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From Coffee Trader To $250M+ VC | Manav Garg (Together Fund)
0 Playsin 1 hour
"SaaS as we know it is DEAD."
This might sound controversial, but as Manav Garg explains, the old model of simple workflow automation is being rapidly superseded. AI agents are now capable of executing complex tasks based on simple commands, fundamentally changing how businesses operate and what they expect from technology.
Manav Garg is the Co-founder and Managing Partner of Together Fund, an operator-led VC firm managing over $250M AUM and backing ambitious early-stage Indian SaaS and AI startups. Before this, he founded Eka Software Solutions in 2004, building it over nearly two decades into a global leader in commodity management software. He scaled Eka to $34 million in revenue with $9 million in profit by 2014, raised over $55 million, navigated a complex pivot to the cloud, and ultimately exited the company. He is also a co-founder of SaaSBOOMi, Asia's largest SaaS community, and is passionate about building India as a Product Nation.
Key Insights from the Conversation:
👉The challenging journey of pivoting an already profitable company (Eka) to the cloud.
👉Learnings from bootstrapping, fundraising, M&A, and scaling enterprise SaaS globally.
👉The Operator-VC model: "Paying it forward" with capital plus know-how.
👉Why "People Buy From People": Building trust is paramount in enterprise sales.
👉The Founder Exit journey often involves an identity crisis, not just financial calculations.
Chapters:
00:00:00 - Introduction
00:03:32 - Early Career: Commodity Trading & Learning Lateral Thinking
00:10:50 - Spotting the Gap: The Founding Idea for Eka Software
00:19:29 - Starting Eka: Solo Founder, Seed Funding & Early Choices
00:25:33 - Zero-to-One: Building Eka Profitably From Year 1
00:34:20 - Scaling Up: Raising VC & Growing Through M&A ($34mn ARR)
00:40:55 - Facing Crisis: The Commodity Crash & The Cloud Pivot Decision
00:48:58 - Navigating the Difficult 3-Year Cloud Transition
00:53:07 - The Exit Journey: Deciding to Sell Eka & The Process
01:05:04 - SaaSBOOMi & Founding Together Fund (The Operator-VC Model)
01:10:09 - Investing Thesis: AI Wave, Market Size & Evaluating Founders
01:19:34 - Key Lessons from 20 Years: Pricing, Sales, Product Love & Processes
01:33:11 - Why SaaS is Dead & The Future with AI Agents
#FounderThesis #SaaS #StartupIndia #IndianStartups #VentureCapital #OperatorVC #AI #ArtificialIntelligence #EnterpriseSoftware #CloudComputing #FounderJourney #StartupExit #Entrepreneurship #Bootstrapping #SalesStrategy #ProductManagement #TechIndia #MakeInIndia
Disclaimer: The views expressed are those of the speaker, not necessarily the channel.
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Transcript
The Origins of an Entrepreneur
00:00:00
Speaker
So were profitable from first year. So I never used a million dollar that I raised actually. Entire sales team left. I had to rebuild the entire. So for fun one year, they were no head of sales. So I sold back again.
00:00:11
Speaker
What changed in you? It's never about only the money. It's always also about identity and what you're going to do next. I don't think SaaS can exist in a similar of thought as it did in the last.
00:00:22
Speaker
You are a change maker, I think is the best time. At one point of time, Eka Software was the largest profitable SaaS business out of India. Manav Garg, the founder of Eka, is now running one of the largest venture funds in India, which is investing in AI businesses.
00:00:39
Speaker
And this is a masterclass in building B2B businesses. This is the Founder Thesis Podcast, and I'm your host, Akshay Dutt.
00:00:56
Speaker
Manav, welcome to the Founder Thesis podcast. What was the birth of the entrepreneur in Manav? Like, if you look back and connect the dots, what was like the awakening of that entrepreneurial spirit in you? Like when you first realized that you want to do something entrepreneurial, where did it come from?
00:01:17
Speaker
basically I think it it goes back to the the background that I grew up in. You know, I grew up in a very small town in Punjab called Mogam. And if you go, you look today also in Punjab, a lot of my cousins and other otherwise family friends, they all run small scale businesses, small manufacturing plants where you can earn anywhere between half a million to 1 million, earn 20, 30% profit. And the living is extremely good given the small town nature. Therefore, at one time, Punjab has a highest per capita GDP in India at that time.
00:01:50
Speaker
So I grew up, everybody was just doing the business. They even won't finish their graduation. Most of my cousins would just do, like, in the middle of the graduation, they will go back and start something using bank loans. So that was the environment I grew up in.
00:02:04
Speaker
Then my father used to work for Nestle in India. He was actually the plant manager for Nestle, one of the divisions which make milk powder.
00:02:18
Speaker
So, then he left his job and started trying… The plant was in Moga. So, Nestle's first plant was Moga because Moga is known for the best quality of milk in India. Okay. Yeah. So, Nestle decided to put the first plant in India is in Moga. It's still there. It's the largest, very, very large plant.
00:02:35
Speaker
So my father used to work there and he is an excellent engineer. And given the nature of people around you, he also tried the business, I think three, four times. He didn't work out any of the time. So I have always seen that growing up that he will earn some money, then he will feel like doing some business, won't go back, won't do well, then go back to business again.
00:02:55
Speaker
So I learned a lot of you know resilience, understanding, going through ups and downs during those days. So I think that was always in my mind that I want to do something of my own.
00:03:06
Speaker
In fact, after I finished my engineering at REC in Jandah, I decided not to actually work. Though I got a job in Blue Star, I worked there for like two months in Delhi and I thought I would also start something like that. I put up a a plan to start manufacturing hardware pipes which we use in bathroom fittings.
00:03:27
Speaker
And Chandigarh is known for the entire, today also Jaguar, for example, the brand of hardware, bathroom fittings is based in, come out of Chandigarh.
00:03:37
Speaker
So I thought I'd put a plant like that. Back in 1995, it required 70 lakh rupees, which you can imagine is $100,000 is massive money. So my parents had didn't have the money. So I wrote an MBA exam and went to a foreign trade.
00:03:51
Speaker
So it was always in my mind that I wanted to do something on own. ah So after IFT, did you sit for campus placements? Did you take up a job or what did you do? Yeah, so at IFT, I was fortunate enough to, you know,
00:04:06
Speaker
As you know, in MBA colleges, everybody wants to join Unilever. So I was fortunate enough to be in the final interview process. There was one more trading company called GP Group, which used to port post the outside of India, where the composition was like, you know, everything put together north of $5,000 to $10,000.
00:04:25
Speaker
You get good cash composition, fully house paid off. You travel around the world. So that was also equally good job. ah But I wanted to be in India. I want to i had this craze in the last six months of Africa that I wanted to brand India.
00:04:40
Speaker
Even till today, you India is... And you see a lot D2C brands coming in. India is highly underpainted in terms of brand. So I made entire thesis that, okay, we should be of branding more of India.
00:04:50
Speaker
India is so much of... Mass market brands are very, very few right now. And that's how you live. And... So i so campus has this rule that one person, one job.
00:05:02
Speaker
So my ah final interview for GP group came before actually Unilever final interview. and And that's when I started So they called me. as So GP Group, there were two managing directors who came for the interview process.
00:05:16
Speaker
They called me and said, okay, fine, Manav, sit. What you do but you want to do? I said, please let me go. I've just come here as a formal team. My year-level meeting is going to come ah after this. So I would love to you know just say hi to you guys. I can chat for five minutes, but I'm not really interested in joining international business. I love India. i want to be in India. i want to brand India.
00:05:38
Speaker
This is fine, Manav. Since you're here, why don't we chat for 15, 20 minutes, half an hour. We get to know you. You get to know us. Fine. and You don't want to join. It's OK. So what happens is to in the trading company, they would want you to, know you should be able to travel, you should be able to open to you know some amount of drinking, some amount of smoking, though there was no push. But you generally should be able to entertain people as well because it's all about global relationships. Wining, dining, yeah global relationships. And I am from a Baniya family, total vegetarian, never had drink even in college, nothing.
00:06:09
Speaker
So I said, I don't drink, I don't smoke, I don't feel like traveling out of India. I'm a diehard Indian national. So... You know, it's not suitable for me. They said, okay, fine. It doesn't matter. Tell us what you want to do. So I told them the entire thesis of how can I brand India. They asked me lot of deep questions on ah why branding will work, which areas will work.
00:06:26
Speaker
I had a lot of thinking on that. So I walked them through that. Especially that time, I thought children's clothing and the and the clothing is still underpainted with the entire fashion and the garment industry. So spent lot of time talking to them about that.
00:06:39
Speaker
They asked me about how will you sew, what will you do? And after half an hour, I said, okay, we want to select you. i said as I said, please don't do that. I don't want to go to the outside of India. I am from Punjab where people don't even come out of the state.
00:06:53
Speaker
Going out of country is it very harsh for my parents as well. So I want to stay there. They said, no, we'll anyway offer you. If you want to join, it's up to you. I said, why are you selecting me, by the I am not interested in trading.
00:07:05
Speaker
i am not interested in findingning dining. So what is that you like? He said, you are doing lateral thinking. And actually in trading, the people who make money is the one who can think laterally. So therefore, we would love to offer you.
00:07:17
Speaker
It was obviously very lucrative salary. First posting was in Bangkok in Singapore. So that's how I ended up going abroad for my IFT days. Okay, fascinating.
00:07:28
Speaker
what What does lateral thinking mean?
00:07:32
Speaker
Lateral thinking means when you ah can think out of the box. So see basically what happens is that in a trading world, let's say now tariffs are going up and down. I'll give you a different example. Now everybody is saying, okay, you know i can yeah tariffs on cars have gone up, my business will go down. So if you're ancillary industry, you're going to be doomed or think like you're doomed because orders are going to come down.
00:07:54
Speaker
So trader will see an opportunity in that. So trader will say, oh, what order is changing? It's really good for me because I am very flexible. I can travel abroad. I have relationships in the US, relationships in Germany and relationships in India.
00:08:08
Speaker
Let me see what can I do. Can I now work the other way around? And where can I make money therefore? So basically every every crisis or every massive change in geopolitics in the country or in the market actually is an opportunity to make money as well, right?
00:08:22
Speaker
As you know. And therefore good traders typically serve thrive during volat volatile times. Even in the stock market, it's the same thing. When it's very volatile, a normal person can't make it out, right? Because there's no secular trend. If it's secular trend,
00:08:35
Speaker
You and I can also invest and make money, right? Because it's only going to go up. Like it was happening till 21. From 17 to 21, everything was just going up. So all VC industry or PE industry or or stock market, everybody made a lot of money, right?
00:08:48
Speaker
At least ah on the books. So everybody's looking good. But when market is going up and down and, you know... Trump can get up in the morning and make a new story and market can move. That's where have be very, very fast on your feet and thinking about it. So that's where it really helps.
00:09:05
Speaker
OK, fascinating. ah How many years did you work at GP Group? And did you make them a lot of money? Yeah, i did. I actually was very fortunate that I get to work with, the you know, my head of desk was from ex-Goldwyn-Satz, called Jens Nelson.
00:09:21
Speaker
And also chairman Kirith Shai was very, very good. and other managing directors. The culture in GP was really, really good. It was very entrepreneurial. You can go up to managing director and chat with them, understand how they're thinking about it.
00:09:33
Speaker
So actually thrived in that environment. And you were doing commodity training ah trading? Yes, I was doing specifically, I started rice trading, which was the largest for the group at that time.
00:09:44
Speaker
And because, you know, Thailand Vietnam is very big in rice, so they started with that. So that's how they were very big in rice. But Jens Nilsson, my boss, started the green coffee trading desk. Green coffee is the second largest trading commodity in the world.
00:09:58
Speaker
The countries that drink, actually, the countries that produce don't drink that much, apart from India and Brazil. but All of them export. You know, Brazil, Colombia, Vietnam, India, they're all net exporters.
00:10:09
Speaker
And the buyers are all developed countries. You know, all of Europe, Japan, US, large buyers. So actually, when I joined the desk, it was about $50 million dollars in trade. By the time I left, it was about a billion dollars in in trading books.
The Birth and Growth of Eka Software
00:10:22
Speaker
wow i I built the entire Vietnam version for them vth Vietnam was very small in coffee at that time in 1998, 99 so I used to go to Vietnam almost every month put the warehouse, helped grow the origin on this site then travelled a lot to a lot of buyers like Labatza, Nestle all the big names in coffee that you see Folgers coffee which is P&G, Kraft General Food and I built those relationships with the buyers on this site it was an extremely good you know experience very very enriching And also, you know, a lot of thanks to the Chippy Group culture to be able to give you that much of independence at that young age.
00:10:59
Speaker
You're literally dealing with a lot of money and lot of up and down. So my boss has supported me. Chairman supported me. So it was really, really good experience for me. Amazing. Amazing. Okay.
00:11:10
Speaker
So when did you move on and like what did you do next after? during this entire experience, I would have met about like maybe, so my, I tell you, my day used to start at like 7 a.m.
00:11:22
Speaker
because Japan opened and I will finish my day at 2 a.m in the night because I used to make calls because I grew the test from 50 million to 2 billion dollars in bulk and the way it happens is I have to build relationships across the world right so I used to call the buyers in Europe and the US so whole evening and night will go there and then mornings will go in Asia and then buy it from buying from Vietnam ah So that's how you understand initially is that you I just took the directories. Those days there was no internet. It was not their prevalent. So you used to buy these coffee directories and you start calling companies and saying, I am so on and so forth. i am from Asia. We can offer you coffees from Asian religions, which is silent, Vietnam, India, Indonesia.
00:12:07
Speaker
So I started with that that's where rigor came in. And that's how I then started traveling and meeting those customers, with first with my boss, then alone, and built relationships. And during that exposure, I understood that you know all of us are doing all the work manually.
00:12:21
Speaker
For example, if I will do the trade, I will write on a piece of paper, give it to somebody in the back office. He or she will enter in the spreadsheet. And then we are trying to understand what the position is in the morning. ah Sometimes numbers are wrong. We are scrambling when market is moving, like especially in these days.
00:12:35
Speaker
Without system, it would be very, very hard to manage during these times of such high volatility. So what I did... This was what, like early 2000s? Correct, early yeah.
00:12:47
Speaker
Okay. and the Most of the trading was on the phone, like you would call and place out. Trading is always on the phone. Trading is all nothing only online. Commodity trading today, because all relationship driven, they are very large value contracts over longer period.
00:13:00
Speaker
And people buy from people, people sell to people. Systems. Therefore, system-based trading has not worked apart from, of course, on the stock market or on the future side of things.
00:13:12
Speaker
But the physical trading is still very, very physical in nature. Because you do see the crop, you do really see you know how things are happening. Counterparty risk. Counterparty risk also, you have to understand the crop also, right? Your weather will change, things will change in the ground.
00:13:25
Speaker
See, because when you talk about agri-commodities, the quality also matters a lot. So, you know, same bean or same rice or same wheat can be different with different moisture content and different, you know, sunlight and everything else. So, things change in the ground all the time.
00:13:39
Speaker
So, you can't simply... It's not ah it's not a standardized product you're buying. It's not a stock market feature or ah or a union of a share which you can buy which is pretty standardized. So therefore, futures market is standardized, but the physical trading you have to go and feel and understand what is happening on the ground.
00:13:55
Speaker
And that's the reason you go down to those regions and understand how the farmers are thinking about the crop, what the weather forecast look like, how is the soil quality, therefore how is the coffee quality going to come.
00:14:06
Speaker
okay Okay. And how the crop will be bumper crop or not bumper crop, how the yields are getting changed with the weather patterns. Right. So you discovered everything was super manual. Then what?
00:14:19
Speaker
So during that time, if you remember, 2001 was a dot-com boom period. but So my initial idea was to develop what you just asked, an online exchange for coffee where people can buy and sell, but can also finish the entire back office workflow.
00:14:34
Speaker
After you buy, a contract will get created, then shipment will get managed, invoices, and the entire contract lifecycle, futures auction. That's how the original idea was. But by the time I got started, 2001 came and passed, you know, dot-com burst happened.
00:14:50
Speaker
But I still continued the idea saying, okay, no, the back office has actually much more potential. Because the whole idea of starting the business was to automate the back office. Trading was okay. Since I was doing trading also, we thought automate that as well.
00:15:02
Speaker
So actually, I... Therefore, that's what the idea of, first idea was calling, it we used to call it e-coffee connect. That how do you connect buyers with sellers and do the entire back office operation? That's how actually the the first idea, the the idea germinated.
00:15:18
Speaker
And then one fine day, I decided to just leave my job. So actually the whole idea of, so I was in my, this whole trading world ah doing really well. My boss was really happy. The entire thing was doing really well.
00:15:32
Speaker
ah In 2001, one of my catchment from REC, actually, Rajeeb Ajaj, he came to Bangkok for his honeymoon. And he's saying, you know, we're just coming from Delhi. We'll have to stay in your apartment. said, fine, you come and stay here. I'll move with my friend.
00:15:47
Speaker
So they had started with another friend of mine. He had started with a friend of mine, a company called neverdistant.com, which is a flower delivery shop, an online flower delivery. that's why got to understand, okay, there's something called internet and something called systems.
00:16:01
Speaker
And I started reading about systems of and how Microsoft and other initial VPE and all this works. Given I was engineer, and I started understanding that. So that's when the idea started, okay, there's a systems approach to the entire thing we're doing. So actually I built a small system for our desk, which was because i was talking to like 400 buyers and sellers in a course of let's say one week.
00:16:24
Speaker
So I created database using Access First. where I can track who I'm talking to, what I'm talking to, what exactly what I did, ah you know, get my notes around it, get a kind of small intelligence CRM, you can call it in the modern day.
00:16:39
Speaker
I created that first actually. Okay. fire that's ah For, for our, for my, for automating my work, okay Because imagine, you know, on on a spreadsheet, it's 400 buyers and sellers and understanding who's saying what.
00:16:53
Speaker
So I created a kind of entire customer profile, like a customer relationship software, so i can understand who's doing what. How much each person is buying? What does it look like? So I did all those things.
00:17:07
Speaker
So that's where the idea of the system started. And that's how eCoffee Connect happened, which I told you before. ah you ah You quit and started eCoffee Connect? Yeah, yeah. So when I was starting up, I was very clear that I cannot do both things together. Trading, I was working from, I told you, 7 a.m. till 2 a.m. How am I going to do anything? There's ah no time available, in including weekends and Saturdays.
00:17:28
Speaker
We'll be reading and consolidating all that you've done over the week. So there was no time. So I decided just like that. ah So the idea came to me. And next day, I just went to him saying, I'm resigning. I want to do this.
00:17:40
Speaker
He said, it was totally surprising. said, you have no idea what you're trying to do. ah Software is nothing for you. If you stay in trading, you will make a lot of money. But I said, no, I want to try this out. It doesn't matter.
00:17:52
Speaker
So that's how actually... And you started as a solo founder on this. ah oh My initial idea was to start with this person, Najeev, I told you, who had come.
00:18:06
Speaker
But then he backed out saying, I can't move to the outside of India. didn't look good. So I ended up starting a solo founder. In Thailand only? In Thailand only, yeah. I had nowhere else to go at that time.
00:18:19
Speaker
I had no capital also, right? I had only a few years of work. So there was no capital also. So first I had to figure out capital. So what I did, I started going out to so some relationships in Hong Kong. I got to ah J.P. Morgan Chase guys during those times, a few other funds, oh and few other professionals.
00:18:38
Speaker
They all met me. They all liked idea. They said, you know, but we really can't fund you. We have no background in software. You never built a business. You're not from family background of of building businesses.
00:18:49
Speaker
ah There's nothing in your actual life story which is telling you that you have some huge spike. You're not from IIT. You're not from IIM. So internally, it's very hard. Your case is very hard for me to push, even though I like you personally.
00:19:01
Speaker
But internally, how do i ah do I fund you? So none of those materialized. Then you know I decided that I should go back to the chairman of the group I used to work with. He is very, very entrepreneurial. His name is Kirith Shah.
00:19:14
Speaker
He is, you know, that family is what, Forbes 19th in Thailand. So very wealthy, very entrepreneurial. So I just went to his office. I just knocked on his door. I went back to the office, knocked on his door saying, this is what I'm doing.
00:19:28
Speaker
And within what, I think half an hour, he said, fine, I'll back you. He said, how much money you, I said, no idea. I said $1 million. I said, fine. Then he made me meet all his, you know,
00:19:40
Speaker
partners or managing directors and that's how actually the journey started. Amazing. Okay. So, but you know, you're not, you didn't actually, you're not known as the founder of eCoffeeConnect. So what happened?
00:19:56
Speaker
Well, then we changed the name because, so you know, after, ah so then the first issue was how do you build a software? So I said, okay, fine, let me go to India. I came to India, i went to Delhi, Bombay, Bangalore, met a of services companies on how the first version can be built.
00:20:11
Speaker
At that time, I got clarity that, you know, ah so sort of eCoffee Connect, it has to be back off the system. So we changed the name as we go along. <unk> in the newport You pivoted the idea from a marketplace to a something which helps the traders to manage their middle office is the right word for this, right?
00:20:30
Speaker
Yeah, backup front, middle and back office automation. So instead of... See, trading is the even before front office. It's a part of the front office. So it's an entire automation of front, middle. So instead of starting from a trading, we started from a contracting... Once a contract is in place, the physical contract is in place.
00:20:49
Speaker
From there, we started off. So our idea was... So back office automation or the front to... Entire office automation was always there, but we took off the online trading path we didn't build.
00:21:00
Speaker
We built a little bit to start up, but then we said, OK, it doesn't make sense. And we started building just the entire automation suite. So it was not clear to me that, see, I'm not coming like a software founder, and understanding the industry, market size.
00:21:13
Speaker
None of those are doing that time.
00:21:16
Speaker
And this was in year 2002, 2003, 2004.
00:21:20
Speaker
thousand two three four So the slide ideas of how to build product was also very, very, very nascent at that point in time. Can you describe the what your software was solving, the problem?
00:21:31
Speaker
Yeah, the the software problem solving is for trading companies are nothing but just supply chain companies. Don't think of trading companies as somebody buying and selling. So what happens is when I'm a GP group for a Cartier or Louis Dreyfus, which are large trading companies, the way it works is you are basically guaranteeing a Nestle that I will deliver you X quality of coffee, X amount at this particular time.
00:21:54
Speaker
Because Nestle will then plan their inventory and they'll plan the entire manufacturing accordingly. So you can't really delay things just like that to large extent. Now to do that, you have to make sure the entire supply chain is managed properly, right?
00:22:06
Speaker
And the entire risk is managed, which is one is the risk of delivery, other is the risk of price. Because Nestle will say, I'll buy you at this price. but And I'll buy you for the entire delivery for the entire year. Every month, please deliver me 1,000 tons of coffee of this quality from this particular country.
00:22:22
Speaker
Now if you're a trader, what you will do is you will go and secure the supply from Vietnam, Thailand, and then You will make sure that it is shipped properly, the quality quality checks will happen, all the legal export work is done, shipment is done, entire shipment management, and then you will make sure the quality the quantity is delivered to the Nestle warehouse at a given time and the given price.
00:22:44
Speaker
Now the price is also fluctuating during all futures and options. It is not fixed. So you have to manage the price also. The entire thing is called management of the entire supply chain risk and delivery.
00:22:56
Speaker
That's what the trading company does in physical time. so now entire Imagine entire this flow is physical in nature and it is doesn't have any system. So would I build a system which can automate the entire thing?
00:23:07
Speaker
Therefore, you as a trader will know what is my mark to market, how much money I am making any point in time. What is my position? Which means how much should I buy, how much should I sell? Because you will do like thousands such contracts with Nestle, with Kraft Channel Food, with Folgers, with other small roasters around the world.
00:23:25
Speaker
So now you have a book. Like the stock market, you will have a book, a portfolio built up, where you're buying, selling, buying, selling, and you have to manage that entire thing. And things will keep on changing at every point in time.
00:23:37
Speaker
So the that's the system. That's what the system does. OK. Fascinating. So you which year did you launch this? 2004. So is like when software was sold in CDs, right? It was not really a SaaS market. No software. so as the first So my version was, um so that time ASP Wave had come, you know which is application software where you you can actually do some, what you call today, managed hosting.
00:24:10
Speaker
So therefore the architecture I chose was a J2OE architecture, which is a web-based browser. It was one of the first web-based system in our industry. Okay.
00:24:21
Speaker
So we built the entire system using a web browser and of course it has a middle tier and and the back office oracle database. But still it was not enabled on the cloud. We had to go and implement on the client site, on the client server. Cloud as a term was not even coined at that time. It was ASP. Cloud itself as a term.
00:24:39
Speaker
Yeah, yeah, yeah. Okay. As people software architecture, the reason I'm giving background architecture by chance. It's not that we had huge tunnel vision or vision at that time. But...
00:24:50
Speaker
We were able to... lucky Yeah, we were just at the right time, right place. So design choices were ah in line with a little wave in cloud. So entire software got well up in that. Yeah, that was... Yeah, you're right. That time software was in CDI.
00:25:04
Speaker
Okay. So you had this million dollars. How did you use it? Like you gave it to an IT services company to build the product for you. then you set up a sales team. Like what was your go-to market journey, that zero-to-one journey?
00:25:20
Speaker
See, Zero One Journey was, first of all, I had some really good relationships. As told you, I i have a ah still believe the cold call really works. ah whatever what People call it cold call, actually, it is very warm. you know you are Like I'm calling the phone and calling, Akshay, are you doing?
00:25:33
Speaker
I'm coming to see you in Japan. okay okay in Tokyo, we'll have a a meal or a coffee. So actually, what happens is you develop good understanding of what key problems the person is solving or facing.
00:25:44
Speaker
And so therefore I had built these relationships around the world. So I first went to them, and understand what they're looking for. Actually, I designed the entire system on um paper first, almost about 300, 400 screens.
00:25:56
Speaker
I first got a design on paper by traveling around for one year. Okay. and like and and What today we call as co-building with customers or something. Yeah. What what do you call design partners today?
00:26:08
Speaker
What you call design partners today? ah But it was very physical. I will sit in the office for one week, sometimes two weeks. understand from workflow what they're looking for. So I did that first.
00:26:20
Speaker
And people used to like me because I could speak their language and then I could transfer it back into design. data yes Yeah, not only jangas, also the deep problems. So the managing the P&L and end of day and mark-to-market is the biggest thing because the market is moving. You really want to know whether I'm making money or losing money and what should I do at that point in time.
00:26:40
Speaker
So people understood, I could understand deeply how they're working, their workflows, I speak their language. ah So that really helped me. So the moment the first version was launched in 2004, we got the first customer immediately.
00:26:54
Speaker
We signed five customers in the first year. So we were profitable from first year.
Eka's Global Expansion and Cloud Transition
00:26:58
Speaker
I used to charge about $7,000, $100,000 per but customer at that time. We got five customers in first year, half a million dollars. My expenditure was hardly 250K at that time India.
00:27:10
Speaker
Wow, amazing. Yeah. So I did all the sales. ah Till I think about 4-5 million dollars, I was only person doing all the sales. What was the journey to hit 5 million dollars?
00:27:22
Speaker
It was like just within the same market, find more customers or increase the contract values with existing customers or? So both. So first we started selling at $70,000.
00:27:35
Speaker
So first issue was, how do you price? So we thought, okay. We will save at least one back office person job in Europe. The composition of one back office person in Europe is about $70,000. So let's price it then. That was simple mathematics of pricing at that time, or logical pricing.
00:27:51
Speaker
So first five customers, we actually understood what it takes to implement a system, because implementation is a very complex system. It has data, data has to match, number has to be perfect. ah So I learned that with first five customers, is about $70,000 each.
00:28:06
Speaker
And then come a huge opportunity to participate in the ah RFP for a million dollar contract,
00:28:13
Speaker
ah ah which was from Noble Group. And before that, I think I must mention that you know there's a person called Tishul from Louis Jeffers who also really helped us. Louis Jeffers is globally about top five trading companies.
00:28:27
Speaker
And Tishul and his team from London really helped us understand how a large trading company works. I had a good understanding with first five customers and how mid-size companies work. Mid-size means turnover between, i would say, half a billion around that turnover.
00:28:44
Speaker
okay And large large would mean 5 billion, 10 billion, 15 billion dollar turnover. So Louis Drift was a very large trading company. So he actually, he and his team gave us in entire knowledge of how a large trading company works. Because with scale, the data on the screen changes, the data in the back end changes. So we went through a lot of learning. It was very hard.
00:29:03
Speaker
because You know, as Indian engineers, we were trying to still figure out how to build a product for an industrial scale, scalability and reliability. So they were very patient with us. So that's how we learned.
00:29:14
Speaker
And then came an opportunity for 2006, I think, around that time, to participate in a very large RFP, which is from a company called Noble Group. Noble Group was that time listed company in Singapore, very, very large.
00:29:27
Speaker
I think 12 or 20 billion dollar company. Again, agro-commodity trading. Agro, we focus on agro-ing only. at that time. So, ah there was this gentleman called Dimitri, Russian champ, CIO.
00:29:41
Speaker
He actually called me saying, Manav, I heard about your company. You're really small, but I would love to give you an opportunity. And that time, we had no clue how to how to fill an RFP. RFP was just long, you know, 100 pitches RFP. We were very confused.
00:29:54
Speaker
We sent some, I would say, trash version back, which I had no clue. So, he called me and literally said, you guys are not professional. You don't know what to do. Actually, I told him, don't get angry for the first time. He's saying, but you know, my CEO is not going to look at it like that.
00:30:07
Speaker
i It's a loss of face for me. I said, okay, calm down. I'm going to come to Singapore tomorrow and I'll sit with you. I said, don't come. Don't see my face. I just don't like you. This is not the way to be. You know, that's where, again, the previous skills come forward. I said, fine, let's have a coffee.
00:30:21
Speaker
I flew actually to Singapore without knowing him and sat in Starbucks below his office. He came down, then he spent a day, then he realized that we really have substance. And that's how the first, then we went through proper process.
00:30:34
Speaker
ah Their team evaluated the product. That was the first million dollar contract. It was big deal. Even today, a million dollar contract is massive deal. So, that account become, I think, ten twenty million dollar account for us in the next 3-4 years. A lot of growth came from that.
00:30:48
Speaker
So, therefore, journey is… 10 million but annual will revenue. from that one account? No, overall. world There was no reckoning revenue. Remember, it's a CD-based or a client-server software. It is not a cloud.
00:31:00
Speaker
There was no cloud in 2006, 2007, 2010. There's no cloud. The account became very large for us. We so also signed other large customers like Cargill and Kafka International and so on so forth later on.
00:31:13
Speaker
But that was a pivotal moment. Both Louis Jeffers' teams, Tishwara and his team to give us understanding and then Dimitri and his team at Noogle to really give us an opportunity to build a global, you know, global scale business using that.
00:31:28
Speaker
lot of learning, a lot of revenue. Team also worked like 18 hours a day. We used sleep in the office because managing this company really, really hard. We had no understanding sitting back in, sitting in Bangalore on how to manage such large implementations.
00:31:43
Speaker
So that really made a solid base for us. And from there, yeah. Sorry, please continue. And then we started putting a oh things in place to build a global sales team.
00:31:58
Speaker
We were asking something. 2010, what kind of revenue were you at? I think 2010. See, 2012, we were at $14 million, fourteen million dollars earning about $5 million in profit.
00:32:14
Speaker
Oh, wow. Okay. Yeah. Incredible. Always profitable. So, from 2004, not a single year when I was not profitable. So I never used a million dollar that I raised actually.
00:32:26
Speaker
I only raised, I only used $200,000. That's all. Okay. Okay. ah I can see your total lifetime about as per traction, you've raised about 55 million roughly. That's right.
00:32:43
Speaker
so So what was the fundraise for? So 2009, we raised from next to 2010. So I was sitting with Kirith Shah, who was the chairman of the group. He was on the board. He is on the board. He was on the board before i sold the company now.
00:32:57
Speaker
ah So we discussed, okay, we don't know how to build a large-scale global company because we could sense that we're scaling revenue is profitable. We should get a venture capital firm who can help us to think globally.
00:33:08
Speaker
So that's how I had met Naren and Sandeep Singhal. Sandeep Singhal from Nexus. And Naren, who had co-founded Nexus at that time, along with Sobeer.
00:33:21
Speaker
Yeah, ah you said ah we should get a venture capital Yeah, so we should get a venture capital firm who has a global experience. So when Nareen and Sandeep are single of Nexus, they were co-founding Nexus in India at that time.
00:33:33
Speaker
So I ended up meeting both of them. And I think when they decided to invest in us, we thought they good partners. Nareen is based in Sandeep based in Bombay here. That's how actually we got into ah business with Nexus or partnership with Nexus.
00:33:49
Speaker
And the idea was to, and they really helped us at that time to understand how global companies work. I met a few the companies at that time. And the journey started with that. And then we grew really fast after they invested. 2012, 2013, we touched about $40 million, $5 million in profit. And then the thought process back then was, now can we use it as a leverage to acquire more companies?
00:34:09
Speaker
Because now we are very profitable, we are internal accruals, I think eight, $9 million dollars for our balance sheet. Plus we raised capital, three, $4 million, dollars I think at that time from Nexus to start off. And the idea was, can we now scale the business by acquiring companies in the US and Europe?
00:34:23
Speaker
Can we enter into other areas? We were only primarily agriculture focused at that time. How should we enter into energy and metals and pure radios? And that's the point in time. We said, okay, let's put this entire acquisition strategy in place.
00:34:36
Speaker
And that's where the Silver Lake came in. So from there, we raised about, I think, another thirty five forty forty million. dollars ah The existing investors also participated. GB Group participated.
00:34:48
Speaker
Then Nexus participated. That's how the funders went to $55 million total overall as a company. And that's it. And then we acquired two companies. Revenue in 2014 went to about $34 million dollars with 9 million in profits.
00:35:00
Speaker
Wow. Yeah, we acquired one company in Australia, one in Canada. It was also very hard to acquire companies back then because the founders won't trust you. ah You know, they will think how will an Indian founder will treat us, how will they treat our employees. So we went through all those things, selling Indian brand, saying we are global, what can we really help you? So completely expanded very, very fast during that time.
00:35:21
Speaker
What were the learnings from these acquisitions? Like, how did you decide this is the right company to acquire? And did the thesis come true? Or were there gaps in your thesis?
00:35:33
Speaker
See, the entire acquisition strategy went on two things. One is that we look at the product gaps that we have. So, we are focused in agriculture. We are not present in energy. So, can we look for an asset which does energy?
00:35:44
Speaker
So, that's how we identified a company in Canada. And then... Second thesis was, how do we make money from that particular acquisition is through? OK, we'll bring part of the cost to India, especially the engineering cost.
00:35:57
Speaker
We acquire customers in the front end. If the revenue is sticky, we'll start generating more profits from that. So that's the thesis that we will. The thesis did come out true. But we found out that integration takes more time than expects.
00:36:09
Speaker
It's simply not easy to move the jobs from there. It takes time for people to culturally assimilate. So those were the learnings in acquisition. And very good learning on how to build this.
00:36:22
Speaker
A lot of learnings before before all these things in 2008-2009, we also started building a global sales team.
00:36:30
Speaker
Yeah, that was also too hard how to hire a really good head of sales and build the entire sales team. ah We hired this gentleman called Rick Nelson, who was head of competition at that time, called Triple Point.
00:36:41
Speaker
And then he moved on to ICE, which is the Intercontinent Exchange. ah He was hitting sales there. So he then helped us build the entire sales team globally.
00:36:51
Speaker
So, and that's how we had a very good base set up. We had a global sales team in place. Engineering team was good scaled up. We knew how to do large implementation. So therefore, we thought it's a good base for us to scale now, to then do the acquisitions and move from there.
00:37:07
Speaker
ah so So just to summarize, we had a very good base. We had a global sales team in place. We had a backend fully operational. We have reference customers. We're pretty known in the industry, in agri-industry, at least globally.
00:37:20
Speaker
And therefore, we acquired those companies. So that's what we were in the process. We got almost eight term sheets during that time from global investors. And that's how Cirulik came in. And we started acquiring companies.
00:37:32
Speaker
We acquired two companies very quickly. In 2014, we acquired two companies, both almost back to back.
00:37:38
Speaker
But then, you know, so was very good. were probably the largest software company in India at that time. Wow. Okay. When you say not just software company, you're talking about product companies, not like a services. Yeah, product.
00:37:50
Speaker
When you use the word software, it's actually for products. Software services called services. Yeah. Okay. Typical software means software means the product companies. Yeah. Software product company, just to clarify.
00:38:01
Speaker
and And that's how we thought we'll become 100 million in three years from then, because we're growing really, really fast. But then until the 14th end, actually the huge crash came.
00:38:12
Speaker
The oil crashed massively. if you go and check, you will see a massive oil crash happened, which even large companies like Shell and BP could not see. And the entire commodity price starts falling down drastically.
00:38:26
Speaker
ah I also decided to move to New York in 2014 because we said we are the Kwanamo company, so I should move to the US. So actually moved to the US in 2014 with family. And after I moved in August and crash happened now in September, of October.
00:38:40
Speaker
So it was a massive, massive, massive shock actually to the industry to us as a company because some of the companies went out of the business our revenue started coming down it was very very bad situation to be in at that point in time so actually the revenue company started coming down from 34 it came down 27 it came down to 25 and that's the point in time i decided okay this is a good time had about 35 million dollars on the balance sheet at that time even after acquiring two companies because we had internal accruals as well
00:39:13
Speaker
So I convinced the board, which took a lot of time to convince, that we should pivot to cloud.
00:39:19
Speaker
ah Yeah, so that's how the the whole, that's when I thought, okay, now cloud is going to be the the future, so we should pivot to cloud and not remain as a client-server company.
00:39:31
Speaker
So it was a big risk. You know, I'm pretty thankful to the investors who support me and so because ah they invested behind a thesis of acquiring and then, you know, increasing profit, which is a very simple, straightforward execution-driven problem.
00:39:44
Speaker
as against now doing a new R&D. Nobody in the team has seen a cloud software. We all client server people. So how will or you build a cloud software is a massive risk. And then acquiring customers is another risk because all customers were not moving to cloud in 2014, 2015, if you remember.
00:40:02
Speaker
It was early days of Amazon and Azure at that time.
00:40:06
Speaker
But I... Yeah. Help me understand the complexity of this pivot to cloud. Is it just about ah engineering problem or is it also about pricing and ah sales?
00:40:20
Speaker
So it is ah it is a multi-port problem. So first problem is, so in a client server, we will get a million dollar less than subfront and get 20 to 24% annual maintenance. So if I sign a million dollar contract, I get immediate cash flow and then I get 240,000 of the king revenue as a customer support revenue.
00:40:39
Speaker
So very liquidative model, especially after you've done the hard work in early days, right? So now if you go to cloud, the same million dollar will become a contract of $300,000 typically.
00:40:51
Speaker
Ratio is 2.5. but You divide by 2.5 is 2. So million dollar will be around 300, 400K ARR contract, including the support and maintenance. So therefore what happens is your revenue top line will start coming down.
00:41:06
Speaker
Your profitability will get skew. right And the cash flow will go out of picture. That's the first fundamental problem of pivot from enterprise to cloud. So where is the cash flow going to come from?
00:41:20
Speaker
You have the money on the balance sheet, but you're going to now put the money to fund your cash flows. That's the first financial problem or cash flow problem to be solved and a business model problem to be solved.
00:41:31
Speaker
And then there's a technology problem that whether you know how to build a true cloud software, how will it scale? Will that huge data-driven complex workflow work on cloud? At that time only, you know, HR software, travel software was getting built. ERP was not there fully on cloud. NetSuite was there, but not fully there for large companies.
00:41:52
Speaker
And the third problem is the customer adoption. Will the customer move? so Trading is a sensitive industry, right? People are wary about the data processes. So will they move to cloud or not? It's a mission-critical software.
00:42:04
Speaker
So those are the... It's very hard. Today, I'm an investor. I can empathize. That's a very, very hard call. If you're putting $50 million, dollars you know, and you want to suddenly change the business plan.
00:42:16
Speaker
So if I'm an investor, I will push to sell the company at that stage, saying, let's sell the company since the industry is changing so fast, instead of trying to pivot and take whole new level of risk. You never know whether you can do it. If any one of these fails, company is zero.
00:42:31
Speaker
Nobody will buy the company at that point in time. So we to...
00:42:37
Speaker
Sorry, please finish your thought. So I was, so it took one year to to go through that step-by-step in midst the investors and the board.
00:42:46
Speaker
As a founder, you could probably see that if you don't pivot, ah it will just, I mean, cloud, I don't know. Could you see that cloud is the way forward? Yeah, if I was very clear.
00:43:02
Speaker
I could have sold the company. I think in hindsight, if I look back 10 years back, other option, a real option was for me to sell the company as well. Obviously, you get more ah you know mature or wise as you age and you can have more experience.
00:43:17
Speaker
So one of the options which we discussed, but I didn't agree, I thought cloud is the right way to do. Probably another way was to sell the company at that time and then start all over again in the cloud.
00:43:30
Speaker
In hindsight, because what what happens is when you pivot the company at that scale, we have 34 million revenue, 9 million profit, Your finances are getting hurt, cash flows, people's skill set. So the internal cultural change is also massive.
00:43:42
Speaker
Because, see, the cloud, there was no full buy-in of cloud into the, please understand the situation during the the internal team. We had about 400 people at that time. There's internal debate also, is cloud going to work or not for our industry?
00:43:56
Speaker
So teams also kind of divided internally. So the cultural change internally was massive, which I didn't realize actually.
00:44:06
Speaker
Whether you're CTO, you know ah sales, tail sims globally, your engineering leaders, they're all aligned or not. That was not the case. I underestimated that.
00:44:17
Speaker
I managed the transition with the board really, really well, I would say, or reasonably well. But I think I underestimated the transition required internally. What were the symptoms that made you realize that you got that an estimation wrong?
00:44:33
Speaker
I think people will not do the work. They will say, it I don't believe it's right. Productivity. Yeah, productivity. And they will come and say that this is the right direction. We don't think cloud is going to work. ah The person who will build, they will say they don't know what they're doing. Because, see, you have an existing business to run.
00:44:49
Speaker
It is a substantially scaled business. Even today, also, it is good scale for India. Back then, it was a massive scale business. So, you have a team who's running that. And now, suddenly, I say, okay, small team will start building cloud.
00:45:02
Speaker
Now the team who's building on this, they first think, will happen to me? Do I have a career? Because Manavis is of moon going to go into cloud, and I am sitting in an enterprise enterprise client server division. right So that's the first issue.
00:45:16
Speaker
You created actually haven't have and have nots.
00:45:21
Speaker
And then there's some people in the middle who will say, i want to go there, but I want to be here, but I want to be here, but I want to go there. So that creates a massive, massive chaos. OK. and the And the risk of building. So our HR was very good. I think they really helped us build. you know At that time, i had this girl called Shuchi and she really helped.
00:45:40
Speaker
And Mumu, who heading CTO, she said, I will give up my VP engineering position and start the small product on the side to see how cloud works. So I think that's how we thought we should pivot there.
00:45:53
Speaker
Then some older people also started helping, but still the sales team never believed in it. So the sales team had to be changed. So I had to go through multiple changes in the team side. Okay. Okay.
00:46:05
Speaker
Fascinating. ah How long did the whole transition take? that Like by when was Eka a cloud so company? So we are a very, very heavy mission critical system. As you can imagine, we're managing global scale companies, 50 billion, 100 billion dollars in revenue scale companies.
00:46:19
Speaker
It took us almost three years, resibled in 2016. And 2019 is when we were to build the first deployable version on the cloud. Every year we could see the progress.
00:46:31
Speaker
But 2019 is when we got Cargill, Unilever, Crafts and Food. We got a massive validation from very large customers.
00:46:41
Speaker
And a good thing happened that Cargill also decided in 2017, 2018 that they will only buy cloud going forward. So a lot of companies also. so So all three points I said. We were able to build a product, customers able to adopt,
00:46:53
Speaker
And we were to manage the cash flow. We went negative during those two, three years because invested a lot of money from the balance sheet. Very tough time for us. Very, very tough. Entire sales team left. I had to rebuild the entire... Luckily, you know, I had a backstop in me to sell.
00:47:08
Speaker
So for one year, there was no head of sales. So I sold back again. And then we again rebuilt the entire system. So I think I would say one learning is if you're a really strong HR and recruiting department that really helps in this transition.
00:47:25
Speaker
So I think HR played a very, very good role. Because imagine the number of people transitions we are doing, right? It's a global scale transition. It's not just in India. So, you know, that customers I could do myself because I've had very, very strong relationships with the customers.
00:47:39
Speaker
Because the customers also have to be told why you're changing the strategy. So customers I could manage, then I used really HR really well. And they really contributed a lot in managing this massive transition on the number of people leaving, changing changing culture, changing people's priorities in terms of career they want to build. That was the biggest challenge, i think.
00:47:58
Speaker
At one time, lot of, I think one board would have thought that companies are not going to survive. There's too many things moving at the same time.
A New Venture: Together and SaaS Boomi
00:48:07
Speaker
But ah like, how did you personally go through that time? Like, was it just pure grit, conviction, keep your head down, keep executing? Yeah, keep executing.
00:48:20
Speaker
I believed in the thesis, right? So I think my conviction came from the thesis. I could see the word moving towards club. It was very clear to me that company has to go to club. The other thing, as I said before, the only thing now going ahead is probably it is given all the culture and the people transition and the customer transition,
00:48:37
Speaker
It's easier to sell the company and start all over again. Perhaps. Instead of going through this massive transition. But I was just heads on, focused on it. And there were cool people around me. see My management team stayed with me for almost 10 years.
00:48:52
Speaker
I think I should recognize them on this podcast as well. I think ah we had people like Asash Uchi from from CTO, CFO.
00:49:03
Speaker
Then I had people like Rajiv and Sanjay from professional services. The entire team stayed with me for 10 years, 10, 12 years. So I was very fortunate to actually work with the team who stayed during the entire ups and downs.
00:49:16
Speaker
the but but architect yeah By time came and you started deploying cloud, what was the revenue at by that time So we touched back again at about $17-$20 million dollars per record revenue now.
00:49:32
Speaker
So yeah, so a lot of, as you can imagine, lot of financial engineering would have gone through to come back to the same scale. See $20 million means $50 million dollars in inner and enterprise revenue.
00:49:44
Speaker
right So we could sell really well. We got really large contracts. ah Revenue really scaled well. And that's the point. The company was not profitable. It was mildly profitable. So the idea was to make it hugely profitable.
00:49:57
Speaker
And that's when we thought now is good time to exit, think about the exit as well. Because Silver Lake had been the company for now six, seven years. It was time for them to exit. Nexus has been there for eight, ten years.
00:50:09
Speaker
Time for them to exit. So that's how I started thinking about the exit in 2020 actually. What changed in you? Because you were, ah i mean,
00:50:21
Speaker
you know, most people who start a business don't think of selling it. And you were in that mode in 2017 when you decided to make the pivot to cloud. Something changed, right? To make you consider exit as an option. What was that personal evolution you went through? I think the personal evolution is two the things. One is that investors are You are the captain of the ship and investors are part of the gym.
00:50:46
Speaker
So you have to make sure that you have to give exit to them. So that was first thought process. Now I could have bought the shares back. I could have bought some other investors in, changed the capital. IPO also could have been an option? IPO, we were based in Singapore, headquartered at the start because started to come in Singapore.
00:51:04
Speaker
So at that scale, I think IPO in India as possible was possible. But then there were a lot of regulatory issues at that time to move to India. I think for me, the... the main discussion point was how next decade is going to look like.
00:51:18
Speaker
And I could see the early signs of technology changing again. You know, ML was coming. I can say now in hindsight, okay, by timing was perfect in terms of AI, generative AI, but there was no generative AI in 2020, 21.
00:51:32
Speaker
The thought was that I should look at something else in doing it because the industry that I was in is a vertical industry. industry And if you look at my learning from 2004, 2020, it's massive. From go-to-market, to managing the teams, to building the product on my own.
00:51:45
Speaker
I could do this same because I'm product guy at heart. That's how I'm able to pivot and create a product for every single stage. I was only i ah was acting CPU the entire time. ah okay So that's how I was able to think through the next decade. Probably I should look at some larger canvas and not just stick on the vertical company. Because the industry is small. It's a billion-dollar industry total.
00:52:06
Speaker
software company, and the growth can only be 10-20% or 30% maximum for the next decade I'm talking about. So, choice for me is do I want to run a lifestyle business? It could become you know massively profitable. i think last, you know we were, as I said, 9 million profit. We could take the company 10-20 million profit, 30 million profit.
00:52:25
Speaker
But then would be a good lifestyle business. ah My children could perhaps come. out That's how families think, you know, can come. Software is still a very good industry to be in. But that didn't attract me that much. I wanted to use something and put on larger canvas.
00:52:39
Speaker
And also started along with Girish and Avinash, SaaS Women 2015, which is not a profit for SaaS, right? Which grew massively also. So SaaS was growing, but I thought I should wait for the next wave now.
00:52:51
Speaker
Maybe ML, maybe do something else. That's all the decision. It was a tough decision. My family still think that I should have continued Vika, Vishwakundu Vika as a family. Because it's very hard to build a business, as you know. ah so And that to a profitable, sustainable business, the industry doesn't change that fast.
00:53:07
Speaker
The customers don't turn out that fast if you service them well. So it's a very, very beautiful industry, I would say. I love the customers in the industry, i love the people in the industry. And you build long-term relationships with them. So my family was still, I think, was thinking, in my my wife especially, was he thought I should probably start the business.
00:53:25
Speaker
But thought was good time to exit the business. So 21 is when I started thinking about the exit here. working on exit. Okay. And when did you finally exit? And are you at liberty to share what was the exit?
00:53:40
Speaker
Yeah, i can share. I didn't know the number, but I can share the process. So, so started 21, we agreed as a board, okay, let's look for an exit. ah Then, you know, 21 was a peak. We started engaging the PE firms, PE firms saying, if this industry small, we don't know.
00:53:56
Speaker
Then we waited for another six months' time. And that six months, I built lot of relationships with a lot of PE firms globally. And then SGG, which is a, um I think, top 10 PE firms in the world, it's a $10 billion property group based in San Francisco.
00:54:11
Speaker
They came to us first. We couldn't agree on the valuation and the deal didn't go through. But they liked us. We stayed in touch. Then after six months, I again met Bill and Dishan, who are the and the founding manager partner and the operating partner, respectively, at SGG.
00:54:27
Speaker
And I said, okay, now we're ready to sell. Let us know what the deal is. And they offered better terms. And then the entire process. So in two years time, the entire process has finished. And exit happened. And and but in this two years, I think the key one, I also prepared myself for the exit.
00:54:43
Speaker
Because I want to make sure that I am exiting. And I am not staying for next five years. Because then there's no point that I would rather not exit at all. Hmm. So I was, therefore, the next level of team, which I talked about, all these people who stayed within 10, 15 years, they actually are the ones who also stayed alone and give a lot of comfort to the investor that, you know, they can run the company.
00:55:03
Speaker
So I put a lot of processes, actually. input In between six months' time, we hired McKinsey. We put in processes, dashboards, a lot of, so that the company can run like, ah you know, autopilot.
00:55:17
Speaker
We started managing customer health regularly. So we changed the structure quite a bit on how we work. And McKinsey engagement was good. They really helped put that structure in place.
00:55:28
Speaker
No share from McKinsey's team and Sid and all these people, really, really good. So we engaged McKinsey for three, four months. Almost six months, I think. And that's how then the entire systems of next scale came into picture.
00:55:43
Speaker
Because I wanted to hand it over the revenue company as a proper structure in place. Because I had everything in head. So it's easier for me to run. But somebody has to run. It has to go to proper structure, dashboards, proper product planning. So all those things we did in that six months to one year.
00:55:57
Speaker
And then, so therefore exit for me become very easy. Okay. So I had declared to the PE firm that, you know, I don't want to continue. And they were very gracious for saying, fine, we have a CEO who can come in.
00:56:10
Speaker
They acquired one more company in the space in between. So they were pretty, they a CEO from that. So things don't work out from that perspective. They had a CEO, another company in place and they could merge it with a kind of larger entity.
00:56:22
Speaker
Okay. Okay. Fascinating. oh How does the founder think about valuation? You said you didn't like the first offer they gave you. Are there some rule of thumbs that this is what you should expect?
00:56:33
Speaker
ah Like a multiple of revenue, multiple of profit. but like Like, why didn't you agree to the first offer? and I thought... At that time, ah we could get more value.
00:56:45
Speaker
We should do more market discovery. I was, see again, depending on why you're doing it. So most of the founders, at least in my experience, they struggle with the identity, right? I have built Eka for last 15 years. You also asked me a question, should I introduce Eka or should it together fund, right?
00:57:00
Speaker
So you typically have an identity crisis because you known for that for 15, 17 years or whatever, 10 years, 12 years. And that becomes your you know first family. the people in the company, the business that you are running.
00:57:12
Speaker
So what are you going to do next is a very big thing. So that's one that's the one issue of struggle. It's not as much about money. It's never about only the money. It's always also about identity and what are you going to do next.
00:57:24
Speaker
For me, therefore, two three things happened. I started together for in 21 as well, along with Grish, Mathur Bhutam of Freshworks. ah And then Shubham joined us as a third partner.
00:57:35
Speaker
And first $185 million. dollars So that also gave me a huge platform which started getting built. And really thanks to Shibam to do all the heavy lifting in the first two, three years because Grish and I were still running Freshworks and Eka, respectively.
00:57:48
Speaker
So platform got built. right It's for me easy to know. It's only switching of Eka to a other platform. So that is the second important piece of their thinking. that now my earnings will start from there, rent table will shift there, and I'm going to a larger canvas of helping the startups and and scaling that.
00:58:08
Speaker
So therefore value did matter to me, but not not that much for the founder. But I think that the key issue is that investors should make money, and get their money, and also founders should make money. The issue in exit is not about the valuation alone. the fact The issue is that lot of time you can get squeezed out like ours, right? Where this industry is small, your exit is not going to be massive multi-billion dollar exit, IPO exit.
00:58:30
Speaker
So there's going to be negotiation all around. So I think how do you negotiate, keep things very transparent, and keep the highest governance standard actually are the more important.
00:58:43
Speaker
If you see a lot of stories come where either investors took all the money, founder took all the money, investors didn't take much money, right? So that's where the issue comes when the exit values are not very massive. It's not in multi-billion dollars.
00:58:54
Speaker
how How would that work if, for example, you have say 40%, 50% equity in a company, then you will get that of, if the company is valued at 100 million, you will get 40 million, right?
00:59:07
Speaker
How would it happen that investors took money, founded it, or vice versa? See, there are a lot of clauses that happen in the contracts. So it only depends on how the contracts shareholding agreements put it in.
00:59:20
Speaker
Things are not as simple as it may seem. It is not simply a simple percentage. Let's say a company sold at half a billion. It is it also question of how much money did you raise? What are the terms and conditions linked to that? Who gets the money first?
00:59:32
Speaker
How is a PE firm structure in the deal? So multiple things come into place, especially when you look for a secondary transition with a PE firm or even a strategic buyer. If it's IPO, it's cleaner. It's simpler because pre-IPO and then also scale is very high. So a lot of terms and information have to be thought through.
00:59:49
Speaker
But the biggest roadblock is not that in founder's exit. It is about what are you going to run next. And I'm telling you from experience, lot of founders come and talk to me. They can get an exit, but the question is what are they going to next?
01:00:03
Speaker
Right. Okay. Because from value perspective, you will never be happy. You will think I could have waited little bit more.
01:00:13
Speaker
So timing is ah is ah is a combination of what you're getting now, what are you going to next? Or do you have something to do next? how do you What are you going to do? The money you're going to get. so all these things have to be thought in place. It's a very spiritual or philosophical plus practical discussion. It's not a simple discussion.
01:00:29
Speaker
Right, right, right. Okay. Fascinating. So you're saying all equity is not equal. Some equity, irrespective of what the sale price is, there's some equity which is... So there there's preferred shares. There's a dividend, some preferred shares also.
01:00:43
Speaker
So obviously all equity is not equal. Foundry equity is a common equity, at least in India. In the US, you have different voting rights. In india they don't allow that. ah When the investors come in, they get preferred equity. Preferred equity has anti-derivision. It has liquidity preferences.
01:00:57
Speaker
it has certain preference return which is there. For example, if equity says that we have to give you minimum 10% return. So let's say if I raise the capital in 2014, it is 10 years, let's say, ah before i get the return.
01:01:12
Speaker
If I guarantee them 8% return, so 8% will compound over 10 years. over ten years So that's all. Irrespective of sale price, there is a minimum that they have to receive. Therefore.
01:01:24
Speaker
Okay. Okay. Okay. Understood. Okay. Interesting. And I'm assuming you would have sold it for like a couple of hundred million dollars in that. Yeah. It's a big number. It's a big number for me, at least coming from the prime value side. I'm sure. I'm sure. Yeah. Amazing.
01:01:40
Speaker
oh So you said SaaS Bumi was kind of pivotal in defining your next journey. Just take me through that. So, sase me what is Sassfumi? Sassfumi is, which I just told you, we started with Krish Suresh, Avinash.
01:01:56
Speaker
Avinash is the CEO of Sassfumi now and Gurdjieff, right? So, back in 2015, we didn't know how to build you know cloud software companies from India. So, we thought, okay, we should all come together and just share our learnings.
01:02:10
Speaker
How to hire a salesperson, how to build a quality in the product. And it's a very context-based learning. So that community, at which was 40 people in 2014, 40 founders 2015, became 800 in 2018.
01:02:22
Speaker
And the COVID hit, and the SaaS-related view, like a hockey stick. Today, it's about 6,500-plus founders. People come and talk. We have playbooks, which we run across India in various cities, 10-odd cities, including Surat, Gopal, Chandigarh, and many other places, Calcutta, Hyderabad, Bangalore, of course, Chennai, of course, Delhi.
01:02:43
Speaker
So it has become a moment. where founders can come in, especially the SaaS or a B2B founder can come in and they can talk about what they want to hear, what they learned, what they not learned. So it's a very context-based learning system.
01:02:56
Speaker
So I got huge exposure. Every weekend, would we would help the founders. We would meet the founders, seeing what they're building, what help they need. So I get to understand the founders so much. oh And also, i started enjoy investing as well, because that time, nobody would invest in SaaS.
01:03:11
Speaker
So the founder would say, can you put a small check? So Grisha and I would put $25K, $50K, sometimes $100K check in the company. So back to 2019, our personal portfolio was 100 plus software companies or SaaS companies.
01:03:24
Speaker
Wow. Yeah. So that's all we, you know, between Grish and i you know, Grish obviously, in whole Chennai circle, other Roblios, much largest success. So we had Charge P, name it, Zenoti, a lot of companies in this portfolio.
01:03:40
Speaker
And I had Unbox, which got another exit in India as well, and few other companies. oh But overall portfolio did really, really well. And then we thought that since we are doing this,
01:03:52
Speaker
But if we get a little bit more institutionalized version of of doing that. So that's how we thought, let's put a fund together. And then Grish wanted to wait for an IPO. We wait for an IPO. We put started a small fund saying, OK, we'll start with a small $5 million dollar fund, given that it's our own money.
01:04:13
Speaker
We have no idea of how to raise institutional capital ah for the fund at that time. But then VC's got to know. So we have fund one came from three cohorts. We had venture capital firms, all the top guys, Insight, Tiger, you know, Sequoia back then, Axel, Nexus, Lightspeed, they all invested in our fund as funds.
01:04:34
Speaker
ah We had institutional investors in the US who came in and we had lot of founders, 100 plus founders who invested. 100K to half a million dollar checks. So fund one became $85 million. How much was? $85 million. Okay.
01:04:46
Speaker
okay And this was set up as an AIF structure? No, it's a Mauritius fund. Since Greece is based in the US, we try to keep it a Mauritius fund. And money, a lot of financial institution money is based out of India.
01:05:01
Speaker
All the funds are out outside of India. All professional... Okay. Okay. So fund one was 85 million. And you you have fund two and fund three also? What is the total...
01:05:17
Speaker
Fund 2 now, total is about $230,000 to $3,500,000 in the management right now. know Okay. Fund 2 is about $150,000 roughly. Yeah, correct.
01:05:27
Speaker
Okay. so okay So, fund 1, actually we could see the AI way very early. So, the same thing happened. So, 2022 is when the ChadGepardy was launched, right?
01:05:38
Speaker
ah And that's where it also exerted my exit. I told you the wave of what to do next came in. And for fund one itself, we have more than half the portfolio is actually AI companies.
01:05:51
Speaker
And the fund one itself, because we we said, okay, this wave is real and we want to start investing in very, very early on. who Who were the early pioneers that you identified? We have, a if you go to our webpage, which is in AI studio right now, we have,
01:06:06
Speaker
Composio, which is building indication layer for LLMs. We have Spry was the first investment with the physiotherapy clinic automation software with automated physiotherapy clinics in the US.
01:06:18
Speaker
We have RapidClaims, who has whose focus on our... So healthcare is a big focus for us, US healthcare. So within that, we invested in Spry and RapidClaims. RapidClaims is the revenue cycle management automation, which helps you get the claims better for the US healthcare care providers.
01:06:37
Speaker
Then we have better forms. U.S. Healthcare is a large TAM. ah you You didn't want to do a small TAM like you were doing in NECA. So, okay. Understood. Yeah. More than me, yeah. From an investment perspective, things changes, of course, a little bit. But yes, ah it's U.S. Healthcare is a large TAM.
01:06:52
Speaker
So, we invested in Rapid Claims, Pry, Composio. Then we have Thesis, which is building the Genitive UI automation. Infrastructure for Genitive UI, actually.
01:07:05
Speaker
So, we have... Metaforms, which is an AI research agent. We have Revenue Hero, which is doing pre-sales automation and auditing automation of demo booking.
01:07:19
Speaker
Overall, then we have companies like Unstruct, which is building a LLM for unstructured data. Okay. Yeah. all So these are pure AI companies.
01:07:32
Speaker
And these are all like Indian founders? All Indian founders, yeah. OK. OK. ah You know, early on, you told me about your JP Morgan pitch, where they said, we cannot back you. You're not IIT. You're not IIM.
Insights on Founders and Market Trends
01:07:47
Speaker
But you obviously proved them wrong. ah How has that shaped how you evaluate and decide home to back? See, India has changed a lot, Akshay. Out of 3,000 plans we've received for the last three, four years,
01:08:04
Speaker
Almost 50% are people coming from THC to four times. And they necessarily are not from IIT. Ivy Leagues, which are called IIT, IIM, plus Harvard, Stanford, all put together, it's about 15%, 20% of the deals.
01:08:17
Speaker
OK. In our portfolio also, there are some IITs, but a lot of them are from other colleges, which are normal local colleges. So we are not, our criteria doesn't talk about where you came from. Both Grish and I came from small town. Grish is also from Trichy and he went to a local engineering college in Trichy.
01:08:38
Speaker
not yeah So, I think we look for fundamentals in the founders which are linked with the resilience, understanding his learning curve, his or her learning curve, which area is investing in, how good is he or she is in building the product. We are a big believer of if you build a world-class product, you will start generating revenue.
01:09:00
Speaker
so So, lot on that. So, India has changed a lot since then. I think back then, I would say JP Morgan was right. 2004, right? When India was, there was hardly any product company in India back then.
01:09:12
Speaker
How are you going to trust a trading person claiming to build a software product company from India? Look at the odds of success. I think from a professional investment perspective, even today, it would also be hard for us to do that. If somebody's so much lateral jump from totally...
01:09:29
Speaker
I would say industry, which is laggard in technology, the person who has never worked on technology, getting a technology firm. It's a massive, massive shift. So I think for an institutional investor, it is hard to take those calls. It's massive, massive risk.
01:09:41
Speaker
Personally, you can. Saying, okay, fine, I trust you. Here is the money and you see what happens. For an institution, has to follow a process because you're fiduciary responsible to manage somebody else's money also. So those things come in.
01:09:54
Speaker
oh What is the, like, again, coming back to your evolution as a founder to now being an investor, I think founders have like a bias for optimism, right?
01:10:08
Speaker
Like, but I can do it is like the motto of the founder, you know, that I will survive, right? but You start against all the odds, first of all. Yeah, yeah, yeah, exactly. yeah You can't survive if you don't have that bias for optimism.
01:10:21
Speaker
How have you evolved now as an investor? How has that changed? What are the biases you have as an investor now? I think it's still a bit early for investor journey for me.
01:10:34
Speaker
I think I am very biased towards larger markets. Okay. yeah Yeah. I love to give a lot of long rope to the founders, given that I have gone through a lot of ups and downs and zigzag and changing the journey, pivots.
01:10:47
Speaker
So I tend to give much more longer ropes to the to along a drove to the founder, especially if somebody is showing grit and resilience and ability to learn. But I am biased against the market, I think. I look for larger markets because I believe like larger markets give you little bit more room to move.
01:11:04
Speaker
You can go wrong and come back if you have the capital, if you know how to preserve capital. If you pick a small market, then becomes very, very hard. you know So what happens is if you pick a small market, even if successful, you are mildly successful.
01:11:17
Speaker
all The order against success is so stacked against you that might as well pick a large market and fail big, you know, or you become really, really big if you are successful, right? So I believe in that philosophy now that, you know, and I was sort of coached founder also.
01:11:32
Speaker
Look at the market. And many founders coming from India don't look at the market because of natural history from India, right? We all tech people. They all come together and start building companies. But I think market does play a lot of role. A lot of tailwinds in the market can really help you scale the company faster, like you see in B2C, right?
01:11:47
Speaker
There was a tailwind of e-commerce companies. Flipkart came out of that. The tailwind of entire delivery companies came. Zomato and Swicky came out of that. And then the tailwind of D2C brands ah came out of that.
01:11:59
Speaker
Therefore, Nike came out of that. And lot of whole commerce-based brands and platforms come into picture. And then the payment wave came in in India, which is easy to understand. So you had phone ping out, building that wave.
01:12:13
Speaker
so and now grow and zero-dha and all that can build based on the stock market boom. So think, so therefore if as a founder you can cash those waves. Sometimes you can't design for it, sometimes you may not plan for it, but right time right place also does make of difference.
01:12:27
Speaker
So as an investor for us, we spend lot of time on, spend a lot of time understanding the markets. Not that have a crystal ball which markets will do well, but I think just a narrative on the market is really helpful for the founder.
01:12:39
Speaker
How do you understand markets? like Like by speaking to founders in that market? or Founders, companies, reading the signals, do a lot of fundamental thinking. Like for example, no tariffs have changed, right? Which industry is going to grow a lot?
01:12:54
Speaker
Which industry will get impacted? Which industry won't be impacted as much? So to think so that all those things bit ahead of the curve. And I have lot of knowledge about the markets because I've been reading for the last 10 to 12 years. Like US healthcare is what I identified very early on.
01:13:10
Speaker
And I could do that because i've been reading since 2012 about US healthcare. It's not today. So I have a full understanding of how sort of reading has to happen on the markets over a longer period of time for you to understand.
01:13:23
Speaker
So I know the trends. I know with every industry, in every technology way, about the industry changing to some extent. What do you recommend as sources for reading? Like, do you read a Bloomberg? Or what do you read like?
01:13:35
Speaker
I read... um So there's no recommend. See, it requires lot of thinking, first of all. Reading-wise, I tell you what I read. I read WSJ, FT, which is Financial Times, Economic Times, Bloomberg at Times, on business side. Then I read New York Times.
01:13:51
Speaker
Of course, I read Times of India, TechCrunch. That's the normal reading on what is happening on startup. But then I go and read about What companies are getting funded, which industries, how they're shaping up. but i For example, Vinod Khosla put out a very good thesis on the entire healthcare.
01:14:09
Speaker
He had a 110 page thesis on that. So I read that. Okay. and Different thesis on different things. Right now, for example, for AI, I'm reading research papers actually. Okay. So reading is important changing. So there's no standardized list.
01:14:21
Speaker
So one is news, but news not going to take you much further away. You have to go deep. Like, for example, if you're now building an AI company, you will have to understand the research, in my opinion.
01:14:32
Speaker
Or you have to understand the use case really, really well from domain, like I did back then. But I think more fundamentally, you trying understand the research and what's going to come next to be able to relevant in the next five, 10 years.
01:14:45
Speaker
How do you, like you said, in founders, you look for resilience, product, and learning curve. Yeah. I think resilience, you can see by based on their history, how long they're stuck at things, etc. a Product, you could probably have a demo of the product. yeah How do you judge LearningCov?
01:15:04
Speaker
It's also in the history, right? So if you're from a small town and where you have made, number one, so education background shows. Sometimes, see, for example, in India, since we came from small town, I know that when I was in 10th grade, I had no idea of IIT.
01:15:18
Speaker
I was a small town in Mogad. Nobody had gone to a local engineering college also, Fogartwood, IIT. So lack of exposure also makes a difference. So you understand the cultural context little bit, in the history. but where That where the person is from, which conditions they were born and brought up, and therefore what they learned from every situation.
01:15:34
Speaker
And then how did they apply that? See, one is learning. Learning is OK, but then application is even more important. So you will see people or some founders who will learn and apply also extremely, extremely fast.
01:15:46
Speaker
That's also is actually embedded in their history. OK. OK. OK. Fascinating. ah Let me kind of wrap up the conversation with the getting some learnings from you.
01:16:00
Speaker
So you spoke of your first approach towards pricing that a one-year salary for a person in Europe is $70,000. So I will sell my product at $70,000.
01:16:12
Speaker
ah What have you learned about pricing since then? I think pricing has to be based on the value you are delivering. lot more times we leave lot of money on the table. because especially when you're a founder looking for the first few deals, you want to just sell at any price.
01:16:27
Speaker
Which is fine. The first few the deals, you look at this price. But a lot more, as you scale the company, I think a lot more can turn on the pricing side by understanding how much value you're delivering to the customer.
01:16:40
Speaker
So you talk a lot about the value of delivering or value in the service of the product you're delivering to the customer and then think about pricing. In a short nutshell, that's the mental framework.
01:16:52
Speaker
Now, within that, you know, if you're scaled up to $1,500 million, dollars you can use lot of pricing consultants also. You can use sort of negotiating techniques to do that. So all that also helps. How do you evaluate value that you're adding?
01:17:05
Speaker
The ROI? So let's say if i'm let's say let's say in case of AI now, I'm coming to say, Akshay, you run a company with 1,000 people. Using my software, you can reduce the customer support team from 200 people to 20 people.
01:17:20
Speaker
Ah, okay. Right? So now you're saving... Yeah, using a analytictic you are saving 180 people. So ROI is one big measure. Now ROI sometimes is tangible, like in case of people or productivity, which is AI is bringing it.
01:17:32
Speaker
In our case, it was managing the risk. Ah, okay. Yeah. So it was not simply... The P&L mark-to-market risks. Correct, correct. And risk, like for example, today tariff is changing the markets. Market is coming down.
01:17:43
Speaker
You have to take the call right now. Should I sell my futures or should I hold on to futures? you wait for 24 hours to get the right data you are anyway doomed you might be my whole position make it by front right so the value how do you price that value of risk right so so you also talk a lot of risk so there are the multiple angles to it cost saving revenue generation or risk management okay okay what have you learned about customer adoption so like you know how to really get customers to adopt and love your product
01:18:19
Speaker
There are two different things. I think first design the product for customer love. I think it starts with design thinking. I think if you say I won't compromise on small things, even a small pixel on the screen has be designed really well.
01:18:34
Speaker
So first point of love is first set is the user interface. Today look at ChatGPT, right? That's a user interface you got used to. They had a bigger challenge of how do you build a new UI for the new AI world.
01:18:47
Speaker
All of us are used to that kind of chat experience within ChatGPT. So that's the first love. Second love is the ease of use. How easy I'm able to get to the tasks that I'm able to get to.
01:19:00
Speaker
Do I have to make five clicks, three clicks, one click? So you have to design for that. Then the loading time. by It's taking 10 seconds to load, 5 seconds to load, 2 seconds to load. So it makes a lot of difference. I'm just giving examples side by side in AI also.
01:19:15
Speaker
GROC is really fast. It'll come within one second. Charge you could take in five seconds. So some users are saying that grow easily fast. I love it, right? so So those things actually start adding to the customer level. And that is the actually what you call a product craft.
01:19:30
Speaker
You have design the product for that. For that engineering has to then design for that particular like experience. So that's all the first is the product love. Customer adoption then is ah is a work of how well the workflows are crafted in a B2B.
01:19:45
Speaker
That is, Akshay is able to do his work, for example. recording a podcast and editing the podcast and releasing the podcast. How fast and how seamlessly I can do that. That's how the the for So that comes from empathy, like to really study their workflow and then map it out on the software. One is the empathy and second is the eye for the detail.
01:20:07
Speaker
Ah, okay. Yeah. and You may have empathy, but you may not have eye for detail. You will make silly mistakes. I've seen products where spellings are wrong, especially used to be. screens are not designed properly, the colors are jarring.
01:20:23
Speaker
So founders who come and pitch to you and have these kind of issues in the product would not make the cut. Correct. Like eye for detail is an important thing for you when you evaluate. Yeah.
01:20:36
Speaker
Interesting. Okay. um What have you learned about sales? Like ah starting from your... one-to-one selling that you were doing first, you know, how does that work? And then how do you build a sales organization?
01:20:53
Speaker
See, sales, my biggest learning is, I did most of the sales, my company the early days, right? So sales is people buy from, people buy from people. That's one biggest learning. So what does it mean?
01:21:04
Speaker
It means that when I'm talking to you, there's a certain kind of trust being established. With every statement I make, every conversation we do. So it's about being genuine in the relationship. and then walk the talk.
01:21:15
Speaker
If I come and tell you ah my phone is going to you know give you SMS and gives you this kind of email, it will work like this, the better it pretty much has to live to the promise. So the way the sales, the most is the good sales people are very, very genuine in the conversation with the buyer. They will tell you what's the problem and it's not the problem.
01:21:35
Speaker
Because all the problems may not affect you, right? If the battery life is not 10 hours, 8 hours, it's so clear to call it 8 hours and not kind of fib your way through, oh, I have the highest battery time for 16 hours.
01:21:46
Speaker
You may win the customer early early on, but that customer can overcome the customer and you will lose the trust in the market over the period of time. I think building the trust is the biggest, biggest factor in sales.
01:21:58
Speaker
And how do you scale that like to an organization level? like You as an individual can focus on building trust, but how do you build it into the DNA of the company? You have hire the right people, first of all.
01:22:09
Speaker
You have pick the right people in the sales. who you believe can resonate with this some basic philosophy of... So let's say I talk to you, you will be able understand whether I am a good salesperson not. You will see a sales... So salespeople have a natural ability, first of all. So when you interview salespeople, you will see that they have natural ability to connect with you.
01:22:27
Speaker
So if the salesperson is able to connect with an interview, you will know that this person is a good, reasonably good salesperson or not. Then comes the value system of the salesperson. So a lot of salespeople are various category types. Some people...
01:22:40
Speaker
really blow it up 10x and then kind of sell you something and you get looped into that. Some people stay very genuine and focused in what it is and they're bit more longer game. It will take longer for a buyer to buy.
01:22:51
Speaker
But once somebody converts, they stay with you for longer. So you have to decide as a founder of what kind of culture you're going to build.
01:22:58
Speaker
And once you a founder, you will start saying that sales team will start falling. It's an art and a science. It's not easy to hire sales people because sales people are also very good in selling to you right in the interview process. yeah ah So, and for Indian founders, it's incredibly hard because most of them have never hired salespeople and they have not in sales situations.
01:23:19
Speaker
so So, it is a bit hard. ah How do you do that critical hire and sales? Like say you're hiring for someone who'll lead a territory, you know, what?
01:23:30
Speaker
So, one interview may not cut it, right? Like how do you evaluate it? See, for me, a lot goes with my intuition for me. Typical data you see have they met the quota, what kind of sales they've done before, what have customers they have done, do the references. But that I don't think is the final decision-making factor.
01:23:50
Speaker
For me, if I'm able to connect with a salesperson and I think the value system is going to match, I will hire. Otherwise, I won't. Okay. You know, you don't come across as a salesperson, even though you've told me multiple times that you were the salesperson number one in the organization.
01:24:08
Speaker
ah You come across as a little more introverted. ah I don't know. is the Traditional wisdom says salespeople cannot be introverted. but but but why do you say that But why do you say that I don't come as salesperson?
01:24:21
Speaker
What trait do you think tells you that?
01:24:26
Speaker
Uh... ah What feeling is telling you that? I mean, it's based on multiple interactions that we've had. I just felt like... I
01:24:38
Speaker
the i mean, so... You know, like, someone who's very salesy tends to...
01:24:47
Speaker
go an extra mile to establish to some sort of connect like, oh okay, you interviewed him, oh, he's a good friend, e etc. Or, you know, find those points of commonalities is what I have seen. ah so just basing it on that. Yeah, yeah that's right. So lot of people are very salesy in purchase.
01:25:07
Speaker
So all salesy people may not the best in sales sector, I'm telling you. So, see, my persona is very well suited for large enterprises where the relationship has to be more enduring.
01:25:20
Speaker
You can't fib your way to sales salesiness because even if I'm able to impress you, there's a process behind it. I have to go through multiple channels, multiple people be able to convince. So the trust factor has just factors to be extremely high and the relationship has to endure.
01:25:37
Speaker
So it's more about empathy and ah authority and trust. Yeah. And understanding the real need of the people. I want to solve your real problem. I don't want to simply sell your product and move on. Right. I want to solve the problem and stay connected with you forever.
01:25:52
Speaker
So the lifetime value from the customer is very high. Right. And that can only happen if the if the value system has to match the value of the product in and the services and the system have to match almost in like 80% range.
01:26:05
Speaker
If it is not matching, it will very, very high. Okay. Okay. Okay. okay um You said that to but to move on from Eka, you wanted to put in processes and you even employed McKinsey for that.
01:26:19
Speaker
ah What are some of those things which you will do differently considering that maybe the next time you start a venture, you will want processes from day one. so So what are some of those guidelines that you would suggest to founders in terms of those processes which...
01:26:35
Speaker
make it possible for a founder to not be ah like the key person in the company? Like you said, I think start giving, devoting enough time for the, see, when you're second time founder is different, you know what not to do at least to large extent, to some extent, if not everything.
01:26:50
Speaker
So, and you have a little bit more sources also. So there's a first of all difference in that. If I'm a first time founder, I raise small amount, I only have a little bit of money, then I would just go for growth first. I just want to say that out very clearly.
01:27:01
Speaker
So processes can come a little bit later as it starts scaling. But when I start for the second time, now looking together, both Krishna and i say, okay, let's put the processes in place, which is in line with the scale of the firm.
01:27:13
Speaker
So when your firm is managing 250 to half a billion AUM, m it is not the same as managing 5 billion AUM. So you can't put the processes. you have to put process to the scale, but you start thinking of the basic processes in place.
01:27:26
Speaker
Do you have a CRM in place? Do you write investment memos? How the investment memos are written? you know, how the information is shared among team members. So you start doing basic things. How the meetings are run.
01:27:39
Speaker
Are processes essentially about documentation, having a single source of truth and everyone being able to access that? No. Processes are... ah first framework procession is The is coming, being able the same page.
01:27:53
Speaker
So if I view situation, let's say, when the first customer smoke call comes, you and I should be able to respond in a very uniform fashion. See, everything is ultimately... focus on delivering a uniform customer experience and uniform employee experience.
01:28:07
Speaker
If you look at, company has two faces. One is towards customers and second is towards employees and third is shareholders. I'm going to leave that out for a moment. So all the processes that you think of will bring the organization at the same page for either for a customer or for an employee.
01:28:23
Speaker
When the employee joins you, how should you be greeted? How should your induction be? What you should be told in place? So now, as a founder, I might be able to tell you very articulately. So how do I scale that? So I document my culture. i document my values.
01:28:36
Speaker
I document what five lines each employee should say, right? So that's how those things are coming into the picture. Okay. So for example, if a founder is pitching two together, no matter who is hearing the pitch, they will have a standard uniform way of evaluating their founder. And there will be some sort of a checklist on which there will be some scoring mechanism mechanism ah so that...
01:29:00
Speaker
there is uniformity in how pitches are evaluated. And yet you give, so now in this is a perfect example, a good put case study. Now, every since even when the processes are common, you want to give freedom to everybody to say you put your own, you know, aspect it. You don't want to kill creativity. yeah Yeah, it's not possible, right? Therefore, every partner has different way of picking companies, different way of investing.
01:29:23
Speaker
So an investing world, you can't automate every single thing. You can automate the information actually. But you can't automate the judgment part of it. to make sure the creativity is not good.
01:29:36
Speaker
But in an operating business, when I'm delivering a product or service to you, everything end to end has to be uniform. So process has to therefore match with the scale and the nature of the business that you own.
01:29:48
Speaker
Okay. Okay. ah My last question to you, what are the AI opportunities now? that Like the world of AI is changing so, so fast. ah What are you looking at? A lot of people are saying SaaS is dead.
01:30:05
Speaker
So, and I think like Satya Nadella also said that, like, you know, so do you agree with that? And what's your take on, where the next billion-dollar companies are going to be created. What technology will they be built? How will the company, what will be the org chart of that company? Like people are saying that five-member team with the AI agents is going to do what a hundred-member team used to do earlier. You know, I don't know how much is hype, how much is real. Can you, like, give me your take on it?
01:30:37
Speaker
Yeah, SaaS, Jashli is that. There are companies who can still make money and still survive as a business. But will it create unprecedented value going forward like it did in last decade? The answer is no. Because the productivity shift is massive, the buyer behavior is or what it can do for you changing in such a drastic way. I don't think SaaS can exist in a similar avatar as it did in the last decade. So SaaS, like we knew, I think is over for anything somebody is trying to build for the next decade, for next 10 years.
01:31:04
Speaker
one So I fully agree with that. ah particular thought process. What does it mean when you say SaaS is there? Is it like the pricing will come down and it will be commodity? or No. It will get replaced. can try and explain to you. right So, what we did in SaaS or previous application software or any software is we basically automated a workflow.
01:31:24
Speaker
Yes. Which means you will create a form. So, let's say Akshay wants to interview Manav. Your form will come in. Today my interview Manav. It's at this time. So, then you say, okay, let me then go in.
01:31:35
Speaker
Mark the calendar. Calendar is marked. Then may let me now open. I will send a summary agenda to him. And then I will open ah Zencaster. And I will step through Zencaster and open it.
01:31:47
Speaker
So that's what software will automate. If you're doing, let's say, million podcast as a company, you will make sure everybody is following the same workflow. And you will do that. Software will help you do that. Reports will come. Who is doing quality.
01:31:58
Speaker
Did it happen on time or not? That's how you track everything. But now, AI, you can just give one voice command saying, hey, ChatGPT or ProductXPyZ. Can you, I have a podcast with Manup Kurg at 9.50 a.m. India time.
01:32:13
Speaker
Can you please get one schedule for me? Open the Zencastr, send this in the chat. That's all. And AA will do all the activities for you, right? So productivity paradigm has shifted totally. So therefore, the way you build a software or the way you build a system now is not the same as you built in SaaS first of So SaaS is not like required. It's not if SaaS is there.
01:32:31
Speaker
B2B will still thrive. Enterprises will still spend money on technology. but the budget will shift now. So now if Akshay, who is running a million dollar, multi-million dollar podcasting business, will not have to buy SaaS software to manage that entire workflow, you may have 50 or 100 podcasts around the world.
01:32:49
Speaker
don't have to that. All of you can use one simple AIS software, which can, just one command will do all these things. And then in end they'll give you a report along with summary of the podcasting, the quality parameters of the podcast.
01:33:02
Speaker
So now imagine how the world is going to change, right? So now you have to build for that. So it's a paradigm shift. there are two different planes you're talking about. so Okay. Understood. Okay. ah Is this possible today that I can use an ai agent and that agent can actually send a calendar invite?
01:33:19
Speaker
Yeah, possibly. Okay. Which tools? ah So you can build it using Composio, for example. you can use it up in ah In a platform itself, you can use Emergent. We saw the demo of a company, DevPro history called Optrix. You can do that. So the many companies are able to Okay, okay. And these are AI agent companies, basically.
01:33:38
Speaker
So AI agent is like what is going to replace SaaS? In the current context, yes. You never know what's going to come next. Right, right, right. Okay.
01:33:49
Speaker
Okay, so SaaS is that we covered that. Now, the other thing which a lot of people are saying is that the way companies will be built, the way next generation of startups will built, they'll not need VC money.
01:34:00
Speaker
They will not need large teams. ah What is your take on that? First of all, the team size is already shrinking. In our portfolio companies also, you can build a software with three people, four people. See, if you know what to do, first of all, let me differentiate on what I mean is a small team. If Akshay or Manav knows what exactly to be done, you can do with three people too.
01:34:20
Speaker
Because software code, today you can start coding using all this platform like Bolt, Emergent, Lovable, Cursor. You can start building software just now. Just put a command there, they'll build the first version for you very, very quickly.
01:34:32
Speaker
English is the new software coding language. So that itself is automating. It's not fully automated. It still takes time to go to production. But it will get there in some time. You know, one to two years time.
01:34:44
Speaker
So, therefore, the teams are very small if you know exactly what to build. ah The money required for the business, I'm coming to the second part, VC money or no money, depends upon how much money you have, almost which industry you're building. If you're doing a core, you're building a core technology product.
01:35:01
Speaker
then you will need money because you have to hire engineers which can cost you massive. Salaries in Valley is different. Selling even in Bangalore for top and talent is very, very difficult. So yeah you may need some money for that, but you can get to profitability much faster if you hit the right curve.
01:35:16
Speaker
Or you may say, I want to do the land grab and I will raise lot of capital and grow very fast in sales and marketing. So it really depends on person to person. But yes, you can build a bootstrap company much faster and make it take it to profitability also much faster if you hit the right area.
01:35:31
Speaker
That is possible today. So we seem only see money. When people talk about money, I have given answer. The standard, I have an answer which is more practical and rooted in the old economic business also.
01:35:42
Speaker
the From time immemorial, go back 50-70 years. Funding is an essential element to building a business. Whether you take a bank loan, whether you take a VC as a new asset class, you take a venture capital money or take money from family and friends.
01:35:57
Speaker
So businesses will always need money. May not be startup stage. You may need for growth. You may need it for pre-IPO. So funding is only one of the elements to make your company successful. It's not the only and the leading element to make you successful.
01:36:14
Speaker
People call it leading element sometimes because it can go through ups and downs. Let's say you start building a product today. You didn't raise any capital and suddenly technology came. Suddenly opening eye came into your market.
01:36:25
Speaker
You have no money left. You have to shut your business and start all over again. If you have money, you can pivot. So money gives you a little bit more lateral, you know, more latitude to make mistakes and pivot your business much faster. So those are the values of money.
01:36:38
Speaker
Whether you raise from your family, if you have a wealthy family, you may not raise capital ever. Why not? Why to raise capital? But if you look at even reliance also raises capital, right? They raised from... So that's the second part of capital.
01:36:49
Speaker
You also raise capital to get knowledge, to get access to network, access to partnerships. So that's another way just another advantage of raising capital. So capital a different aspect to it.
01:37:02
Speaker
Okay, okay. Fascinating. oh So are you still looking at healthcare care or are you now looking at more like agentic AI companies? like what are you bullish on?
01:37:14
Speaker
I wrote a blog also on what opportunities opportunities I'm looking at right now. So obviously, Agent AKI is one big part. As said, we already invested in Agent AKI two years back. That's in our portfolio. Touchwood is doing really well right now because we invested early.
01:37:27
Speaker
ah US healthcare still is a multi-trillion dollar opportunity. There are many places we can build a software. In front too, we invested in a company called Confido, which is doing in the front and back office automation for hospitals.
01:37:39
Speaker
Like Nurse Calls You, so he's automating all those things. on how entire hospital systems can be automated. So healthcare, yes, we're still big believer in healthcare, big believer in agent tech automation, big believer in ah sales and marketing. I think tech, I think a large CRM company should come.
01:37:57
Speaker
ah Salesforce is growing, it's a good company. I think there's a lot more room to create good companies there. Customer support software is a massive industry where Freshworks is. ITSM, we see Atomicworks getting started and few others are coming up.
01:38:09
Speaker
Those are very, very large areas. There's a massive opportunity for ah vertical software companies also. And I'll take a minute to explain what has changed. So when we, in a software world or in a cloud world, we build software to only automate software.
01:38:22
Speaker
So therefore, a software could access about 2 to 5% of IT spend of a company. as so For example, for a food company, if there are or for a call center, if there are, let's say, 10,000 people coming, they will spend about 2 to 5% of technology and on software.
01:38:38
Speaker
call software, CRM software, support software and so on and so forth. But now with AI coming in, you're also going after salary time because AI is able to do some part of human work.
01:38:49
Speaker
So suddenly your time becomes very big, right? So you are not, so when you're going for call center, you can get a new age call center, which is all AI driven. And you may still charge the customer per per a call, right? But your cost is much less.
01:39:02
Speaker
We have a company called Huna.ai, which is doing true quality recruiting. Now using AI agent, voice agent. So, you know, their cost is coming down. They don't have to hire more recruiters, which are manually doing it. It still delivers the same value to the customer.
01:39:15
Speaker
So, therefore, you can build large vertical companies now because software plus selling it time is coming together. ah Should founders still be selling it as software should they be selling the outcome? Like, say, a per call pricing is different from a software pricing.
01:39:29
Speaker
It is changing. A per person hired pricing is different from selling a recruiting tech software. So it is changing. So outcome-based pricing is coming into picture at all. So pricing will go massive shift in AI for sure as well.
01:39:44
Speaker
Let me end with any words of advice for founders in like you know small cities like you are from. Any words of advice you have for them, like people who are very early in their journeys?
01:39:58
Speaker
I think it's ah it's a time for for the generation to build. know I'm a big believer that people who are in colleges, students, which are early in their careers, I think they are AI native.
01:40:11
Speaker
People like me have to work really hard to learn what's happening in AI. But for people who are in their 15 plus onwards, anywhere between till 30, they are born in the AI era in many ways, right? They are able to adopt AI technology much more natively. Therefore, more creative juices will flow.
01:40:27
Speaker
and India is the place where you can build today. There's a capital availability, people are taking risk, ah opportunity availability both domestic and globally. So I think let's go build. That's my advice. I think if I will make, I think every young person should take once time this challenge.
01:40:44
Speaker
Of course, ah having said that, want to give have caution that entrepreneurship is not for everybody. You go through a of ups and downs, mental resilience. So if you think you have the mental resilience, you're able to face the challenge.
01:40:55
Speaker
Because it won't come without challenges. There will be ups and downs. There will days when you will feel really bad when customers reject you or when clients will come you, it doesn't show up for work. You feel really bad in those days. So I think having said that, if somebody wants to change things, it is the best time. You are a change maker, I think is the best time.
01:41:14
Speaker
Thank you so much for your time, Manav. Thanks, Akshay. Thank you.