zero revenue. right So in hindsight, I learned a lot.
00:55:23
Speaker
ah right it's It's not just about what you build. ah Selling is an equal part of of running a business kind of it. And and you need to be very aware of what sells, etc.
00:55:34
Speaker
So it shut down. And it was the 2003 meltdown and when the company shut down on a day's notice kind of it. And I, and again, in in my entire sort of the early journey, I and one of my very close friends, we were together. So we were together in this company.
00:55:49
Speaker
Then both of us joined another company. We were together at IIT as well, Shiva Karwal, who would be later my co-founder kind of. Then we joined another company. And and at that time, when this happened, a lot of people were very concerned sort of about what happens to my H1 status. Do I need to go back?
00:56:06
Speaker
Somewhere we were like, what is the worst case? but but We'll go back. right We'll get something kind of. okay So we joined another startup right after that. And again, that was an internet security kind of a space. Again, ah we did some stuff that people considered black magic kind of it, figuring things on the wire and figure out those were also the days of like zero day attacks, et cetera, kind of it. So it was a security product, which will stop things on the wire or change things on the wire so that the end system is protected and all of that.
00:56:35
Speaker
um That became very, that got acquired by VMware. So it went high and then 2008 happened and and suddenly things were tough. And that time the company was sold to VMware. And that is how I entered into VMware.
00:56:48
Speaker
And again, in this company, I learned a lot. I mean, I was very fortunate to work with some very, very bright and smart people. and And they trusted me and my co-founder. I mean, very quickly, we were running a large part of the company and it was almost like you get to do whatever you want to do, right?
00:57:05
Speaker
Whether it is building teams or building products or going and selling, meeting with customers, the entire gamut was open. So there was a lot of trust. And of course, we worked very hard to learn kind of it. So I spent all this initial time doing a lot of learning. So that was always the motive. What was VMware's product? like what So this was a firewall product. So this was the first virtual firewall product out there. So it started with something else and then it got converted into a virtual firewall and and then VMware acquired it kind of. It and it became Genesis of a VMware's billion dollar product later. ah Kind of it it formed the foundation of it. So that is how I came into VMware.
00:57:42
Speaker
And and ah what I noticed then while I was over there, I got an opportunity to move to India. So again, my my boss, ex boss, or now an ex-boss, right, at that time, he knew that there was this thought of coming back as well, kind of. So he asked, hey, there was an opportunity to leave VMware in India, kind of. So he asked me if I wanted to, and and I said yes, and that is how I came to Kune.
00:58:04
Speaker
And after a couple of years, again, I and my friend, we decided to leave. And we said, this is great. and Now let's do something of our own. So we were doing quite well in VMware at that time. But we said, hey, now enough learning. that let's Let's put it all of this into practice.
00:58:20
Speaker
That is when we left VMware the idea that we will do something again ah in the virtualization space. That was all it was. And so we started meeting with a lot of people, figuring out what is going on.
00:58:31
Speaker
And we yeah the the good thing at that time was that I sort of knew networking like the back of my hand, right? Whatever is the state of the art over there. I knew all of that. And also...
00:58:44
Speaker
what were different companies doing kind of it. so So we earlier thought we will build something and then raise money kind of it. So we created had some ideas. We ran it with some of the VC friends. And before we know, the term sheetscape kind of it, right?
00:58:57
Speaker
And it was just ah with a PowerPoint and a few people. Of course, they do all the due diligence kind of it to check. Do you have the strength to stand through whatever comes your way, it etc.?
00:59:08
Speaker
And that all came to positive. And we were very fortunate to have some very good people as investors who themselves have been great entrepreneurs, kind of it. ah So that's how the Arkin journey started.
00:59:21
Speaker
So what we built over there was think of it like a Google Maps for the data center. So the idea was that you have these complex data centers, kind of it. And you can figure out what's allowed, what's not allowed, what are the roadways that are open, right? So which should not be open, there should be a gate, not gate, kind of it, security checks, etc. So it was a security and networking product that we built for data center operations.
00:59:44
Speaker
And it will also tell you about capacity. ah When will you run out of capacity? What are the hotspots? What needs to be done? How and ah traffic needs to be diverted and all of that. so That is what we built.
00:59:55
Speaker
And it became a category leading product in the space. And we we got a lot of accolades around that time. It was termed like coming out of dark ages for networking kind of it. So the way we positioned all the product and the At that time, other companies were also trying to build product in the space, including VMware.
01:00:14
Speaker
So there was one business unit of VMware which loved our product because we sat on top of them and and that is how they would sell. And there was another business unit which was trying to do something that we were doing.
01:00:25
Speaker
So even though we were very small, i think we ah we had put together a really, really rock star team. It was a small team, super capable, lots of single man army kind of people when it comes to be able to do things. and And we really beat the heck out of competitors, etc.
01:00:44
Speaker
um And so VMware then OEM'd our product. They started hearing from their customers, this is what we needed kind of it. And again, um then VMware came to us, they acquired us, they put an offer, and which was really, really good.
01:00:58
Speaker
around that time. And we were like, what is the best sales? How much was it? So this was a lot of $100 million dollars kind of acquisition. And you had, I think, only raised about $15 million.
01:01:10
Speaker
so So overall, we raised around close to like 20, I would say. 20 kind of raising is what we raised. And it was in four years that we got there. So it was a very compressed time and a very, very fast journey.
01:01:24
Speaker
So I and my other co-founders like Shiv and Mukul, right? We had a lot of fun building it. And we realized that it was a little early, but the best sales team for our product was clearly VMware. It was huge synergy. It was a great outcome for everyone, for investors, for key members and everyone. So we said, this is the right home, but we didn't take it as like the end.
01:01:46
Speaker
ah we We only took it like a pit stop over there. We said, okay, we we are still not where we want to be. And that's when the phenomenal growth started happening. Once we got the right distribution platform inside,
01:01:59
Speaker
ah the product grew like a proverbial hockey stick curve kind of it. The distribution channel opened throughout the world and it was a great synergy with the other products selling. And very quickly, we started doubling, quadrupling right year after year kind of it.
01:02:14
Speaker
And the team started growing. It was considered one of the best acquisitions inside VMware, grew very, very fast. so And so we continued to run it and I was there till 2021. That when felt ah that is when i felt that we have reached a very good logical point. We were doing almost around $250 million dollars in revenue.
01:02:34
Speaker
So ah build a company from zero to $250 million kind of revenue, etc. And i also felt the next rung of leaders was there. And personally, i I was getting like, what I've done so far has been sort of building on top of each other.
01:02:48
Speaker
And then I wanted to really sort of take a clean break, learn things, And then figure what I wanted to do for my next 15, 20 years kind of. I tried.
Transition to Sustainability
01:02:58
Speaker
And around that time, as I told you earlier, the COVID had happened. So it it resets a bunch of things.
01:03:03
Speaker
As I said, while i I could read bits and bytes on the wire, I didn't know where my food came from, right? What I was eating. And so there was very little awareness about these things. So you you read about some of these things which looked like a very distant or something.
01:03:16
Speaker
But I was sympathetic to these. I did not really have a good understanding of these things. So, and during that time, I met Dr. Praveen Bhagwath, who was co-founder of 14 Trees himself, a very successful entrepreneur kind of it. So I started spending more time on the site with him, learning these things. And and then when I left, I spent some serious time.
01:03:37
Speaker
And again, as it had to be and destiny or you call it whatever, I met Akash over there, my co-founder, and Hemant, my other co-founder. And Akash sort of convinced us to get out of our sabbatical, even though it was early.
01:03:53
Speaker
and And this is how where we are right now. Fascinating. Fascinating. Did you stay as a technologist or did you get into sales and client acquisition as well?
01:04:06
Speaker
so So this is a very interesting question. So I still remember ah when we were getting acquired. ah So the HR from VMware comes and he says, are you an individual contributor or are you a leader?
01:04:18
Speaker
Are you an engineering or are you sales? And we were thoroughly confused, and right? Because see, as a co-founder, I mean, you have to do everything, ah right? Of course, there are roles.
01:04:30
Speaker
There are people who focus. There are strong suits everyone had. And I have always been an engineer at heart. I've always loved to build things. But at the same time, not it's not just for the sake of solving the puzzle kind of it. It was like, what's the valuable thing to be solved? What's valuable to be done? So somewhere, those connects also started happening. and and And a lot of it based on what I learned in my earlier startups kind of it, right? What not to do in the first startup, then how to do things and how to build that confidence that we can build whatever it wants.
01:05:06
Speaker
But that doesn't mean you you start on something, right? There needs to be a context of whatever you are building. So those things were there. so like ah like has happened both in Arkin and at ats I've been very, very deeply involved in the product side, but all the early customers, I mean, that has to be founder sales.
01:05:26
Speaker
So both I and Shiv, we used to go at Arkin here at Spley, while Akash is largely driving the sales, e etc. The early customers going to them, understanding them, because otherwise, you unless you understand what the customer really needs and the customer understands what you are capable of building,
01:05:45
Speaker
finding the right sort of what we call product market fit, et cetera, can become very difficult, right? and And what I've learned, you do not blindly build what the customer says. You understand what they mean. And then in order to express, they have to express in terms of what they have seen, right?
01:06:00
Speaker
Does not necessarily equate directly. So ah you have to do this. and And you also need to have a very tight control on on technology because you need to be able to know what can be built, right?
01:06:11
Speaker
as As time progresses, what can be built is very hard. What we built probably at Arkin could not have been built 10 years ago. What we are building right now could not have been built 10 years ago because technology has come to a point where what we are doing is possible.
01:06:26
Speaker
So you have to understand what are the needed, the problems that need to be solved and where does the technology stand right now to be able to build that. Of course, you do a lot of innovation, but It needs to, like, as they always say, ah who would be the smartest scientist of all times? and And answer is always the most recent one, because they are sitting on the body of word that has been done over the last many, many centuries, kind of. it Right.
01:06:53
Speaker
Some of this could not have been done like 1000 years ago 500 years ago or whatever. So the same way i look at it. so So to your question, do you build or do you code? Do you sell? Yes, it's it's all. Because I think when you are doing technology product, especially where the core is technology, you need to be both be able to build and able to sell.
Advice for Aspiring Entrepreneurs
01:07:19
Speaker
so OK, let me end with this question. ah Give me an engineer's take on how to hit a $250 million dollars revenue.
01:07:32
Speaker
See, here also, It's very interesting. So as I said, being very fortunate to work with some very, very smart people um at our earlier company and at this company, we have been blessed with some very smart advisors, right? At times. And, and one of the thing, of my advisor told me, it's very hard to build anything, right?
01:07:53
Speaker
ah The amount of energy that it takes to build anything ah falls in similar because you have to give your blood and sweat to whatever you do, right? If you have to build something. So then, Why not build something which can become very, very big kind of it, right? And and this is also where some of the motivations come in, as I said, in in this particular. So like all of us, all the founders, we have worked earlier with startups. We have seen, we have been fortunate to see some good success kind of it, et cetera.
01:08:21
Speaker
So there was not this itch of doing something, but right? It was more that if you do something, it needs to be meaningful, uh right uh it needs to be done because maybe others are not looking at our problem from that way and if you hit your best case then it should really be very very valuable kind of it right so that so so to your question of how do you build something which can become like a 250 million dollar any kind of it i i think you first start with what space ah you want to solve a problem in uh right uh
01:08:58
Speaker
whether it's a yesterday's problem, whether it's a solved problem, whether it's ah just a cheaper version of something that is successful elsewhere. I mean, there are many choices. There's nothing right or wrong kind of it, but everyone has to sort of decide for themselves.
01:09:11
Speaker
And so here, I think when when I look, ah At present time, right? And if I were to say, ah what are the two, two three things ah that' that's really going to shape the future?
01:09:25
Speaker
i mean, definitely AI is one of them. Climate is also one of them. The other is. what is happening in in the entire biospace, right? ah Human body and and other interactions kind of it. I see some of these things ah which will really shape the future for us. And so picking something in these kind of spaces, right? And and we are at the intersection of both the eye and climate kind of it. That is where we are. So I feel that A, you have to start in one of those. And B, you have to really think that. And
01:09:57
Speaker
I have always believed in as long as ah you have perseverance and determination and and the right amount of competency kind of it, then you become what you say you are. Right. If I keep on saying I'm going to be this, I'm going to be this.
01:10:11
Speaker
I believe truly. I mean, we call it whatever you want, whether your mind does the trick, whether you do, like, like when we look back at our earlier journeys, it it feels surreal, ah right? In both cases, if I were to look at like three years ago, feels surreal. How did we come this far? Kind of. It's really,
01:10:29
Speaker
When I look at the 10-year journey in Argentina, it feels like, can I do that again? I mean, you almost feel like that. and and so But you eventually become what you are. you You start working, just keeping one goal in mind. And then you are so...
01:10:44
Speaker
maniacally focused towards that, that you start identifying, yes, there can be detours here or there. and and you keep doing those course corrections along the path, it's like i but you keep moving towards that.
01:10:56
Speaker
So I think that's probably the most important thing. Then the second thing I will also feel is finding the right kind of partners. And partnership is at all levels. I mean, who you start the company with, who who you employ, who you take the capital from, who are your early customers kind of it.
01:11:14
Speaker
I mean, are all of these like big picture kind of people or can become big picture but kind of people? ah Not everyone will think about all the angles. Everyone's responsibilities are different, but do they get excited about the big picture kind of it? I think that becomes very important. And for you also, I think we've been very blessed. I mean, and and there's a lot of differences that we are doing compared to my previous startup. Sometimes the question that I get asked is, oh, you're serial entrepreneur, does it come easy? Actually, it comes hard because you try to apply the same things that worked earlier and you might have that,
01:11:45
Speaker
sort of a compulsion to do the same things and it might not work over here. So you have to be very conscious about some of these things. And here the team that we have built is, I'm super proud of the team. and And we have done it differently because these are all very smart people who might have various different options kind of it.
01:12:02
Speaker
So here we tell them that here we are. We are never in a hurry kind of it. key oh We need to just double the strength right now. We keep talking to people. And we also try to find those people who get inspired by the work that we are doing.
01:12:17
Speaker
And so the right kind of smarts and the right kind of motivation, ah that helps a lot. Similarly, on on the capital side, we have been very fortunate. I mean, we raised our sort of the PC drown from Leo Capital.
01:12:30
Speaker
Again, the people over there, I've known them for a very long time. No, very patient people, right? It is not about a, as I said, when you ask the question, what are you building? If you had asked me six months ago, I might not have said this. So think about it. Hey, two years, Karun. I mean, I don't know.
01:12:45
Speaker
So you are in such a stage. and And so people need to understand. And typically people who have done something of their own, who traversed those kind of journeys, are able to appreciate they as long as they have the trust in your capability and and on your intent et etc they let you of course you you discuss things etc and sometimes ah new data points ask for taking new decisions and it's not like cast in stone oh two years ago we said this so we cannot deviate from that no it's not about that ah when the new input comes in you you adjust to the new reality etc but we have been very fortunate ah to get those kind of people over here who have been very patient similarly when it comes to customers etc as I said we have been
01:13:23
Speaker
very sort of picky, not that like a lot of choices, but who you approach. At that time, you have a choice. I mean, these are the set of people that I want to approach, et cetera. So we have ah had that kind of a thing in mind. No, this kind of a person we want to go.
01:13:39
Speaker
And and ah many of our early companies, ah the promoters, et cetera, know us very well. And they have been super supportive kind of it. And and they are there for the long term.
01:13:51
Speaker
ah Right. It's not about a you sold me this. What is happening about that? We almost never talk about that. We always talk about, hey, ah what are you doing? What's exciting? Have you looked at this? Have you looked at that? And it's very energizing having such kind of people around. So.
01:14:07
Speaker
So $2 million, dollars I mean, kind of a revenue you're looking. So I think all of these things sort of come together. And then the these numbers start becoming sort of side effects. I always believe that.
01:14:18
Speaker
So you water, you take care of the roots and and the soil and the flower will happen. You cannot focus on the flower to get the flower, ah right? So that's that's what you need to do.
01:14:30
Speaker
Amazing. Amazing. Thank you so much for your time, Rohit.