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Why The Best Product Doesn't Automatically Win in Enterprise Sales | Rohit Chennamaneni (Darwinbox)
218 Plays4 years ago
"In enterprise sales, the best product doesn't automatically win."
This powerful insight from Rohit Chennamaneni dismantles a common startup myth. In his conversation with Akshay Datt, he explains that winning high-stakes enterprise deals goes beyond features and requires a deep understanding of client politics, internal power dynamics, and solving strategic business challenges.
About Rohit Chennamaneni
Rohit Chennamaneni is the Co-founder of Darwinbox, the Hyderabad-based HR tech platform that has become a dominant force in Asia. A graduate of IIM Lucknow, Rohit leveraged his unique experience at both Google and McKinsey & Company to build Darwinbox into a global challenger. Today, the company is a SaaS unicorn valued at over $1 billion, serving over 3 million employees at 1,000+ enterprises—including giants like Starbucks and Nivea—across more than 130 countries.
Key Insights from the Conversation
- The Contrarian Enterprise Playbook: Darwinbox deliberately targeted large, complex enterprises from day one, a strategy most startups avoid. This was possible due to the founders' deep understanding of enterprise needs from their time at McKinsey.
- The "People OS" Vision: The core insight was to reframe HRMS not as a passive database, but as a dynamic "People Operating System" that every single employee would use, driving unprecedented adoption and data quality.
- Architectural Moat: The platform's foundation on a graph database gives it superior agility and configurability, a deep technical advantage that legacy competitors like SAP and Oracle cannot easily replicate without a complete overhaul.
- The Power of Founder DNA: The fusion of Google's data-driven, product-obsessed culture and McKinsey's top-down, strategic thinking created a unique founding team capable of both building a superior product and aligning it with enterprise-level business goals.
- Solving for User Experience: A primary reason for their success was creating a mobile-first, consumer-grade user experience that solved the core issue of legacy systems: extremely low employee adoption. This approach led to adoption rates of over 90%.
Chapters
00:00 - Podcast Intro
00:50 - The Making of a Founder: Forged at Google, Sharpened at McKinsey
15:06 - The High-Stakes Career Bet: Choosing McKinsey Over a P&G Offer
22:47 - Key Lessons from Solving Problems for the World's Biggest Companies
37:58 - The "Aha" Moment: Identifying the "People System" Opportunity in a Crowded Market
44:06 - Deconstructing The Problem: Why Legacy HR Tech (SAP, Oracle) Was Failing
51:59 - The Brutal Early Days: Bootstrapping & Facing Investor Rejection
1:01:11 - The Enterprise Sales Playbook: How Darwinbox Sells to Global Giants
1:13:39 - Scaling Globally: The Playbook for Expanding an Enterprise SaaS Company in Asia
1:21:58 - The Future of HR Tech & Building a Global Product from India
Hashtags
#FounderThesis #RohitChennamaneni #Darwinbox #EnterpriseSaaS #SaaS #StartupPodcast #IndianStartups #Unicorn #HRtech #Leadership #B2BSales #VentureCapital #ProductManagement #AkshayDatt #MakeInIndia
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Transcript
Introduction and Remote Work Importance
00:00:00
Speaker
Take me on a tour. Take me on a tour. This could be a great intro.
00:00:27
Speaker
I'm sure you would have heard the famous saying, software is eating the world. And this has never been more true than now in the new normal where remote working is the norm rather than the exception.
Darwin Box and Salesforce Investment
00:00:39
Speaker
In order to make remote working successful, companies need to invest in a robust platform to manage all things HR. And the leader of that pack in this space is the Hyderabad-based Darwin Box. Rohit Chena-Maneni quit a lucrative consulting job with McKinsey to start Darwin Box.
00:00:56
Speaker
But boy has that bet paid off. Today, Davinbox is present in 60 plus countries with 1 million plus employees served and was the first company in India that Salesforce invested in. Here's Rohit talking to Akshay Dutt about his journey.
Rohit's Journey from Tennis to Google
00:01:13
Speaker
I never knew what IIT was until I got to my ninth because I was so focused on tennis that I was like, okay, whatever. Engineering I have to do, not IIT. I didn't know what IIT was or PITS was and all of that. So suddenly when I decided, oh, I have to do academics very seriously, then it was like, okay, IIT coaching and all that started off.
00:01:35
Speaker
I did give it a shot. I couldn't make it to the IITs. I got like a 4,000 plus rank, which I was getting a metallurgical in some IITs. So I said, I wanted to do mechanical engineering. And there was no big reason for that. I just loved physics. And somebody told me, mechanical engineering has most physics. And that's how I ended up in VIT Wellor. And that's when I joined Wellor for mechanical engineering.
00:02:02
Speaker
What I ended up doing there was mostly tennis and organizing fests. So it is not like I did a lot of mechanical engineering. But it was good fun. It was the first time for me in a hostel and a lot of new things to do because it was a large campus and very good focus on extracurricular activities as a college.
00:02:22
Speaker
So that kept me busy. I was quite excited about doing all of the things. I was the captain of the tennis team. We used to win tournaments. So it felt like a little bit of extension of school in a way because I was just playing tennis and studying there as well.
00:02:38
Speaker
And yeah, I think that took me to a point of final year where I was like, OK, now I have to decide what I have to do next. And then you have the usual placements. I got into GE after my campus. And then there was a good six-month break post-college before joining in that year. And while I was in Hyderabad, there was a friend of mine working at Google.
00:03:04
Speaker
And Google had just opened a big campus in Hyderabad and of course everybody knew Google then as the Blue White, Blue Chip company, right? And he called us for lunch and this was like a big show off thing, right? Because I have a friend and he called me for lunch and they're huge spread buffet and all of it.
00:03:24
Speaker
When I went in, it felt as if like on Wonderland, right? It was like this chocolate factory, right? There's offerings everywhere, chocolates everywhere, good food, etc. And it was Google, right? Like everybody talked about Google. And then I was like, okay, I'm a mechanical engineer, is there a way to get into Google?
00:03:45
Speaker
And that's when my friend said, there's a role of a search analyst, which needs a certain bit of coding, but mostly math. So then I was like, OK, I want to apply for this. I applied for it. And interestingly, for every role, they had about seven interviews at that point of time. I don't know if it's the same today, but they had seven interviews before I got selected into Google.
00:04:12
Speaker
What was different from one interview to the next? So so I think they were checking for consistency one. And second, and I became an interviewer later at Google, while there are other elements which are more tangible, they had an element called Googliness. And Googliness was basically if a Googler felt like somebody they want to work with.
00:04:37
Speaker
Right. And of course, there's there's next levels of saying, OK, do you want to spend time working with this person, meeting this person every day, et cetera, as questions to define
MBA Pursuit and McKinsey Experience
00:04:47
Speaker
that for the interviewer? But that's that's what they were checking for. Right. So I had a I had a meeting with somebody who reported into Larry the last interview. And the 30 minute interview was about I think there was a cricket match, which was very popular the previous day.
00:05:05
Speaker
And I was explaining to him why cricket is so popular in India. Wow. And it was just 30 minutes of just that. And that was the last interview and I got through.
00:05:17
Speaker
So I do think it's quite powerful how they maintain culture, Google as a company. And I think one of the reasons they are able to do this also was because of this interviewing process and then the onboarding process. So many levels of check before somebody gets in.
00:05:37
Speaker
that they were quite consistent with the kind of people they were hiring. I don't know at the scale that it is now they were able to do that. But at least at that point of time, for somebody who is coming in as an individual contributor just of college, seven interviews with final interviewing being with the SVP who reports into Larry Page.
00:06:01
Speaker
It was quite a big deal. I was super nervous and the 30 minutes was off talking about cricket.
00:06:08
Speaker
In a way, this is very much like the Google approach to problem solving in terms of crowdsourcing feedback. I mean, how does the search engine work? It works through data from crowd, like a large crowd. And therefore, the results are always relevant. So this would be similar, like, you know, in terms of have a large number of people interview every person. And if overwhelmingly people like him, then he's a good fit.
00:06:36
Speaker
probably that was what they were doing and the exciting part Akshay was when you enter the Google office in Hyderabad so there is a large screen and real time
00:06:53
Speaker
They give you the search queries that are being searched. It's a building thing. And it feels very powerful. Just sitting there and watching that happen. It's the whole world. And this is like 2007, where Google was almost like the default place for internet. There was nothing else you would do on the internet.
00:07:12
Speaker
And it was quite powerful. So I was super excited to get into Google. Probably I put in a lot of fight for that as well. So why did you decide to quit Google and do an MBA? Yeah. So I think two reasons. I'd spent about three years there, actually, in Google. Also spent about six months in Google Ireland as well.
00:07:42
Speaker
And I think the biggest reason was monotony, right? Probably something that has been consistent for me in terms of making choices. But I find doing different things more exciting, which is again, I'm articulating in hindsight, but it felt I was doing same things at a larger scale and larger scale, but repetitively doing same things.
00:08:06
Speaker
That was one reason. And the second one was I used to head the CSR for the Hyderabad office. And as an India CSR team of Google, we had come up with an idea of a Google Bus. And I'll tell you what Google Bus is, right? And it's an interesting concept. So this was in 2009. Google had this mission of bringing a lot more people online.
00:08:34
Speaker
Now how do we do that in tier 2 cities was the problem statement and this could have been done both as CSR and as a like a business proposition. So on the CSR front we were like what can tier 2 people benefit from internet and we need to go to the tier 2 towns and talk about it. Village this was a distant away right there was no geo then that internet has penetrated there but tier 2 towns had internet.
00:09:00
Speaker
We conceptualize the thing called Google bus where it's just a bus which had a satellite on top. So it connects to the internet wherever you are at that point. And they used to have kiosks within the bus. Right. Like so 10 kiosks which had just like a browser and a search engine on top of it. What we used to do is take this to smaller towns, go to the busiest part of the town and have people come in and we explain to them how internet helps them.
00:09:31
Speaker
Now, what was interesting is we did this on the road for a few times, and then we passed it on. We outsourced it to other people.
Founding and Growing Darwin Box
00:09:37
Speaker
But when we did this, what was super exciting for me was the part where every person who comes in was a different person with different backgrounds. So somebody was a farmer, somebody was like a vendor, somebody was like a retailer, somebody was a mechanic. And we were showing them saying, OK, you're a mechanic. See, these are the new technologies that people are doing.
00:10:00
Speaker
globally to fix something. What you just need to do is search for this. And we used to do this in their vernacular language to explain to them, both language wise or wise English wise. So this I found very, very interesting. So how do I sell a story to every individual who was coming in to get them excited about something?
00:10:25
Speaker
And when I came back and articulated this to my manager and all, he said, oh, this is marketing, right? So I was like, let's do marketing. So that's where the seed of MBA or marketing came in, right, into my mind and said, okay, I want to do marketing, which means I have to do an MBA. So, and I gave my GMAT, I was ready with my scores and records and everything. What also parallelly I used to do is every year I used to go write CAT. So it was like this November, third Sunday ritual for me.
00:10:55
Speaker
I just used to go and no prep, nothing, I should just go and write CAT. And that year was the first time it became computerized. CAT. So probably because of my GMAT experience, I cleared it in that year. And so that's when B-School calls came and I ended up in, I am Lucknow, because I wanted to do a two year MBA and it was in hand versus me applying to colleges in the US, all that.
00:11:23
Speaker
So that's how B-School happened. And that's how I am Lucknow happened. And in I am Lucknow also, first six months, I was very clear, only marketing. All the companies I applied for my summers were marketing. I got into Procter & Gamble for my summer internship. So very, very focused on saying, I want to do marketing, finance, et cetera. I will learn, but marketing is why I'm in this college.
00:11:47
Speaker
Did you, was IAM Lucknow also like your engineering days? Like, you know, a lot of extracurricular activities and... Yeah, very similar, very similar actually, actually. A lot of extracurricular activities, again, tennis, constant thread, right? Like, I think after a point of time, people don't play so much that, right, like you just have to pick up your racket and you'll be in the college team, at least in B-School, right? So, and then you used to have this,
00:12:13
Speaker
inter-IAM contests and inter-UP contests and all of those. And we used to go just play. So you get attendance for that. We had a minimum 75% kind of attendance in some classes. So you get attendance for this, which is a reason you can go play and get attendance. So that was there. And then there were other things that I was doing on campus. But the other exciting thing on campus, Akshay, was these night outs and group projects.
00:12:43
Speaker
which again was something very new for me because all my life I was this sleep by 10 30 11 kind of a person, right? Like always had sport or something happening. So I used to be very tired and sleep and this whole waking up in the night and doing projects and last minute submissions and all that. And I never had those time pressures probably in the past.
00:13:02
Speaker
It was something new, again, interesting and exciting because you're working with different sets of people, different project groups, and all the pain of those project groups. Some people will free ride, some people don't want to do certain things, all those things. You have to make all that happen. So you learn quite a bit in those things more than what you learn in class. And that's what I figured in B School is all about POs. And I had a very nice peer set who were all excited about marketing or problem solving in general.
00:13:32
Speaker
And so that was a good time because you had to present almost every day there was a certain presentation. And you're never well prepared. So managing those presentations has taught me so much in life, where you get curve balls from the professors and you try to react in a certain way so that you're both answering some part of it and then managing the expectation at some part of it, which was quite interesting.
00:14:02
Speaker
Were you generally the group leader in groups that you? I was the presenter. I was never the group leader. I was the presenter because I was generally calm when it came to like tough situations. So when it was like a very tough professor or a very angry professor, they used to put me in the front and it just became a habit.
00:14:23
Speaker
So I used to be the guy who used to present whatever was made, right? It was good, bad, ugly. I used to present. Okay. Okay. Right. And make up stuff on the fly sometimes. So that I picked up while I was there, but not the group leader. Definitely. Right. The group leader always used to be the ones who are the most diligent, right? Because they used to make sure things happen, right? I was not the one who would make sure things happen. I was make one who makes sure this presented in the best format possible.
00:14:49
Speaker
And in my head, that was also marketing, right? Like a lot of sales and marketing for me. I was like, oh, I have to present it in a way which is accepted by the professor. And like, how does the professor perceive this? Always goes in my mind on what the other person expecting it kind of.
00:15:04
Speaker
So that worked. So why did you join Mackenzie and not like a FMC? Because see, marketing typically leads to FMC jobs. I mean, people know I did. So some words was my marketing internship. So I was in PNG in Singapore, working with some of their brands on a few country launches, and I really enjoyed it. Right. And
00:15:29
Speaker
The only worry I had Akshay was I got a pre-placement offer as well, once that was done. It was a similar situation to Google happening, which is after two, three years, I find something monotonous, right? And that was a worry. And that's where when, I mean, when I was thinking about it, right, after you get a PPO in B school, you are basically sorted, right? Like people don't even access it.
00:15:55
Speaker
So I was like, okay, now what, now what, right? Like this, what is the next challenge? So then I was like, okay, I mean, let me at least figure this out because till that point I've never thought about career, right? Because Google just happened. Uh, then the school happened and then, uh, obviously I wanted to do marketing, but never thought, okay, marketing means that I'll be a brand manager for so many years, then I'll grow into something and then all that, right? So never thought about like that.
00:16:21
Speaker
Uh, but then, uh, when, uh, second year after getting the PPO, I started thinking about it, then consulting. And, uh, what was interesting is all my seniors who went to consulting were the most popular in campus. And the ones I enjoyed my conversations with. Right. And I was like, okay, why did these people go to consulting? And then when I, when I asked them the next level question, they said, Hey, one thing is definitely about.
00:16:47
Speaker
range, right? Like you get to work with different set of functions in different sectors in a very short period of time. Right. And that seemed interesting. So I did my little bit of digging, understood, McKinsey, BCG, Bain, all these in more detail, got some more sense, spoke to people who've been there, done that kinds. And everybody talked about work life balance, but everybody liked the job.
00:17:16
Speaker
So everybody liked the kind of work that happened. But everybody complained about so much travel and work-life balance. And I was completely OK. One thing I did a lot while I was at Google was travel, which is personal travel. So obviously, again, you think that work travel will be as much fun as personal travel. Because once I started doing the work travel, then I realized, OK, this is not as good. But personal travel, I enjoy. And that's another passion of mine, like solo travels, photography,
00:17:46
Speaker
all these I used to do. And I picked all of that while I was at Google. And so anyway, coming back to the the post B school thing, then of course, right, McKinsey means again, you need to prep on case studies and case or problem solving and all that. All that happened got into McKinsey.
00:18:05
Speaker
And I think, yeah, so that's where the switch happened, where I said, OK, what would keep me excited for at least a foreseeable set of future, which is, again, three years, five years, whatever that number is. And consulting was clearly the one at that point of time, multiple set of problems. You'll learn a lot in a very short period of time. You get to work with really smart folks and all of that. So that was how McKinsey happened.
00:18:34
Speaker
And was it? I mean, generally campuses have some sort of restriction in terms of saying no to offers. Yeah. So that was another part of the story, which is I had to say no to PNG and and to sit for McKinsey or BCG or any of the other consulting forms. Right.
00:18:55
Speaker
And that was extremely painful, right? Because every second person on campus said you're an idiot. Give up a png offer, right? Like, and those choices are tough, right? Because on one hand, you know that there's something in hand and something obviously you like doing, right? Because I enjoyed my internship. But
00:19:20
Speaker
They on the other is like this FOMO, which is not like a short term FOMO, but a long term FOMO saying, OK, people get into consulting firms out of campus, but not in between. And very rarely they do that. So so that's what I had to weigh. And the only thing I told myself is, OK, if I get in great, if I don't get in, it's a story to tell. Like it's OK. Let's see. And that's where I had to give up an offer. And of course, if I didn't make it, then it would be a very stupid decision always.
00:19:50
Speaker
But no, that happened in, I mean, it's the second time that happened with me actually, actually, I had to give up my GE offer because Google takes two months to interview. Right. So there was a joining date which I had to give up. And again, I was told the same thing. I was hoping for getting lucky twice and I did. Luckily, it was quite crazy that way. But in a way,
00:20:17
Speaker
I did enjoy a lot my stint at McKinsey, so I'm happy I took that call. This is like a player's mindset. As a person who's playing tennis, you are constantly weighing risks and taking calculated risks. I mean, which side will the ball fall towards and then proactively anticipating and taking those risks. So I guess that kind of comes through in your career choices also, like taking these calculated risks.
00:20:47
Speaker
Probably, probably, because I think all my competitiveness I attribute to my sport that I play, right? Tennis and other sports that I play. Because generally in academics, I was never very competitive, right? Like while I scored well in grades, it was never, the motivation was never competition, right? Like I want to get first rank or a second rank. But in tennis, you're on the play, you are like always thinking about what happens next, like you said, right?
00:21:16
Speaker
Should I should I lob? Should I drop? Should I hit it on the baseline? Should I go for the second surveys? So all of those things are coming to play. It probably is. You've articulated it intrinsically. I've never thought of it like that.
00:21:29
Speaker
I guess, you know, as a accomplished player, you also develop confidence in your risk taking. Like, you know, you are able to say this is a risk, but I'm pretty confident it will work out. I guess the more you play, the more you get that confidence of taking these calculated risks. Probably. And also you get used to losing, right? I think what sport definitely helps and it helped quite a bit is
00:21:57
Speaker
it doesn't make losing such a bad thing. Right? So you, I mean, you lose so many times, right? So I don't think there'll be anybody who's just won all their career, right? Like they must have lost so many times. And just you, you get comfortable with the idea of losing. Right? What happens with this zero one kind of outcomes that are there is that like, you're so, and you've experienced it for the first time or for the first few times.
00:22:24
Speaker
and you lose out on, let's say, I mean, maybe I didn't get through IIT, for example, it just never felt like, oh, it's such a big deal. It would have been great if I did, but it was okay. So that the whole idea of losing becomes much more comfortable, I think, with sport.
00:22:47
Speaker
So tell me about the McKinsey stint, like you spent a fair amount of time there. I think your longest stint as far as a job is concerned was at McKinsey. So what was that like? So McKinsey again, I think the second day I was at McKinsey and I was going through training and there were people sitting in the room and we were getting our emails for projects.
00:23:12
Speaker
And it said, hey, your first project will be so-and-so company. And it will be based out of Legos. And I read it as Laos. And I was like, oh, yeah, Southeast Asia. And I was telling the other people who are going through training saying, hey, mine is an international project. It's in Southeast Asia, et cetera. And then I was like, OK, maybe it says Legos and not Leos. And then I Googled, where is Legos? I didn't see Nigeria.
00:23:40
Speaker
And I was like the joke of that, like everybody was sending me news articles about like people shooting at flights in Africa and like all those things. But like inherently I was super excited. Right. Because, see, McKinsey will probably take good care. So I was not too worried about life and all those kind of things, security and all. But I was just so excited about a new culture.
00:24:10
Speaker
because my best six months at Google were also when I was in Ireland. Because, I mean, you're getting both, right? You're getting culture and you're getting to do interesting stuff on the work. So it just combines it very, very well. So this, again, I think I had a great time the first six months. And I think two great things about McKinsey that came out in that six months, right? So one, the language, right?
00:24:39
Speaker
One of the worry I used to have is, hey, I'll go learn what they do in Africa. When I come back to India, I'll probably be relevant. When I get into my second project, I might not be that good or whatever. Or I might be doing things in a different way where the African consultants or there were European consultants also on that project. So I'll probably not understand the India way of doing things. But what is great is it's super consistent.
00:25:07
Speaker
the language, the methods, methodologies. I think they've mastered the art of replicating that across teams. So you bring any four people in McKinsey together and make a team, they'll get that basic toolkit correct. Whether it is the language, whether it is the way of problem solving, whether a way of communicating, whether a way of making presentations, all of that.
00:25:29
Speaker
What is the Mackenzie onboarding like? They must have got a pretty strong onboarding. Actually, they throw you in the deep end. There's only two day training. Okay. Wow. So the training I was talking about was exactly two days, right? So one was Excel advanced, right? One was PowerPoint presentation training. And the third one was ethics code, code of conduct and all. That's it.
00:25:59
Speaker
And how did this go to Google's onboarding? Google was great, right? Google was like three months of honeymoon period where you had nothing to do with trainings and chilling. And like, it's, it was very different, right? Like they just gave you the three months to say, okay, so can completely and then start and a McKinsey was like, just depend, right? Direct. So I remember going to my manager on the first project.
00:26:25
Speaker
And he said why don't you this is the proposal. Why don't you have a conversation with the CMO of that company to say hey This is what we propose, what do you think are the thoughts how can we modify this? It was given to me right? I took it and went to him and he had a cabin and all and I went in he said This is an African gentleman. So he said hey Rohit, let's talk two days later
00:26:51
Speaker
I'm quite busy this time. And I went back, like, I mean, obviously, you go back to your manager and say, hey, I spoke to him, he said two days later, he said, I need the answer by tonight. That's it. And then I was listing problems, right? Like, no, he has this board meeting two days later, he has to prepare for it. He needs to do this. How will I go in like that? How can I barge in? All that, right? He said, okay, you've told me the problem, now give me the solution also.
00:27:19
Speaker
So I said, okay, fine. Let me go figure this out. So then what I did was I went to his minus one. I traded with him first. Then while he was leaving office, I was waiting outside his office evening. So while he was leaving office, I said, I did this with your minus one. He okayed all this, but he wants one check on this. Can I walk you down to the car? Like where we can discuss this. And yeah, we finished that and this thing, right? And that's,
00:27:48
Speaker
That's how I learned right and there are a lot of things I learned but I think one of the big things and I was talking about I was going to talk about the second one right they tell you okay problems are there right and problems are everywhere come up with solutions right this is a bad client is not listening to us come up with solutions right what can I do for the client so that they appreciate our value addition and then help us out right what can I figure out so that I find time with this person right.
00:28:17
Speaker
There are situations where I drove with the client to airport just to get the 30 minutes with them. Right. So I think that.
00:28:29
Speaker
part is super helpful, even in the entrepreneurial journey, right? Like, okay, there will be problems. How does Mackenzie build that kind of consistency, which you said that put any four people from Mackenzie in a room and they'll find common ground. So how do they do that? Then when, when their induction program is like a two day induction. So actually the induction is two days. What they do after that actually is every six month interval, they, they put a training program.
00:28:58
Speaker
where they talk about all of this, right? They talk about how to build relationships. They talk about how to solve problems, right? How they talk about how to present better, et cetera. What happens when you do this, right? You one get to learn from experiences of peers from across the world, right? And these are international programs, right? On what they've experienced over the first six months or the first 18 months or first 24 months, depending on the cohort.
00:29:26
Speaker
And then they get experts to make sure you learn about yourself first and a strong belief in McKinsey's. You need to know yourself first. You know what you need to do to service a client or service anybody, right? So that part was very helpful because it always helps to learn from a place where you've already experienced this and you're trying to improve it rather than giving you like a toolkit at the start of it and saying, do this.
00:29:57
Speaker
It's like doing an MBA as a fresher versus doing an MBA after working. Like you get more out of it if you work first. Absolutely. So everything that was spoken about in that class, I could relate back to my first project or second project or third project. Oh, this happened in my third project. Oh, I should have done it like this. Okay.
00:30:15
Speaker
So very, very practical, implementable training, that's like their approach towards upskilling their people rather than doing very classroom-ish kind of stuff. Yeah, yeah, absolutely. Because that is what is the reality, right? Like because you can never be perfect in a McKinsey context because the problem statements are changing, the sectors are changing, the people you work with are changing.
00:30:43
Speaker
Right? What you need to master is actually how do we manage different situations and solution for different situations. And that will only come with saying, okay, I have experienced something in that situation out of my toolkit. If I used this, it would have worked better. Okay. So what were your highlights of that whole state with Mackenzie, like the things that you remember the most?
00:31:13
Speaker
One of the things we had done was we started off a Hyderabad office, for example. We started a digital practice while there. And all of this as an associate or a junior engagement manager, I could drive. It was not about somebody senior coming and doing this. Obviously, you need some support. But very entrepreneurial in terms of, OK, I want to develop this client. And I think this client will have this problem.
00:31:42
Speaker
We can have this together. So we were the first ones to serve in 2014 or 15 the two unicorns at that point of time in India. And we never knew. And I served one of them. And that obviously actually is an important part of why daven box happened as well. But while serving them, McKinsey is all about iterating to get to the best answer soon.
00:32:14
Speaker
Startups are all about take an answer, try, fail, go to the next answer. So it was so different trying to serve a startup because they didn't have the patience. When you in a traditional McKinsey context, what happens is the associate or the team comes up with an answer.
00:32:38
Speaker
gets more data to validate the answer or triangulate the answer, then goes to the partner and the partner pushes back hard till all the assumptions are tested and the answer stands. And then we go to the client. And this probably is a one week process or one month process, depending on the complexity of the problem or the scale of the problem. In the startup that we were serving, the scale of the problem was large.
00:33:05
Speaker
But the speed at which they were executing was, hey, why can't we test this? Hey, why can't we just try it out, right? Why can't we put some money behind this and see if this works or not? So it is so different that the whole model of engaging had to change. Where we said, okay, each team member will work with somebody like a person at the client. And when there is an idea, they quickly check they don't have to iterate with the manager or the partner. Right?
00:33:36
Speaker
but go back and give them the answer with as much validation they can. Because anyway, they're ready to test it out. So it was quite interesting that way in terms of our experience there. So doing all this while the traditional thing was there, being entrepreneurial and trying out all of this, and I was allowed to do all of this, was super experience that I had while I was there.
00:34:04
Speaker
So why would a startup need McKinsey? I mean, you know, traditional organizations typically use consultants for change management. But I mean, you know, what was the mandate from these unicorn startups? So basically, most of the consulting answers or at least strategy consulting answers are on long term bets and choices to be made.
00:34:30
Speaker
Right so it is it is lesser about program managing something versus decision making on certain choices. Right for example if a startup is trying to get to profitability right so they're growing at let's say hundred percent or three hundred percent and they want to get to profitability one answer is chipping away slowly right or the other answer is how do I think about all the available options
00:35:00
Speaker
for a startup to turn profitable. And maybe because I'm neck deep in execution and in a way of execution, I'm not thinking about all the options. Now, where do these option comes from? Could be, I mean, and I'm saying if I bring in a McKinsey or a BCG into this context, this option could come from, let's say, my experience with other similar kind of companies or a cross-section of companies. So for an e-commerce player, maybe I could have said, hey, I've seen retail.
00:35:31
Speaker
In retail, I've improved category, category margins for a certain set of companies like this. Is that relevant in e-commerce? Then there is this whole pool of experts that you have access to as McKinsey, both internal to McKinsey and external to McKinsey, alums, et cetera, and all over the world, right? So let's say in the US who are ahead of us in some of these sectors, what have they done?
00:35:59
Speaker
to do it and how can I translate that to an Indian context and then give you the answer. So that could be this thing. There could be a pure answer on cost cutting. There could be organic structuring plus cost cutting. And I take a very first principles approach to this instead of going into the other expertise that I have.
00:36:20
Speaker
and say this is what is minimum needed for you to deliver this quality. Above this is additional cost. Can you look at forming a smaller team to do this or using lesser resources to do this? Now you are a cloud player or you are using the cloud for hosting your data. Can you have data centers in-house? What it will do is there will be kpegs upfront but ongoing basis your gross margins will improve.
00:36:46
Speaker
So, I mean there could be multiple answers to a question, but that's what is relevant. So, I wouldn't say consultants are not relevant to a startup. The only way is the delivery model of certain consultants might not be relevant. Because the problem statements are exactly the same, right? Like a large company or a startup.
00:37:07
Speaker
He's looking at three things, right? Growth, profitability, or like sustenance, right? Like long term sustenance. So how do you think about that? Like is the same problem statement wherever you go. The way you approach that solution in a startup is let's test 10 things, right? Generally in a more traditional segment, because change management is tougher, they'll say, okay, let's come up with the best answer possible.
00:37:38
Speaker
and do it, it might also fail. But I'm trying to have a much higher burden of proof to be useful. Yeah, in a startup, the burden of proof is much lower. So how did you said that this startup engagement kind of led to Darwin box? Tell me about that. So I think two things. One, the whole startup engagement started making me think about digital.
00:38:07
Speaker
And we started doing a lot more work in McKinsey about digital, right? Because you could clearly see that the traditional sectors are getting disrupted by startups. And how do we help traditional sectors move with digital, both to customer facing and their internal operation optimization through digital was something as a concept we brought in, saying this is something that we want to serve on.
00:38:33
Speaker
Right? So that's something that was very evident when we worked with these startups, right? Because the pace at which they were doing things, right? And changing behaviors, right? Like buying online or food delivery or anything, right? Payments, right? The pace at which these things were changing, the older way of doing things would be disrupted, which means that traditional companies had to catch up or do better in terms of this, right? So that was one.
00:39:00
Speaker
The other thing that was exciting was the energy action. The energy of startups was just infectious. It's crazy how people are so excited about the problem they are solving.
00:39:21
Speaker
You don't have a window of saying, OK, I am going to step back and chill for some time. Or my promotion is, do not do whatever. All those large company problems don't come in. Everybody is focused on getting some things done. And building that was great for those entrepreneurs. And it was very infectious in terms of just being there. So those are the two reasons why
00:39:49
Speaker
The thought of or the seed of Darwin box happened and I'll come to why that happened, right? So while I was doing this digital work, right? And again, none of this led me to say, hey, I want to be an entrepreneur, right? It just led me to say, I want to do this kind of work, which is digital, high energy kind of work. And when we started doing this digital work, etc, then I started exploring products.
00:40:19
Speaker
because we were helping clients digitize different different aspects of their businesses. So the natural answer was let's look at products that they can bring in which they will use to go there like loyalty products or operational products or CRMs or HRMS or all of that. So that's where the introduction to this happened.
00:40:41
Speaker
And interestingly, around the same time, Jayanth is a childhood friend of mine. And both of us used to talk about what are the ways we can go back and settle in Hyderabad. And this is not related to entrepreneurship, right? Because there was a crib session where we were like, Hyderabad doesn't have consulting forms. Hyderabad doesn't have all the kinds of jobs that a Mumbai has. I was in Mumbai. He was in Delhi. He was a banker at Amsterdam.
00:41:10
Speaker
Then when I was doing this digital work and I just pinged him saying, hey, why don't you see these products? So simple, but so expensive, right? And that's the line, right? So simple and so expensive, right? And at that point of time, Jayan's wife was in ISB school. So he was also in that mode of saying, okay, let me, should I take a break and figure out what to do next, et cetera.
00:41:39
Speaker
And when this thought came up, he basically picked that up and developed it into what we have today, right? Like as a, as a thought, right? Like, okay. When we look at systems, uh, there are three fundamental systems of record, right? Which is your finance system, which is your accounting software, um, your people system, which is your HRMS and, uh, your, uh, customer system, which is your CRM. So these are the three databases. Every company will have every large company will have.
00:42:09
Speaker
Now what we were looking at was okay. HRMS is the only system which touches every employee in an organization. Right. And it just felt that the thought of it felt very powerful. And when we looked at the market, nobody was leveraging that. A lot of people viewed HRMS as a database. Right.
00:42:32
Speaker
And so when we, when we did a little bit of more detailing on this to understand why is that case, et cetera. And while we were doing this, we figured we didn't know HR, right? We didn't understand the things fully. That's where Jayanth was a colleague of Chaitanya was a colleague of Jayanth.
00:42:49
Speaker
at EY and he was he was very even same tenure and he was very good at HR, right? He was a HR functional consultant, people advisory services and we got him on board to discuss some of these again. Saying okay, like is there a functional depth that we need to solve for? Is there experience that we need to solve for? And the good thing is actually all three of us had access to enterprises because our experience was dealing with enterprises.
00:43:18
Speaker
We went and spoke to like 50 among the three of us, 50 clients, CHROs and ask them, what is the problem? What are you using today? All right. Why do you like this? Why do you not like this? And what came out consistently actually was everybody at this, at least in the larger companies had a system, but nobody was happy with it. Right. And then when we started digging deeper, et cetera, so they spent a lot of money, all that was also happening.
00:43:43
Speaker
But basically right whatever you were setting up the system for the objectives were not being solved for right people were talking about data insights analytics, etc.
00:43:55
Speaker
But at the root of it, people were not using systems. What was the gap? Was it a UI problem? Was it a functionality problem? Was it a cost problem? Like, you know, what were the gaps in the existing? It was not a cost problem. Right. And that was one of the things that actually encouraged us to do this. Right. Because see, one of the first hypothesis we said was maybe people were not ready to pay for software.
00:44:18
Speaker
which is why these companies are not using software. But everybody was using it. We were talking to the larger enterprises. All of them were using the smaller ones were not. But if you look at the root of the problem, the two main things came out. So one was the usability. People were using systems like Swiggy, Facebook, Flipkart, Uber, et cetera, in their day to day lives. And when you go into an office to either write your performance review or give interview feedback or apply for a lead,
00:44:47
Speaker
These systems were this old database looking systems. And you don't remember passwords. Most of them didn't even have a mobile app. You have to log into your web and do certain things. And then we reflected on what we were using, and we didn't remember as well. At McKinsey, what we were using also. I don't even remember applying for a leave or enjoying an experience. So that's where we said, OK.
00:45:13
Speaker
One of the things that we figured was how do we make the experience of using the system and especially because it's a system which is used by everybody in the organization. Right from the CEO to the last level intern who's joined the organization. The experience has to be like a consumer. Because they're not one architect. They're not all sales folks or all finance folks who understand certain things. Everybody is different based on the role they play. So you need to think about design in a way you think about a consumer product.
00:45:42
Speaker
You can't have overly complex stuff, you can't have too many clicks, right? Most of the time people are applying for one day leaves, right? You make that one click or two clicks, all of that, right? So, that was one big gap we saw, right? Which is how do you consumerize this whole experience? Because people are not using, people are not, the adoption levels of the product were like 30%, 40%.
00:46:04
Speaker
At a 30-40% adoption level, you won't get any insights out of the analytics because analytics data is coming from the individuals. He's applying for a lead. They're writing certain feedback. They're rating people certain things. They're giving interview feedback, et cetera. Those are the inputs you need for the analytics to be this thing. Only great analytics won't solve it. So that was one. The second thing that we figured was the systems were very rigid.
00:46:28
Speaker
And rigidity came out of one legacy, which is they were built like this large monoliths which are not flexible. And second, the roadmaps were decided for the US, where a lot of things run on best practice. Right versus when you look at Asia or India as a context, which were we were experiencing
00:46:49
Speaker
There are a lot of reasons why a certain process is set up, right? Because of power distance, because of whatever, right? Sense or shape, right? Organizations, right? Like promoter run companies are different from MNCs are different from public listed companies. They were all very different, right? So you, I mean, nobody was solving for those contexts. So what used to happen is there used to be this global players who used to come in and say, Hey, this is not best practice. So you change your practice. And two things happen, right? Either
00:47:18
Speaker
you change your practice and it doesn't stick because it doesn't it's not culturally relevant or they do it offline which means the again digital adoption is not happening they didn't want to change the process so they can't put it on the system so they were doing it offline so basically yeah so all of this was resulting in people not using systems or not liking systems or the value of systems not coming out
00:47:42
Speaker
So like your insight was that there were two things. One is user interface needed to be more intuitive, like the mobile apps that people were using. And second was the tools were not customized to the... Yeah, they were not configurable. And the advantage we had with hindsight, Akshay in this case was basically there were a lot of systems which built custom workflow builders. And then there were HR systems, right? We wanted to bring both of that together.
00:48:12
Speaker
How can you build custom workflows with the HR context? And again, it's a benefit of hindsight. And I'm not saying that this is a genius idea. It is just bringing together multiple things that work. And there were so many new technologies, attendance through check-in, applying for relief through voice. And these were all consumer technologies that have come up, small, small consumer elements of features that have come up. And we were seeing how we can bring that onto HRMS.
00:48:42
Speaker
Right. One of my pet peeve at McKinsey used to be, um, these bills, right? Like when I used to come back from Africa, I used to have this reimbursement bills, right? I used to have this big envelope of bills. I had to sort it out or give it to somebody to sort it out. And then it was applied for et cetera on a web system, which I don't take pictures, upload on a laptop and do it right. And I used to think as soon as I get a bill, why can't I just take a picture?
00:49:08
Speaker
from a mobile. And then we end on mobile. It is not just about mobile. OCR technology exists. Why can't your mobile or when you take the picture read and fill up certain fields, date, total amount, name of the vendor were all very clear. There used to be very standard places that they are in. And now GST, for example. They're all in standard places. So why can't they fill those fields up as soon as the picture is uploaded and whatever is the rest, I can fill it up.
00:49:37
Speaker
reasons for application and all of those things, right? Or project code, etc. And that was again because OCR as a technology existed in consumer. Right? Automatic word doc generations. For example, I need an address proof. All the information is on the system. But what HR people were doing was like you write an email, they take a word document, remove the name, paste the name, copy the address from somewhere and put it right. But why can't you just like your service?
00:50:05
Speaker
the previous generation of HR folks needed to be mail merge experts because they used to create all these documents using Excel and Word through mail merge and all that. Yeah. Correct. Correct. So now like if you have to generate an offer letter, I just have to put the CTC. That's it. Right. Offer letter will go to the individual because the
00:50:27
Speaker
the breakup of the ctc into every element like basic hra will happen on its own, the name and the details are coming from the candidate information during the recruitment process, etc. Right? So so that's I mean, I mean, that's where we saw an insight. And what was interesting is people were happy about that they bought the costliest system. But they were not looking at the outcome, right? Like when they said, Okay, so when you used to ask,
00:50:54
Speaker
Are you happy with your system? Yeah, we have the best system, right? And SAP, this workday, etc. Then we used to be like, are you happy with it? Or like, is it good enough system? Is it driving outcome? They should be like, who else is there? And then we said, okay, there is clearly an opportunity. There is a problem to solve, which we've experienced, we've seen our clients experience, right? People are buying, it's not like people are not buying. So there is clearly an opportunity.
00:51:23
Speaker
Little did we know is that, oh, we need to think about market size and all that at that point of time. We were just like, okay, there is a clear problem. These 50 people I spoke to at least I can sell too. Right. Of course, the next level of iteration was building the product, bringing it to market and all of that. But what was interesting in this whole process, Akshay was the idea that, okay, I need to think about market size, et cetera. We never had.
00:51:53
Speaker
Right. We just said, okay, we'll build this out, et cetera. And we started building. There's no, this thing, right? We were like, okay, let's jump. Did you all quit your jobs and started building it? Or like, yeah, yeah. So in sequence, basically like Jayanth quit first, then Chaitanya quit. And then I quit. Basically we're finishing off our last projects.
00:52:10
Speaker
at EY and McKinsey. And as soon as we finish, we were quitting, right? Like we were informed, all three of us informed at the same time, but we quit our project. None of you were like developers assets. So you would have to spend money, hire developers or hire an elite, you know, let's say you put in your own savings into building the product. So two things happened again. One, we spoke to one investor at that point of time, which is where the realization dawned upon us saying, okay,
00:52:35
Speaker
Two things, two big realizations. One, they said nobody has built for Asia. If you're building for the US, I'll invest. Asia is not a large enough market. So that came first. Second, they said, oh, there are a ton of HRMSs. You will not be able to differentiate. It's very saturated as a market. So then we realized, hey, we never thought about these two questions as much.
00:53:03
Speaker
Let's take some time to answer these questions. And the second one, we had to believe it ourselves, right? Because in our head, this was the super consumer app, which would make things easy, etc. But we were not sure if that will be translated. Right. And we didn't want to escalate commitment where we raise money, and then we were like forced to do it when we don't know the answer for these two things. So we said, Okay, anyway, we have decent amount of savings, gets higher people and start building this up.
00:53:32
Speaker
right six months down the line we'll know if the product is coming across as the one we thought because we can take this back to those 50 clients and say does this work better right like do you like this better than what you have so that is one thing we could do the second bit of it was we will also be more clear about this market size and all those answers by that time so three of us put in our savings and then for the first seven months we built out
00:53:59
Speaker
We got our first two, three clients. And that's when we raised money after that. As in, I think towards end of 2015 is when you started working. So by when did you get your first client on board and get validation? So yeah, 2015 end, we started building the product. 2016 March was when the product was out. One module of the product was out because we wanted to build an end-to-end product.
00:54:29
Speaker
and which is like a beast in itself, right? So, we picked up one module which is most bought. The attendance one. Yeah, yeah, time and attendance leaves and attendance because we said, okay, everybody needs this, right? You may not do a performance review for your organization, but time and attendance people will buy, right? So, that's what we did first. When we went into the market in March, then we got in a few smaller clients, mostly internet companies is the first ones we went after.
00:54:56
Speaker
and it resonated there. But we didn't have a sense of arrival this work with traditional organizations at that point of time. But traditional organization were a little more reluctant at the start because one of the questions they asked us was because we thought we had money at that point action. So we were like, okay, let's spend a little more time get some traditional organizing. Most traditional organizations ask the question saying if you shut down tomorrow, what then? Because I'm putting I mean, two things happening. I'm putting all my data on you.
00:55:25
Speaker
Second, I am encouraging all my employees to use this tomorrow. If you shut down, I have to move into another system. It is like a black mark for me as HR person. And that's when we said, okay, maybe the it's time to raise money for two reasons. One, it'll help us accelerate faster on product building, etc. Other modules. And second, it just gives validity, credibility, credibility, validity to the market saying, okay, these guys are there for the long haul.
00:55:56
Speaker
or at least foreseeable long haul. And that's when we raised money from Satish, from India Partners. And Satish is very strongly entrepreneur-led. My conversation with him, the first conversation itself, he was like, I am interested. I want to see what you guys are doing on the product and meet your other co-founders.
00:56:19
Speaker
And then he came down to our office. We gave an extended break to the rest of the team because we didn't have plays. So they came down and then we had the conversation. By the end of the conversation, he said, I'm interested. At the same time, we were also speaking to Mohandas Pai, 3-1-4.
00:56:38
Speaker
Again, Mohandas Pai, the interesting fact was he was the CFO and CHRO of Infosys, right? So he was relevant in a way where he understood what it takes to sell to enterprises. Because he took the money out and he also knew as a CHRO what was needed, right? So his conversation as well, before that we spoke to his team, etc, Pranav and all. But when we went to him, he asked us three questions. And luckily enough, we spoke, we thought about all three questions in the past and we answered them for him.
00:57:07
Speaker
and how we're thinking about the product, etc. And then he came on board as well. And that brought a lot of credibility. Because these were names that were known.
00:57:18
Speaker
right and then there was Smaller other funds which had people in their LPs who were credible So we use that credibility a lot saying they've invested they understand this when we went to the traditional of internet companies understood it much better right like for example delivery Paytm, Swiggy Okay, early customers early customers right delivery was our first large customer at that point of time and
00:57:46
Speaker
All of these entrepreneurs, and thanks to them, I think they've done a major service to the ecosystem where they encouraged a lot of products. Sahil, Arsha, Vijay, all of them were very welcoming. And the good thing was they resonated well with the idea of completely being on mobile, their workforce being very mobile friendly, mobile centric, and the app being very mobile friendly.
00:58:14
Speaker
was what worked. Right. And then I think then we went on and that fundraise, at least we did a little bit of reaching out to investors, identifying and all of that. Right. So I was doing this where I was reaching out to people and I was doing it for the first time. Right. Fundraising myself. You were the fundraiser person in the team. I was the fundraiser person. Yeah. I was the designated fundraiser person. So so we were figuring out how to raise all of those things and all that.
00:58:44
Speaker
Luckily after that, next all rounds, all three rounds that we've had after that were started with an inbound. Right. So at least in that sense, all my learnings about fundraising came from the first one. Of course, there are different learnings around
00:59:02
Speaker
not having only inbound and having a few investors before you raise money, all those things after that. But the first one was quite an experience in itself, because again, it's the rejection story, right? Most people said, hey, enterprise taking on SAP Oracle is painful. They will destroy you. They said Asia might not be a large enough market. They said HRMS is super saturated. They also said, why are you in Hyderabad? You won't get talent.
00:59:32
Speaker
And our reason for Hyderabad was very simple. All three of us were Telugu's and had family connections here. I was born and brought up here. Both of them were in from Vijaya Vada and Guttur, but had like Jainthad is in-laws, Chaitanya had his extended family in Hyderabad, etc. And we said, okay, I mean, food, shelter is taken care of, then you can focus on business is what our logic was. And that's where Hyderabad was the answer. But on all the other things,
01:00:00
Speaker
We had strong conviction because we experienced it more than anything else, right? Like we could, I mean, it felt like those B-School presentations at the start, right? Because there were investors who were saying, give projections of how Indian market will change, right? And like, these are all curve balls for me, right? Because I was like, okay, okay, you don't know. So in the US, for example, you know exactly how many installations each product has, right? So the transparency of data is so high.
01:00:27
Speaker
Versus in India, there was no clarity around how many companies have more than 500 employees at the point of time. Then we triangulated over time, we figured this out. But at that point of time, this was 2016. There was not so much conversation about anything to do with SaaS. There were not too many enterprise companies focusing on India, Asia, to have data, to have, I mean, Capillary was the only other SaaS company which was focused on this part of the world.
01:00:55
Speaker
So you had very few data points to pick off and learn from. So yeah, the initial fundraising felt like that B-School presentations. How did you get into the room? Was it through introductions or just cold emails? No, that's where the McKinsey network helps a lot actually. So they were extremely helpful. So most of the VCs had at least one or two associates from McKinsey.
01:01:25
Speaker
who at least gave you certain intro to, I mean, at least were ready to listen to our story, take us to the partner, etc. Or there was networks, right? Like I was introduced to Satish through one of the partner in McKinsey I worked with. And these introductions are helpful because of course, they come with certain level of credibility, right? Because somebody has worked with you and is vouching for you as an individual. And in a seed stage, it is about the individual, right? There's nothing in the business to
01:01:54
Speaker
really talk about by introducing. So that was helpful. And then, yeah, I think that was how much did you raise in that initial, we raised about four crores, I remember, right? Yeah. There's a lot of money for us, right? Like, I think, I think when we start off with your own money, right, you are much more efficient and smarter with money.
01:02:19
Speaker
Right? So we were very clear about, I mean, I mean, we've been frugal through maybe because of that first eight months of spending our own money, right? Because it just became natural for us to negotiate, right? In any very situation, right? Not spend a lot of time, but definitely negotiate on everything. Right? Check on what is necessary, what is unnecessary, etc. Right? So some of those things are ingrained even today.
01:02:46
Speaker
But at that point, even four quotes was useful because, again, SaaS as a business is not a cash guzzler. And a lot of people used to ask us, and that was the way we used to separate out people who understood SaaS from who didn't or enterprise SaaS. It was like, if you raise more, can you do more? So if you raise 2x, can you do 2x revenue in six months or eight months? But in early stage, that cannot be possible because you are building out the product. Today, we will be in a better position to answer that question.
01:03:14
Speaker
Because there is clear product market fate, we can just go into another market and start selling earlier rather than later and it helps you grow faster. But at an early stage, if somebody is asking you that question, they have not invested in SaaS before or don't understand SaaS well enough before. And we got lucky, especially with folks like Satish and then Dave from Lightspeed, etc. Both of them ran their own software companies in the past in the US.
01:03:43
Speaker
So that was extremely helpful because they had the context of what it takes to build and what it takes to sell to enterprises. Right. So those that was also helpful. Okay. So from that single leave in attendance, how did the product evolve? So I think on product, now we are an end to end suite. So we do from the first touch point of a candidate to an organization, which is recruitment.
01:04:12
Speaker
to the whole recruitment applicant tracking system, the whole onboarding experience. Once the person joins the organization, the whole workflows, right? Like a confirmation transfer, all those workflows, leave attendance, payroll, performance management, employee engagement, rewards recognition, travel and expense. So it's quite a wide spectrum in terms of the touch points in an employee lifecycle that we touch.
01:04:39
Speaker
Of course, all companies don't buy all the modules, so we're very modular that way. About 50% of our clients use the full suite. The others which use are part of the product, right? Only performance management, only leave-in attendance, only recruitment, etc. But what has been consistent in principle for us while building this out, Akshay, is one, at the start itself, we knew that it's going to go broad. So we built a lot of microservices.
01:05:06
Speaker
which is I use the same email, notification, same workflow builder, same form builder, et cetera, across all my modules. So the experience is consistent, and also it's easier to build and maintain these things. So I think that was one. Second, design as a philosophy. It has to be on mobile. It can be completely handled on mobile. Because today, across 1 million people who use the platform, across 500 plus clients,
01:05:34
Speaker
30% of them never use a laptop because these are field sales force, manufacturing folks, etc. So they will completely do everything on mobile. If you look at any of our the global systems, right? They do mobile as a way to do the frequently used transactions. Which means the assumption is that everybody has a laptop. But when you have to apply for relief, which is a very frequently used transaction, you want to do it on the go and you do mobile.
01:06:02
Speaker
For us the philosophy is that there are people who don't have a laptop which means even a once in a lifetime activity like resignation should happen on mobile. Because if you do only some of them then when that person has to resign where does that person go?
01:06:20
Speaker
Then they reach out to HR and then they fill out a paper form. Again, you're bringing back the offline part of the world. So I think that's something that helped us two ways. One, of course, penetrating the Asia market. And the second one was the same companies which used to use different products, like the SAP's Oracle's of the world, used to do it only for their white collar employees.
01:06:47
Speaker
Now the number of employees within an organization using the platform also increased because we just made it easier for more people in the organization to use it. Right. Right. So what did you price it at? I mean, you know, like the initial pricing and the pricing today, like tell me about the pricing strategy and journey.
01:07:10
Speaker
Yeah, so in a more saturated market or established market, generally the norms around pricing are set. So we could disrupt that, but generally the per employee per month model, which is charged by employees, number of employees in your organization and number of modules you're using, is a standard which has been established by the existing players. So we didn't disrupt that too much.
01:07:38
Speaker
I think it's something like $1 per employee. Correct. We started off with $1 per employee per month. Now we are at like $3 and in different countries it's different. So $3 is when they have a full suite? Yes. Or is it per module? No, no, it's when they have a full suite. Okay. And again, this is again for larger organizations, smaller ones is much more expensive, much larger ones has lesser cost, all of those things.
01:08:06
Speaker
Yeah, so we used to be at like 40-50% of the SAP Oracle cost initially. Now we are almost equal to their price. Of course, we had to build a brand and presence, etc. So it would be off by 10-15%, but in a lot of deals we are similar in terms of cost.
01:08:25
Speaker
Wow, that's amazing. So and tell me about the fundraise journey also. So the first funding was 4CR and like are you at liberty to tell me what valuation you got at that time and how that valuation also changed over the subsequent rounds? I'm actually trying to remember. I think it was about 3 million. Yeah, I think around 3, 3.5 million.
01:08:52
Speaker
valuation. How much in crores? Around 20, 25, 20 crores. Okay, okay. And then how long did that last, the four crore? No, I mean, it was like, so 2016, June, we raised and we had almost half the money in the bank when we had an inbound interest from one of the investors.
01:09:18
Speaker
And then in that inbound interest, we said, okay, maybe we are having a conversation with one investor, let's have it to three other investors. And that's when light speed happened. Right. And that's where we raised 4 million in that round. It's about 25 crores. And what was the valuation then? I think around 20 something million.
01:09:44
Speaker
Right. And then and then I think because the money was there. So this was 2017, June, again, that we raised. The next fundraise was Sequoia. This was in 2019. From here, I can't share the valuations, but
01:10:04
Speaker
Right, but so 2019 we raised money from Sequoia again. It was inbound Because I knew we knew Sequoia from before right they were they were tracking us at one point We were going to Southeast Asia. So we launched Southeast Asia in 2019 end So towards the end of 2019 and then we were like, okay, we want to raise money now So that it helps we still had some runway, but we want to raise money now so that it helps our Southeast Asia expansion
01:10:34
Speaker
And that's when we started having conversations again with a set of investors. Of course, some of them we knew from before, right? Like we've been talking to investors all through the journey. And we didn't raise for two years. So, I mean, investors also knew we would be raising around that time. But what was great was for Southeast Asia, we were looking for an investor who had presence.
01:11:01
Speaker
in that region and just beyond. Because our big focus about the fundraise, because we were almost breaking even our profitable in India at that point. Big focus at that point was growth in other regions. And who could be relevant in other regions, et cetera, and who understand this global expansion. And then Sequoia was the best partner at that point of time. And that's when we raised money from Sequoia.
01:11:28
Speaker
Post that COVID happened, 2019 end was when we raised the money. COVID happened, so we tightened our screws in terms of we were very conservative at the start of the COVID cycle, which meant we didn't spend a lot of money from what we raised. So we raised about 15 million from Sequoia, and 80% of that was still in the bank when Salesforce reached out to us. And Salesforce, I'd met somebody from the team in 2017 when I was in the US.
01:11:58
Speaker
We've been in touch, but what Salesforce was doing was a huge focus on SaaS in Asia. Right? So they hired, they got Arundhati Bhattacharya as their chairman in India, who was the SBI Chairman and all. So there's a huge focus for Salesforce in this part of the world, which also meant that they had to partner with or invest in companies which probably have good presence here.
01:12:26
Speaker
Interestingly enough, a lot of our clients like the TVS's Tata's and Mahindra's were using Salesforce and they heard good things about us from these clients and that's when they reached out saying, okay, we would like to do a small investment. It's a very small investment that they've done in the business. They've done another 15 million at this point of time for a small ownership and it is from the Salesforce Ventures now. So that was the last fundraising which closed like last November
01:12:56
Speaker
So that is the fundraising journey. But the exciting part, and we've been lucky, I would definitely say lucky on this, is the investors have been super relevant and super understanding of a not so common journey. The most common SaaS journey in India was India US corridor, like India as well as the US. And we were selling in Asia.
01:13:24
Speaker
where the market is opening up. So what happens, Akshay, and this is something that we've observed, is in any market, the first thing to take off is the consumer. If you look at technology, is the consumer internet piece. The second thing that will take off is SaaS. If you look at the US, right? Amazons of the world took off in late 90s and early 2000s. Even the sales force workdays of the world took off.
01:13:53
Speaker
Right? And interestingly enough, the first SaaS companies that take off are the horizontal. Right? For a longest time, the companies which had more than billion revenue were like Salesforce workday and service law, which cut across all sectors. Now it has become vertical software, right? As the, as the market matures in the US, more and more vertical softwares and point solutions that are coming in. Right? Which is a similar journey that India is going through.
01:14:22
Speaker
Right. Um, you saw the boom of e-commerce and internet and food, tech, et cetera, FinTech. Now you're seeing the horizontal SaaS players take off, right? And this is India, Southeast Asia, all the developing markets, right? Uh, right. And then the SME SaaS will take off and then vertical software. So it's a journey that they go through. And in this journey, right? Like we are, we would probably be in the early cycle of this enterprise SaaS talking, taking off in Asia.
01:14:52
Speaker
And when you're in the early journey, you don't have benchmarks to look at and learn from. Very few benchmarks to look at and learn from. And it makes it even more tougher for investors because for them to learn and give us input is also stuff. Because I mean, for us, we are going through it operationally, experiencing it day in and day out. But for an investor, all the existing information that they have is from the US SaaS industry.
01:15:20
Speaker
whether all of that is translatable or not is a big question right because the context would be very different buying behavior could be different the price points could be different the cost points would be different all that so you can just take a US benchmark and translate it interestingly enough we had very good benchmarks which are comparable with the US throughout but are we had pushback saying okay operationally this is not possible this is possible etc.
01:15:47
Speaker
So I think that at least has been great. We've been lucky where they've been patient with us as we see it out, play it out, share it with them, and they've been able to add value wherever that was necessary. And the good thing is now, lightspeed is one of the largest investors in enterprise SaaS globally. Sequoia is invested in a ton of enterprises and Salesforce is a SaaS player themselves.
01:16:14
Speaker
or probably whatever, I can call it investor company fit is quite strong. And we got lucky in that sense. So I want to know one thing. What made you scale up when other similar companies have not scaled up the way you have? So like, you know, you are saying mobile first, easy to use, configurable, HRMS.
01:16:39
Speaker
There are other companies also which, so have you heard of Samachara? I think they also started at a similar time or maybe before you also. I mean there are a lot of these companies which are very regional players or have a small market. Like there's a company called Candle which I think is mostly here in North India.
01:17:00
Speaker
So, you know, I want to know what is your secret to scale? Why did you scale in other companies which had a similar approach, not reach the kind of scale which you have? I think it's a question of choices and focus. So basically from day one, and it is based on our experience of working with them, we always wanted to be an enterprise software.
01:17:23
Speaker
right and the design choices that you do when you want to be an enterprise software are very different from I will start with being an SME facing product and go up market right. So the way you build the product right the architecture of the product the security standards that you maintain on the product because SMEs don't care as much
01:17:44
Speaker
about security but enterprises do right like the the CIO will come in and test the security first before even if that passes master only you will even evaluate the functionality right so so we made investments in security like in the second year right it is unheard of in like SAS right so in terms of architecture in terms of this the kind of people we hire where people who can manage enterprises
01:18:13
Speaker
So for us, it was always been from, from the sales side or from the sales implementation and customer success. All of these are people we looked at people who can manage large projects because these are projects that these are companies which are used to, let's say taking an SAP and having a big four implement for them. Where there are three people sitting in their office and doing this, right? While we won't do the same model because we are faster and much simpler as a product.
01:18:39
Speaker
We wanted to give an experience of the whole project management, etc, which is very similar. Right. The kind of people we hired was correct. And and the other big thing that we did actually is for all our 550 plus clients, our code base is the same. So we've never made client specific customizations. Right. So that again becomes a deterrent to scale for a lot of SaaS companies. They'll be like, OK, here and now there is this revenue.
01:19:10
Speaker
Let's build this small thing for this client specifically, right? Not that we've not built things for clients, but that is included into the product. So that is available for all my clients. So whatever we built into the product. So today if you take any client of ours, they have the same product. The settings change, which is why they experience the product differently. You can do different settings and you can go into the settings and do that. But consistently we've maintained that we'll have only one code base.
01:19:40
Speaker
So, some of these are choices which are tough to make because when you start off your access to enterprises will be low versus access to SME will be high. And when we explored that as well when we thought about it we said ok maybe we should do SME first etcetera, but we realized that that is not a large enough market now or today in Asia. The enterprise market is big and growing faster than the SME market where
01:20:08
Speaker
There's a lot of work to be done in terms of the people getting used to technology, doing it themselves, the distribution model. All these have to be figured out.
Enterprise Sales Strategies
01:20:18
Speaker
Whereas enterprise, that experience is there. People have used a system or used some system. So there's not too much work that needs to be done. So I think what is the choice of staying enterprise and doing all the things that are relevant for enterprise from day one and focusing on that has been tremendously helpful.
01:20:37
Speaker
So I guess because all of you are from like a consulting background, so you had a much stronger understanding of the kind of people needed to manage enterprise accounts, how to sell, how to open those doors with enterprise accounts, what are the concerns that you need to cater to while building the product that would have helped? Absolutely, absolutely. So across the board, right, in sales, it's a very consultative sell, which means you need to identify a problem and tell them the solution.
01:21:07
Speaker
rather than just talk about features in enterprises. Second, just mapping out the client base. So it's not one decision maker. There is a CIO, there is a CIO, there is a CFO, there is a CEO in some cases who is involved in this decision making. Do we know all of them? Have we been able to present our best picture to all of them? So those as a choice. Then during implementation, as I mentioned around
01:21:32
Speaker
project management, making sure that visibility, transparency is there, bringing in all stakeholders, change of processes communicated well enough, change management, all of that. And in customer success, doing business reviews every quarter, talking about metrics that are moving, all of this is something that is very specific to enterprise and something that consulting deals with you very well.
01:21:57
Speaker
Right, right, right. Okay, so who handles sales among three of you? So Jaitanya takes care of sales and marketing. Jaitanya takes care of product and engineering and I take care of the rest of it. So I do take care of delivery, finance, HR and investor relations.
01:22:13
Speaker
Hmm. So what is the approach to sales? Like, you know, how do you, how does enterprise sales scale up? I mean, you know, I want to understand if you can share a playbook on selling to enterprises. Like how do you do that? I think, I think about enterprises is, is about account based marketing. And it's, it's quite a very well known framework. Uh, so basically account based marketing is I know clearly that this is my universe of clients that I want to go after.
01:22:41
Speaker
If you take India today, there are about just India. If you look, there are about 11,000 companies with more than 500 employees which are headquartered in India. So I'm being so specific about how I define my range. In these 11,000 companies, there are certain sectors which are more amenable to taking a product or a cloud product versus the others. In that also, based on in that sectors also, there are a certain set of companies which have experienced product already.
01:23:12
Speaker
right through a competitor or through an on-premise system or anything would be more willing to buy. Now I know the universe of these 11,000 companies. I know my priority 2,000 companies and then within those 2,000 companies I need to know who are the decision makers etc. So once you get to the companies I need to know the list of people that I need to get to then I need to understand what are the things these people want to achieve with the product.
01:23:42
Speaker
or what are the problems that these individuals, leaders are facing with their existing system. And then I start my communication whether it is through emailing, calling, whether it is through trade shows, networking events, breakfasts, whatever are those or connections.
01:24:05
Speaker
right? You figure out somebody who you know is connected to them. So that is how you basically map out every single person. And then you you create a deal out of it. Alright, sometimes you create a deal where they start evaluating you just because you you've shown something to them that can happen immediately, or you're in touch with them that when the natural cycle of they want to buy comes, you're the first one they'll consider.
01:24:35
Speaker
So, in enterprise that's different. So, we have a sign up page on the platform, on the website and on the sign up page most people who sign up are companies which are smaller than 500 employees. So, you understand the difference. So, it's a lot of inbound post branding that happens with SMEs and smaller companies. But for enterprises it is generally outbound.
01:25:04
Speaker
So no enterprise, or very rarely enterprises, Google, which are the HRMS. Right, right, right. They get enough vendors chasing them. They have enough vendors chasing them. There are enough people within the company who've experienced certain partners anywhere, right? So I have a HR associate in my team who's worked with XYZ company who's used Davinbox. That person will say, we use Davinbox there. It helps you do this.
01:25:32
Speaker
So you automatically reach out saying hey right either you know a person who's reached out to earlier or you you put it on the website or you reach out to somebody saying hey we're looking at Davenbox we want to evaluate right so in enterprise it's all about account based marketing so you know what is your universe by the company right in SME it's a little different where you shoot out stuff you do branding you do search ads
01:25:59
Speaker
You do banners where people are looking and then this thing. And so a lot of work needs to happen in enterprise marketing also on content. Why do we do content is basically when people are looking for something. So last year we had a lot of success with content we built around how to think about hybrid work or remote work. So we were the first to bring out something in terms of so we spoke to all our clients who are in manufacturing, who are in tech, et cetera, where
01:26:29
Speaker
We saw all of that in terms of people who are forced to be in the manufacturing setup or in hospitals. They had to deal with their employees very differently from people who could actually manage work from home. Right. And so we had a learning from a plethora of clients, which we consolidated as content saying, okay, if you have to do this, this is the kind of communication you need to send out. You want to do this. This is the kind of communication you need to send out. Okay. Once you do remote, how do we make sure daily check-ins are happening?
01:27:00
Speaker
How do you ensure new joinings are happening? How do you ensure employee onboarding has happening, right? So both in terms of having those features on product and putting out a content, we were ready. So when, when people looked for saying, okay, a new HR person or a young HR person, as I mean, everybody was experiencing the pandemic for the first time, they are trying to find out what other companies are doing.
01:27:24
Speaker
So we had a content ready where people could read and I could also talk about hey you should use technology in these areas and not in these areas. Now what technology to use maybe I'll have a recall that hey Darren Box has said this maybe they have something right. So there's a lot of work in content then there's a lot of work in the trade events right. So you have these large HR events that happen conferences where people come to talk and then younger HR folks come to listen. So this is there is this SHRM event there is a people matters event etc.
01:27:54
Speaker
where let's say 1,000, 2,000 HR folks come in. Do you have a senior CHROs speaking on panels? And then there are trade shows and fairs where we can put up a booth, et cetera. And what you're doing there is basically highlighting its awareness part of the marketing channel. If you think about, I want to be known to as many people as possible
01:28:20
Speaker
with my proposition right or Darwin box is an end to end software is something that I want that person to take back. So if you take you take the whole funnel majority of the people will okay remember Darwin box saying okay when I think about HRMS this probably something I want to look at there will be some people who are actually actively evaluating HRMS they can come to the booth and see the product right there will be existing customers also there who are trying to understand about what are the new features that are coming and all of that right we communicate directly also but they're also
01:28:51
Speaker
So, this gives you an opportunity to talk to a lot of people. The other bit of it is you get a good sense of what are the asks that are coming, right? So, in one place in three days, a lot of people are coming and saying, hey, do you have a chatbot? Hey, do you have this feature? Hey, do you, can you do continuous feedback? Hey, can you do 360 feedback? So, you know, you get a pulse of the market. You also get a sense of pulse of the competitors, right? What are the things that are being most
01:29:16
Speaker
or where are the people getting most excited about it, right? So are there features that are there? Are there partnerships that we can do with them? All of that. So the whole events and conferences bit, which completely changed over the last one year to online, another big channel of marketing, right? So that's how enterprise differs from an SME context.
01:29:40
Speaker
Okay.
International Expansion Tactics
01:29:41
Speaker
So my last question to you is on going international. So, you know, do you change the product and the features when you go international? Like, you know, what's the playbook for a SaaS company who initially started in India and is now going into other countries? Yeah. So I think the interesting part for us, Akshay, was Southeast Asia was very similar to India, right, except for Singapore.
01:30:06
Speaker
Indonesia, Philippines, Vietnam, Thailand behave very much like India. So the configurability that we built in actually solves for 95% of the problems for them as well, right? And we are competing with the same set of SAP Workday, Oracle, even in those regions, right? And that's context wise, very similar. There will be 5% builds that we have to do, which is very regulatory. For example, in Indonesia, the leaves that you get depends on the number of kids you have.
01:30:37
Speaker
You have to capture that information and link it to that. Right. So Singapore, you need to capture a certain information before new employment, which is very different. Right. So those kinds of things are things which are regulatory and you have to do those 5% for every country you go into. But when you decide to go to a new country, do you first hire like a HR subject matter expert first to customize the product or like how do you go about? So there are two ways that happens. One is.
01:31:06
Speaker
In a lot of times, we have existing clients who have presence. So those are the more accepting of...
01:31:16
Speaker
any questions that we have, right? So we go to the client and ask them, hey, like if you use this product, are there any gaps that you see? There are clients who are already using it. There are clients who have not extended into all countries and only are in India, for example. And so we go to their counterparts in those countries and talk about, okay, what are the things that you need specifically on the product? And this is our product. And so you do a little bit of problem solving with, with the client. The second is,
01:31:43
Speaker
You don't hire someone but you get a partner or a consultant just for the compliance bits, right? So, for example, in India does Adar is visible or encrypted is a compliance question, right? Similarly, certain numbers, visibility and all of those are compliance questions and these are things that are built once in the system, right? So, we don't need this person to be there throughout.
01:32:08
Speaker
So we get in a consultant, etc. But our model about serving clients has always been local. So, for example, we have a team in in Indonesia, in Philippines, in Vietnam, in Singapore. So the sales and client facing roles, which is customer success implementation, are local for us. Product marketing, engineering, etc. are centralized.
01:32:34
Speaker
That's been working well for us because even in enterprise, again, it varies because of the post pandemic situation. But in-person meetings are important, right? Once in a while, at least in enterprise, right? Because some of the context changes in enterprise are not always communicated. So you should be there to understand. So it's better to have a local team. Of course, in this remote context, it is more interesting on how we manage that.
01:33:03
Speaker
It's actually made our life easier in terms of launching countries because we used to always be in a mode of hire someone there to launch a country. Open an office. Yeah. So that used to be the case. Now we're launching much faster countries and we're open to like taking clients from multiple parts of the world. There are people because of the Salesforce investment, et cetera, who are interested from all parts of the world to have a look at the product.
01:33:32
Speaker
So that is coming in model itself and now we are ready to solve them because the expectation is not to be in person or be next to them. So we are more comfortable with this whole remote mode of working. So that's working.
Conclusion and Content Promotion
01:33:47
Speaker
So that was how Rohit built and scaled Davinbox. If you are also looking for a superior HR experience for the employees in your organization, then do check out davinbox.com.
01:34:00
Speaker
If you like the Founder Thesis Podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit thebotium.in that is T-H-E-P-O-D-I-U-N dot I-N for a complete list of all our shows.