Siddhartha Ahluwalia 1:53

Hi, this is Siddhartha Ahluwalia, your host today at Neon Show, and also Managing Partner of Neon Fund, one of the leading funds from India in enterprise software spaces globally. Today, I have a dear friend, Sharath Keshava Narayana, I have known Sharath for like many years now. I have a privilege of him being an investor in Neon as well.

And Sharath, you are one of the very few founders that I know who has built like two companies which have like more than 20 million in revenues, each one of them, almost more than 500 million in valuations in each of these companies, right? And you also run a venture fund. So you have done a lot in the short span.

Sharath Keshava Narayana 1:94

Try to, try to.

Siddhartha Ahluwalia 1:95

So welcome to the Neon Show. So excited to have you for this conversation today.

Sharath Keshava Narayana 1:99

No, man, thank you. I’ve always, again, seen a lot of your shows. I think this show has hosted some incredible founders, incredible executives, and also folks from the government, right?

It’s always been a great platform when I look at it for founders to kind of voice their story, because many a times when you look at a successful founder, it’s again, it’s not wrong to almost assume that, okay, they’ve had it all. But I think very few shows capture the core journey, right? And not everybody’s journey is pretty, right?

It now looks and feels good that you’ve built two successful companies and you also run a fund. But I think very few people know the actual journey. So I’m glad to have had the opportunity.

Siddhartha Ahluwalia 2:89

You’re pretty young, you’re what, 40, 41?

Sharath Keshava Narayana 2:91

I’m 41 now. Yes.

But yeah, so I think it’s, I would always say, timing matters the most in anyone’s journey. You go through your struggles, it’s sometimes very hard. And sometimes you also constantly question as to why you’re doing this.

But many a times, if you are persistent, and if you are having a lot of fun doing what you’re doing, the journey is worth the effort, right? It’s never a straight path. It’s never linear.

But I think when I now reflect back on, it’s almost been a 12-year journey being an entrepreneur, had a very, very, very bad first stint. And then got the opportunity to regroup myself. And then I think, apart from all the hard work, I think timing has played a big role.

I think right from when I started Observe, to the time I started Sanas, to the time I started the fund. Though you can never plan for timing, I would just say, I’ve been very fortunate that it worked out the right way. And then being very grateful to have had a extremely strong set of people who kind of joined the journey, those early people.

A lot of founders I’ve seen don’t talk so much about their early employees. But I genuinely feel a lot of key people who joined us in that journey, that as good as founders are. And when I look back at Sanas, I think we’ve had like six people who’ve been a common factor of this journey.

Without those six people, Sanas would have never been close to what Sanas is today. So yeah, I think your timing, primarily to raise money and to build a company, your first set of customers, who become your largest cheerleaders, I call them lifesavers, to be honest. And then your first set of people who kind of spend that journey with you.

I think those three have to sit well, for a company to be successful. And again, touchwood. I think both at Observe and Sanas, back to back, I’ve been able to land all those three core parameters well at the same time, just been fortunate.

Siddhartha Ahluwalia 5:52

So one of the key things that I want to capture in today’s podcast is, you know, the transition from as a founder from India to the US, you know, and building in heart of Bay Area and still getting supremely connected to the Indian ecosystem and Indian founders. And the third is, you know, selling, especially in the enterprise space in the US. But first, you know, let me start with, how did you plan on moving from India to the US?

Sharath Keshava Narayana 5:79

I think I honestly did not plan man, it just happened. Because I think, after my first company, I started a company called Happy Feet, way back in 2012. I didn’t do really well, but then I got an opportunity to kind of tag along with Shashank and Practo.

So think about it being an acquihire. Again, it’s a glorified way of salvaging yourself. But I think Practo was a great home, built a lot of good connections and good network.

And then after I came out of Practo, and when I met Swapnil for the first time, Swapnil had spent some time in the US, so he was an early employee at Twitter, seen a lot of success early on. Again, he was this one of the smartest IIT kids I’ve known, IIT Delhi, double digit AIEEE ranking. I think there was a news clip in 2012, that this was that whole time period where very successful US B2B companies were hiring Indian founders right after college.

Swapnil was one of them. I think it was this news clipping that this 20 year old kid gets a 1 crore offer from IIT Delhi. So Swapnil was one of them.

So he had spent some time in the US and he had come back to India just to figure out what to do next.

Siddhartha Ahluwalia 7:37

And this was which year?

Sharath Keshava Narayana 7:38

This was in 2016.

Siddhartha Ahluwalia 7:39

And what you were doing then? You were at Practo.

Sharath Keshava Narayana 7:41

So I was, I had just come out of Practo. There was this friend’s company called Unbxd. They had mostly built the product in India, and then they wanted to move to the US.

And that’s when we both got together. And I told him that why don’t I take the attempt of taking it to the US because at Akamai, most of my customers were in retail. And Unbxd had built a on-site search product, where the potential target market would have been large US retailers and Pawan and Prashant, they were figuring out a path to go there.

So I joined them on that journey very early on.

Siddhartha Ahluwalia 8:18

The same time you met Swapnil?

Sharath Keshava Narayana 8:20

No, this was before Swapnil. So, and then, before I met Swapnil, I think the reason why timing is very important is, I had seen that experience of taking an Indian product, which is built very, very well, taking them to the US market. And when you take a product, which is so well rounded, because see, in US market, a lot of enterprises are used to seeing startup products where even something as fundamental as reporting is not built.

But when you think about Indian products, Indian founders pay a lot of attention to get that feature set right. When we started talking, taking Unbxd product, and we did not start with small customers, I went to Home Shopping 18. Some of the largest customers you can think of.

And like we had Express as our customer. We had one of the largest furnishing companies in the US as our customers.

Siddhartha Ahluwalia 9:17

And you were sitting in India with Unbxd?

Sharath Keshava Narayana 9:19

I was sitting in India, I would travel almost every month. But there I started seeing that in India, obviously, the top three, I would not name them, the top three e-commerce retailers at that time were all our customers. The highest value that we had from our contract was 62k.

And here I went to, so in retail, there is this internet retailer top 500 list. We initially targeted companies between 250 and above, because we it’ll be easier to sell to. Our first deal was 180k and sub 90 day sales cycle.

Siddhartha Ahluwalia 9:51

In the US?

Sharath Keshava Narayana 9:52

In the US. And they’re like, we have not seen a site search product which is so complete.

And that opened my eyes. And between I would say, Feb of 2016, when I joined Pawan and Prashant till about August of 2017, when I met Swapnil. In those 18 months, we went from sub half a million in revenue in India, towards six plus million in revenue in the US.

A 12x growth in less than 18 months. And me and there was this person called Monal Patel, we were the only two people in the US.

Siddhartha Ahluwalia 10:29

And you were also traveling to the US?

Sharath Keshava Narayana 10:30

Yeah, I was traveling, like literally traveling on a B1. Every quarter go there, spend 30-45 days. Monal was based there in Chicago.

And just the two of us and that ROI I saw, opened up my eyes about Indian products being sold in the US. And also, every sales cycle is more or less the same, you sell a mid-market product, unless it’s your an SMB, where you can sell a product in a week. Generally, any product above 50k in ACV takes about three months at a minimum, sometimes it can take up to six months.

If that’s the case, the amount of friction you get with a US based customer is a lot lower than an Indian based customer. Indian customers are value based customers, right? So you have great customers in India also.

With the same amount of effort, you can probably do three times more or four times more in the US. So that opened up my eyes. So when I met Swapnil for the first time, Observe, the name came in because he was thinking of building an observability tool.

Siddhartha Ahluwalia 11:32

Okay.

Sharath Keshava Narayana 11:32

Right.

And he and Akash had gotten together, I would say in March of 2017 to build this product. And then I met them in July. And then we started thinking about, hey, why don’t we build a product?

Siddhartha Ahluwalia 11:47

And you had quit your job at Unbxd?

Sharath Keshava Narayana 11:49

No, I was still there. I was still at Unbxd. We just, I was just bouncing off ideas with them.

And we stumbled upon building something for actually sales team, right? Because we had seen Gong and there was this another company. And you never remember your number two, right?

So Gong was a product that we were using. And my thought process was, hey, there’s so much of data being mined. Why don’t we use the data today to mine insights.

And then we were looking at Gong as a potential competitor to anchor on. And then I was thinking, hey, with sales teams, yes, you can provide them insights, but usually after the first 90 days, right, the kind of people you hire in sales team are a lot more, I would say, evolved users. I think over 90 days or 180 days, they might not use your product as much.

But then I looked into another market, which is contact centers, where I spent some time before Unbxd in the Philippines after Practo took us over. I actually launched Practo in the Philippines. And I’d seen this one place, which had over a million people working for this one industry called Contact Center.

And I’m like, hey, that industry has so much of attrition that people leave their job in six months. Maybe a product like this, where you draw insights and give them some value from that data might be very helpful for that industry. And again, it’s a non-sexy industry.

Not many people are going after that industry. If we are the first mover, it might be a game changer. So that’s when Observe formed.

But when we were forming Observe, both Swapnil and I were very clear that, hey, we will build this for the North American market. We’ll always have a team in India. We’ll build a very sophisticated product out of India.

But our GTM will be North America. Eventually, we’ll also sell to India. So for Observe today, I think both Zomato and Swiggy are customers.

We’re very proud of them. But they could only become customers because we had proven our value in the US. And that became that thought process.

Siddhartha Ahluwalia 14:00

And when did you join full-time in Observe?

Sharath Keshava Narayana 13:52

So I started working with Swapnil from August. That’s when we, actually around my birthday is when we incorporated the company.

I joined them full-time in Jan of next year. And the move to the US became almost necessary because we applied to YC.

Siddhartha Ahluwalia 14:18

In Jan 2018?

Sharath Keshava Narayana 14:20

No, I think we applied to YC in November. It was funny. After we came together, we both went and spent some time in the Philippines.

And Swapnil literally parked himself for about 90 days there. And I had a bunch of people who I knew in the Philippines. So our goal was, hey, if you’re building a product for the agents, let’s kind of map what they actually do.

How does the screen look like? What do they do day to day? So I think that so I think when we met in August, one of the things I told Swapnil was, let’s consider instead of going head on with a Gong and build another sales-related product, right? Sales intelligence product, let’s think about a market which is more greenfield, very little competition, but actually has huge potential.

Think about the number of salespeople on this planet. SDR functions, people would use Gong, potentially about a million to 2 million people. But contact center has over 20 million people.

There’s an industry which is 10x, just completely underserved in 2017. Now, it’s the most crowded market today, because everybody wants to build for CX. And at that point in time, there were not many.

So that’s when I told Swapnil that, hey, if you’re building the product, I think you should go and spend time with agents on the floor. So I had that network. So me and Swapnil went together, but Swapnil decided to stay back.

I was still working for Unbxd. And then I went back in late October, me and Swapnil spent about 10 days together. When we were coming back, we were like, okay, now it looks like this is a idea that we want to invest into.

Where do we raise money from? So that’s when Swapnil was talking about his IIT Delhi alumni network and Ankur wanting to invest capital.

Siddhartha Ahluwalia 15:59

And this is pre, after YC or pre-YC?

Sharath Keshava Narayana 16:01

This is pre-YC. And like, okay, let’s talk to Ankur and get the first check. But then I also told him that, hey, I’ve heard about this incubator called Y Combinator.

He said, yeah, we had applied it with our mobile testing idea. We didn’t get it through. I don’t think we should apply.

And I just let it go. And then we spoke to Ankur and Ankur decided to invest the first check. I don’t know, it was a 300K check.

Siddhartha Ahluwalia 16:20

At what, 2 or 3 million valuation?

Sharath Keshava Narayana 16:22

At 3 million valuation. But I think, see, man, at that point in time.

Siddhartha Ahluwalia 16:25

That time you need the first believer in it.

Sharath Keshava Narayana 16:27

Again, at that time, we had already, I think Swapnil and Akash, it was their third pivot. I had just come in.

And we were going after the call center market that nobody had built any product for. So it was a complete founder bet that Ankur took. And Ankur said, hey, one of you is good in product, one of you is good in engineering, and one of you is good in go-to-market.

It’s a perfect well-rounded team. So I’ll take the first check. And he said, I’ll put in 600K overall, I’ll put 300K first and put another 300K 90 days later.

So we actually raised 600K from him. That gave us a lot of confidence. And then…

Siddhartha Ahluwalia 17:05

You went to YC after that?

Sharath Keshava Narayana 17:07

And then, one day before the YC deadline, I saw a note from Michael Seibel saying that we’re extending it by 24 hours because of how many applications you want, we’ve gotten. If you want to apply, you can apply now.

So me and Swapnil on our flight back to the US, in the flight actually wrote the YC application. We in fact, even went to the last two seats, which was available to record our video in the flight. And we landed…

Siddhartha Ahluwalia 17:35

Do you still have that video?

Sharath Keshava Narayana 17:36

Yes, we still have it.

Siddhartha Ahluwalia 17:37

I would love to share it with the audience.

Sharath Keshava Narayana 17:39

Yeah, I’ll get it for you. And then we submitted that video. After we landed, there was 23 minutes or 22 minutes remaining for the deadline.

And we hit submit. And then we’re like, we’ve done such a shoddy job, we will not get in. But the good thing that we said there was, I think nobody in YC had ever heard about two founders going and spending time in the Philippines.

And the insights we had garnered as to how agents use technology today was an eye opener for them. And within the first one week, they asked us for a Skype call. Me and Swapnil went on that Skype call and then before we knew it, December 25th, we went for the YC interview.

8 to 10 minute interview.

Siddhartha Ahluwalia 18:31

By the time you were full time or still not full time?

Sharath Keshava Narayana 18:33

I had resigned. And I think me, Swapnil and Akash went, we met. I think Swapnil and I ended up doing most of the talking.

It was a very unique experience. And again, like having Sam, Michael Seibel in the same room, asking you firing questions.

Siddhartha Ahluwalia 18:56

At that point of time, I remember Sam Altman was heading YC.

Sharath Keshava Narayana 18:59

Was heading YC, Michael Seibel was there and we had like five people and I don’t even know what questions we answered. But they were very curious about why we chose contact center as a domain. And then they actually acknowledged that we’ve seen people build products out of here or from India.

But if your customer is actually in the Philippines, and if that’s the person using the product, very few people dare to actually go there. So they were very impressed by that. And then, yeah, I think…

Siddhartha Ahluwalia 19:32

And that was an in-person interview with Sam?

Sharath Keshava Narayana 19:34

It was an in-person interview. And then at 7pm that day, we were waiting. People said, after five o’clock, you’ll start getting calls.

At seven, we had not gotten a call. Like, yeah, man, screw it. We didn’t get in.

So we just went out to actually get an ice cream. And that’s when we got a call. And then I think getting into YC at that stage was the single biggest founding moment for us at Observe.

I think that changed our entire perspective. Justin Kan was actually in the same batch as we are. I think that batch produced so many unicorns.

I think we were just fortunate surrounding ourselves with some incredible people. But I think Swapnil and I stuck to one thing. Even when we went to YC, everybody has this thing that in 90 days, by demo day, we have to show something.

We said, hey, we decided to start Observe to sell to enterprise customers and to sell to customers in the US. Let’s not just get bogged down because everybody else is showing 10% week over week growth. We cannot.

Let’s focus on getting one early adopter who will sign a 100k deal. And then let’s start building some pipeline. So most of the time during YC, I think I spent time in the Philippines.

I spent two weeks in Philippines, two weeks in the US. And then Swapnil spent all his time in the US. And by the time we even before demo day, we got to a stage where we got our first 100k customer.

And then we had at least six large enterprises who wanted to start doing a POC with us. But again, the product was still to be built.

Siddhartha Ahluwalia 21:09

And I assume demo day was like March or April 2018.

Sharath Keshava Narayana 21:11

March 2018, three weeks before demo day, we got an inbound from Lightspeed and then Sequoia and then Nexus. And then we started spending time with investors. And at that point in time, Jishnu and Ram were from Nexus.

And I think we were just blown away with Ram’s humility and Jishnu’s overall knowledge of this industry. And then I think they gave us some really strong, helpful advice and met Naren, who’s unfortunately no longer there. Again, everybody in Nexus, we were just blown away by their humility.

And they were one of those companies who really wanted to be part of the Observe story. And then yeah, before demo day, we actually raised at that time, outside Justin Kan’s big round, because it was…

Siddhartha Ahluwalia 22:01

a serial entrepreneur…

Sharath Keshava Narayana 22:02

We raised the largest seed round out of YC, an 8 million seed round was the largest seed round.

Siddhartha Ahluwalia 22:09

It was all Nexus in that 8?

Sharath Keshava Narayana 22:11

Nexus did the majority. And then there were other investors also came in, Ankur doubled down, YC did their pro-rata, right, I think…

Siddhartha Ahluwalia 22:20

And suddenly, I assume the round was at 25 post, so the company’s valuation went from 3 million to 25 million…

Sharath Keshava Narayana 22:26

in less than like 90 days.

Again, it was a huge validation that if you can take bold bets of building something for an enterprise, building something which is very valuable, I think the whole community will come and support you. I think that was a huge validation for us. And after this round, I think it validated our enterprise focus even more.

I told Shabnam, it might take us a year to build a true enterprise ready product. We have a strong product partner, let’s work with him. And then for the next 12 months, we just built the product till I think March of 2019.

We were just building. March of 2019 is when we went to market and then there was this great growth story when 0 to almost 2, 2 to almost 7, 7 to almost 18 then SoftBank came in and invested at almost a billion dollar valuation. So 3 years of extraordinary growth.

Our average ACV was about 350K. We built a fairly strong business with less than 50 customers, almost $20 million in revenue. I think we stuck to what we did.

And I think, yeah, been very grateful for that journey. But I think it was a very bold bet to say, we’ll build a team out of India. We will only sell to the US market.

We will focus on enterprise as a segment. It was a bold bet to take, but I think I’ve now seen it twice, both at Observe and in Sanas. Those bets matter as long as you build something which is very useful, which solves a very key pain point.

And in both cases, we did the same thing. We identified something which is very core. At Observe, it was about what’s the first message you hear when you call a call center.

The call is being recorded for training quality and compliance. Let’s automate that.

Siddhartha Ahluwalia 24:16

And how do you automate it?

Sharath Keshava Narayana 24:18

Essentially, we built an auto QA product and auto coaching product. It’s still, we say automation was mostly an augmentation software. People would still do it.

But people would only do a random sample. We did it for across the board and helped a QA to do QAing better. Helped a team leader to coach people better.

And then when we started with Sanas, the single core use case was that, hey, all these agents talk to North American customers or European customers from India or in the Philippines. They have a strong bias of being from where they are. Why don’t we eliminate that bias and bring in clarity of speech and make people be understood in a much better sense?

When you promote communication between two people, magic happens. So it was about that core use case of being agent first, but selling to a larger enterprise that kind of worked in both companies.

Siddhartha Ahluwalia 25:15

And today the company is doing like 40 million annual revenue.

Sharath Keshava Narayana 25:18

Yes, Observe is at 40 plus million annual revenue. And then I started Sanas and…

Siddhartha Ahluwalia 25:23

Would be interesting to story, right? How did you meet Max, the co-founder of Sanas?

Sharath Keshava Narayana 25:28

Yeah, I think Max was also a happy accident man. Just like I met Swapnil where I was introduced by somebody else. Max, Sean, and Andreas, while I was in Observe, I have this thing of going and meeting all my enterprise customers every quarter.

In one of those visits, I generally talk to them about their business and also what’s the latest they’re seeing. This was this one customer who’s also now a Sanas customer. The CIO name is Prashant.

Prashant told me that, hey, I saw something magical last week. This is Stanford founders, very, very early. This is still a concept that they’re building.

They claim that they can essentially have a software that can sit on an agent’s desktop, and it can harmonize their accent in real time. But again, this is probably still one or two years away.

Siddhartha Ahluwalia 26:22

And this is which year?

Sharath Keshava Narayana 26:23

This was 2021. But just that concept sounds very interesting. And the founders were incredible.

I heard about it. My intention was to actually inbound them the same day. I completely forgot.

And then two weeks later, I was in the Stanford speech lab. When I heard one of the professors there talk about a similar concept, then I’m like, is this Sanas are you referring to? He said, yes, they’re from Stanford.

You should meet them. And that’s when I met Andreas and Max. And again, Max was 22.

Andreas was 21. And Sean was 20 when I met them first. And they were trying to raise the first round.

And then I invested in that first round, and then started spending more time with them because it was we were trying to solve a real time problem at Observe. We were seeing a perceivable latency challenge. And these guys had found a new way to go around that latency challenge by not waiting for something to get converted from speech to text and text to speech, but do it on a phonetic mapping on parallel pairs in real time, where you don’t have to wait for the entire word to be spoken because phonetic is a very fundamental, think about an atomic unit of sound, right?

So they were thinking of using that to actually do it in real time. And I found that idea very encouraging. I told him that first patent this, take my money, go and file for a patent.

So me and Steve, who’s from DN Capital, wrote the first checks at Sanas.

Siddhartha Ahluwalia 27:59

And how big was the round?

Sharath Keshava Narayana 28:00

No, initially, we just wrote a 50k check each.

But then we helped them construct a $5 million round. And then that’s when we had General Catalyst, White Capital, Human Capital, all of them came in. And then I was in touch with Max and Sean.

And then they were like, Hey, for us to build this, we want you to come on board full time. And that was a time where Observe had gone through that journey from whatever, zero to 15 million. And I saw that there was an opportunity for me to build something from scratch, which is as impactful or probably more impactful than what Observe did.

Siddhartha Ahluwalia 28:38

And this is still 2021?

Sharath Keshava Narayana 28:39

This is still 2021. And that’s when Swapnil and I spoke about this. It was again, a hedge, a bet that I took.

I think everybody would say, when you’ve built something till now, why don’t you see it to a logical finish? But I somehow thought from a timing standpoint, this was a very impactful problem to solve for. And I decided to take a punch of going back to ground zero, knowing that Observe was still an engineering problem, by and large.

Yes, there was machine learning components that had to be solved. This was cutting edge machine learning and speech. And I could spend the next two years not solving the problem at all.

So that was the risk. There was here a something that was already built, I could just be in the journey and build a large company, or going back to crude basics, where I knew for the next 12 to 24 months, I have no guarantee that we can actually solve the problem. Prototype concept works.

But I took that bet. Because I took that bet, I could suddenly see everybody in the market that, hey, if you’re taking the bet, we want to come in with the right big check, because you’re solving an interesting problem. And then, within 60 days of me coming on board full time, we actually had insight right, one of the largest rounds for a company, which is pre-product pre-revenue.

Siddhartha Ahluwalia 29:55

And how big was the check from Insight?

Sharath Keshava Narayana 30:07

Insight wrote a $20 million check.

Siddhartha Ahluwalia 30:09

And GTA was done before you jumped in fully?

Sharath Keshava Narayana 30:11

Correct. Yeah. So we did a 30 million round overall at 150 million post.

We were pre-product pre-revenue. But the concept and the art of possible was so exciting for everybody, right? Being able to harmonize voice in real time.

Yes, contact center was one use case, but we could think about a much broader enterprise communications as a segment, where this will promote communication from across the world. So, in Sanas, we had this story. When I first heard the pitch from Max and Sean, I came up with my own narrative, which formed my thesis of investing in Sanas and also coming in full time.

I had this whole concept called spear within a spear. The first spear was two people speaking English from anywhere in the world can understand each other really well. And the spear within a spear was Max and Sean.

Again, Sean, his background is he came from China, his parents came from China. So he’s a Chinese national, Chinese descent. And then Max, again, though both of them were born in the US, he’s from Russia.

I’m like, if we can build Sanas in a way where you can speak in Russian and Sean can speak in Chinese, and if you can understand each other perfectly well, and that will be a game changer, right? So then it’s almost like democracy, right? You’re like two people from any part of the world can communicate with each other, not worrying about them being understood or not, right?

One of the customers recently told me, I asked him in one word, if you have to describe Sanas, what would you say? He said equality. We never knew how to put Sanas in one word. I think when this customer told us that, it went back to that original thesis of that spear within a spear I wrote, where initially we can solve for two people speaking English, irrespective of their dialect and accent being able to understand each other and then ultimately being able to understand irrespective of the language. It kind of justified my whole risk taking appetite because at that point in time, this was just a very nice concept, right?

But then after we came on board, that was the same thing, right? In the last 18 months after we went to market, the narrative was very clear. Just like Observe, we’ll focus on enterprises.

Let’s focus on, again, agent first, North American business, build a large team in India. I think Observe today has over 300 people in India, Sanas is getting up to 200 people in India. We’ll always build a software in India and we’ll market it in the US market and then become a global company.

So that narrative has stayed true for me.

Siddhartha Ahluwalia 32:49

And which month, which year you came full time in Sanas?

Sharath Keshava Narayana 32:52

Jan of 2022.

Siddhartha Ahluwalia 32:54

And as you mentioned, within 90 days, Insight wrote a 30 million.

Sharath Keshava Narayana 32:58

So I think we closed the term sheet actually in March, we announced it in June, but within 60 days of me coming on board, I think everybody called me crazy when I took that bet. Why go back to something which is, you have to literally go back from scratch and for the first 18 months, I played the head of product role at Sanas. So I think we only went to market in July of last year.

And from July of last year to now, 18 months getting to 22 plus million in revenue has been very surreal. Again, the bet was build a product that a large enterprise can use across the board. Yes, it’ll take more time, you’re taking a very, very large bet.

And if you go wrong, you can fall flat on your face. But it’s always a bet which is worth it. Because if it works out, getting every customer will add half a million dollars in revenue.

It’s much easier to scale than scaling, adding $50, $100, $200 customers. So that’s again, different people have different narratives to go to market. My narrative has always been enterprise first.

Because going enterprise first, it almost gives you that responsibility of building a product very, very well. And always focus on building something very unique, that builds you tangible, long standing differentiator like Observe got a three year head start. Sanas also has a three year head start because we built something so sophisticated, that the me too’s coming in will always take time to get to your level of sophistication.

Siddhartha Ahluwalia 34:33

So in both the cases, if you have to lay the crux of what are the elements that made these companies successful? Was it being enterprise first? Was it the product or was it the go to market motion?

Sharath Keshava Narayana 34:49

I think it’s a combination of all three, right? So I think in both companies, we always picked a use case where there is not too much competition, there is some little greenfield opportunity there. When we started Sanas and got into Contact Center, the last company which built a speech analytics in the call center space was CallMiner, which was two decades ago.

Again, in Sanas, there was nobody. So first you pick a market which is large enough and not very competitive. Then you take a bet that, hey, will large enterprises pay money for this product?

Siddhartha Ahluwalia 35:23

And how do you validate that?

Sharath Keshava Narayana 35:24

So you go and do a survey, right? So go and talk to a lot of people.

At Observe, LinkedIn was our best friend. But now with Sanas, there’s a lot more tools available to do that survey. And I always obviously know a lot more people.

At Observe, I think the first six months all Swapnil and I did were reaching out to these contact center leaders in India and Philippines, asking them for a time to chat, right? And again, when you’re a San Francisco startup reaching out to execs in India and Philippines, you generally get a meeting very quickly, right? So everybody said yes.

And I’m really thankful to all those people who gave us those 30-60 minutes, because that opened up our eyes completely, right? We got to know that all the products that we’re using are Verint or Nice or CallMiner, which is all two-decade-old products, great products, strong enterprise products, but built in the pre-AI, pre-machine learning era, right? So that’s when Swapnil and I were like, hey, if we build a sophisticated product here, we will have a significant market leg up.

Siddhartha Ahluwalia 36:23

And Observe had the first few customers in India and Philippines, not in the US.

Sharath Keshava Narayana 36:27

Yeah, again, they were based in the US, but their operations was in India and the Philippines, right? Same thing with Sanas, right? The execs, the decision maker could be based in the US, but the users are in India and Philippines, right?

So yeah, I think pick a market which does not have too much of competition. Pick a market where, pick a product line where enterprises are willing to spend, and then see, build a very strong team that can build a strong enterprise-grade product, because that is the only thing that will survive the test of time. If we had not had that three-year head start in Sanas and at Observe, we could have not built a company of this value.

Siddhartha Ahluwalia 37:07

But the other thing with enterprises is they take a lot of time to validate your idea. How do you not get lost in the internal processes?

Sharath Keshava Narayana 37:17

I think that’s where people try and portray, especially when I’m selling to enterprises, I look at so many other companies, they try to show them also as an enterprise, right? I’ve always believed in showing yourself as a startup, show that you’re vulnerable, ask for help. I think people don’t understand, it’s one of the most powerful ask you can do where you can go to a CEO of a Fortune 500 company and say, I’m young, I’m naive, I’m borderline stupid, I want to solve your problem, I know you have this problem, and I need your help.

When you ask them for help, you’re not selling a product, you’re not selling a solution, you’re just telling him that, hey, I see that you have a problem, and I think I can help you. I just need this shot. And I think people generally like underdogs.

I think everybody has opened up for us, both at Sanas, Sanas had a little more credibility personally as a founder as well. But when I had started Observe, Swapnil and I had no credibility, right? But everybody was willing to give us a shot.

I think that is very powerful. And you’ll have to do LinkedIn, you’ll have to hear no’s. For every yes, you’ll hear 100 no’s, right?

You’ll have to be thick skinned for that. As long as you can do that, there will be one or two people who will give you a shot. Right.

Siddhartha Ahluwalia 38:39

And what has been, if you have to describe the journey, what has been the same things between Observe and Sanas in the journey of the scale up, or winning the first few large customers and what’s been the things that have been different?

Sharath Keshava Narayana 38:52

I would say similarity is both at Observe and Sanas, we actually thought you sometimes underestimate the amount of time that you need to get your product right. When we got all this funding, even at Observe, we had raised a seed round before demo day. It took us 12 full months after raising that kind of money to get the product out to the market.

We always thought building product will be much more simpler. And same thing with Sanas, right? So we raised a 30 million round, before that another 5 million round.

It took us a good two years after that to actually launch the product into the market, right? So in both cases, you sometimes underestimate the time you take to get enterprise ready. And that’s where I see a lot of people lose patience, right?

So as long as you have that conviction, that you’re solving a problem for an enterprise, and you have a large enough market, you have to stick your guns to it, right? So that is something that was similar from a challenge standpoint. The second thing that has been similar is in both companies, it’s been founder led salesman.

And I don’t think we had a actual go to market rep for the first 5 million at either companies, right? As founders, we went and rolled up our sleeves and sold the first $5 million. And now, when I look back, any other approach would have not worked, right?

I’m getting the meeting because I’m a founder. If I had gone there and said I was the head of sales or CRO or VP sales, you would have never gotten that meeting. Because people always want to back a founder and nobody else.

That was very similar. The third thing is, I think in both companies, picking that market, which not everybody is going after, contact center is a space. I think by the time we started Observe Sanas, contact center was a lot more matured market.

When we started Observe, it was like complete virgin territory, right? Lot of greenfield opportunities, right? So that market became very similar.

And I think building this strong team in India, man, I think people underestimate how strong machine learning talent you actually get in India, obviously, being more and more expensive by the month and by the year. But still, I think the quality of talent in India and the speed at which we can build enterprise grade features has been massive. So I think these four, I would say, are fairly common themes that has kind of worked out.

And then in both companies, we went to enterprise first. I always had this fascination of having a 250k customer as your first true customer. That worked out in both cases.

So yeah, I think…

Siddhartha Ahluwalia 41:36

And what’s been the difference in the journey?

Sharath Keshava Narayana 41:38

Difference has been pure momentum, I think, because in Observe, we still had legacy players who were there, and you built a AI first product, you still had to go and compete against them. So the momentum, yes, we went from 0 to 2 and 2 to 6, 7 million in the first 24 months. In Sanas, we went from 0 to 22, 23 million in 18 months.

I think that’s been a strong difference because here we are not competing with anybody. It’s completely greenfield. So it took more time to build a Sanas product than an Observe product.

I think that market momentum has been pretty different between Observe and Sanas. And then Observe was very strong founder-led outbound sales motion. Sanas has been very strong inbound and channel-led sales solution, apart from the founder being involved in selling.

That’s been a little bit of a difference. The third thing has been, after building Observe, I always thought building Sanas would be a lot more easier. It always finds a way to surprise you.

Building true blue enterprise products is a lot harder than what most people think. And even though you’ve been successful when you go out as a founder of a new company, the journey is pretty similar. I had never expected that I’ll do cold outreach and explaining to people who I was after Observe.

But Sanas had to go through the same journey again.

Siddhartha Ahluwalia 43:14

So people can give you meetings based on your credibility as a second time founder, but they’ll not buy your product because of your credibility.

Sharath Keshava Narayana 43:21

So it went through the same 30, 60, 90 day sales cycles, even to get a pilot for free. We had to still prove that value for an enterprise customer. Those things never changed.

But I think I had expected building the product would be much simpler. Attracting talent would be much simpler when you’re doing it for the second time. It was not that easy.

It was equally hard. But I think what trumped everything was the overall go-to-market momentum that Sanas picked up made the journey a lot more easier.

Siddhartha Ahluwalia 43:56

So your conclusion can be that if you start in a greenfield space, your chances of building a much larger company are much higher.

Sharath Keshava Narayana 44:06

Yeah, that is my philosophy so far. And I think I’ve seen it with two companies. Though Observe was not truly a green field, but the opportunity scope was greenfield.

Because the last company that was any meaningful in this space was two decades ago. And with Sanas, even today, we don’t have competition as of now.

Siddhartha Ahluwalia 44:25

And specifically speaking for Sanas, it’s a pure greenfield, although they’re still competitors. So you have to show how your product is better than the one they’re using. In Sanas, they’re not using any product.

Then the other problem is how do you carve out budgets for this something which budgets never existed?

Sharath Keshava Narayana 44:41

Again, it started with your early adopters. What I’ve also seen with people is they don’t market their customers enough. I think that’s a very powerful tool, especially when you’re selling to enterprises.

I think with Sanas, if you’ve seen a lot of our marketing has been centered around customer marketing. Though many a times you can’t use their name, we’re just talking about use cases you’ve sold them for, helps you attract a lot of attention. The first one or two are always the hardest to get to.

It’s a chicken and egg. Hey, nobody knows you. Why will we take the first shot?

That’s where your founder card helps. Then after that, how can you showcase that value to everybody else will help you gain market share much faster. So that’s been my experience so far.

Siddhartha Ahluwalia 45:30

And what does it mean some of the challenges in scaling both these companies, right? I believe all was not rosy once you…

Sharath Keshava Narayana 45:36

No, man. I think hiring people is always the hardest, right?

Because see, as founders, you have enough equity, you have enough passion, you can come in and spend 80 hours a week and not complain about it. And even if you raise money, you’ll end up raising, we raised 5 million in Sanas, we raised 8 million in Observe. That is not enough to attract the kind of talent you want to get.

So bringing that initial core team together is always very challenging. And just not them coming together, them staying with you. I think the first few core people at Observe, they were there for almost the first two and a half, three years of our journey.

And that consistency helped us scale faster. And the same thing was at Sanas, I think the first four people who joined the company, it would be Ashish in Customer Success, Marty as our Chief Customer Officer, who was also actually one of my customers at Observe, Ananth who joined to run sales and marketing for us and Monal who came in as our Chief Product Officer. They’ve all been there for the last two and a half years and we’ve gone through a lot of ups and downs.

That consistency will help you. But getting them to get aligned is not very easy. So you have to spend a lot of time keeping them aligned.

And once those core people come in, then building that extended team today, especially when in Sanas, I think the challenge was much higher, because people have so many options. In 2018, when we were building Observe, you saying that your Nexus funded YC, attracting talent in India was a lot more easier. And obviously, Swapnil and Akash came from IIT Delhi, that alum network also helped.

At Sanas, when we were building teams in India, you’re not YC, yes, you have raised money from inside. But we are not from the IIT, Alum network, like motivating that first 25-30 people to join you is not very easy, because people have a lot more options today, there’s a lot of strong startups in India. So I think that is definitely a very, very big challenge.

The second big challenge is, how do you keep your costs under check, right? I think, especially when you raise 20-30 million, I think a lot of startups in the 2021-2022 timeframe ended raising a lot of money. How do you keep yourself disciplined after you’ve raised that money is also very important, right?

So we’ve still not spent that first 30 million even till date, right? Being very disciplined on how much you can spend, and what could be your path to being profitable is also very important, right? I think that whole discipline, it is not natural, right?

So that’s something that you’ll have to spend a lot more cycles on to think, right? And the third thing is building that kind of a war cry, right? Where people are working for, how do you almost build a company like a movement, right?

I learned some elements of this during the Observe days, right? We didn’t think about it too much, but when the pandemic hit, and for the first time you had to kind of completely work remotely, you’re not seeing how people are working day to day, right? The only way you can be sure about somebody working, whatever, 40, 50, 60 hours a week, whatever amount they have to work to deliver their task.

The only reason, only way you can be confident that they’re giving their best is if they align to something a lot more core than what is your mission statement as a company, right? At Sanas, I think that came very naturally, right? But putting that together to make sure 200 people today who work for Sanas, I’ll share a statement I wrote on Sanas, it is on our Sanas notice board very early on, that becomes very important.

At Sanas, if you go and ask everybody, the passion at which they’ll talk about the company, you almost feel like you’ve built a movement. It’s no longer an idea, it’s no longer a startup, it’s no longer an enterprise. It’s a movement where there are a lot of, like the first 50 people in the company were all immigrants, and they all felt the challenge of bias, right?

So building that at a startup becomes very challenging, right? I think, as founders, we have to spend a lot more time as to what gets somebody to get up in the morning and come with a lot of energy to work on your idea, when they don’t own 5, 10, 15% of the company, right? So those are some of those nuances that, as a founder, you have to think more in the early days, because you’ll have the time because once you find product market fit, you’re just running after momentum.

But in the early days, those are some of these core areas you have to focus on.

Siddhartha Ahluwalia 50:44

And what have been your lessons, because you have raised very successfully across both those companies, every round, not just one round.

Sharath Keshava Narayana 50:53

I think fundraising looks nice when you make that announcement. What people don’t realize is the prep that you’ll have to do fundraising. I always tell my founders, every day morning, you have to be ready to raise money, right?

Not that you have to think about raising money all the time. But you have to be prepared for raising capital at any point in time, right? So that means constantly being in touch with people, constantly updating people on how things are going.

Also constantly talking about challenges that you face with your investors, right? I’ve always have had a list of 8-10 investors that I’m in touch with, on always a very regular basis, right? That gives them a lot of confidence.

Because when you go and do a prepared fundraise, you’re always telling a nice story, right? People never see the inefficiencies, people never see your vulnerabilities. With me, I think both at Observe and Sanas, people have always been aware of our vulnerabilities.

Even with Sanas with 30 million raised, about 8-10 months into that journey, we were almost questioning, can we even solve this problem? I’ve had a meeting with Insight where we are like, hey, we’ll give it another 90 days. Otherwise, I think we should just return the capital and go and do something else because this has not been an easy problem to solve, right?

Luckily, we cracked it. But your investors should also see that vulnerable side of you, right? Because that’s when you’re true to yourself, right?

And that’s when, at least with all my investors, they’ve always told me that whenever we want to raise money, don’t think too much. You come to us, we will write the first check. And I’ve been very fortunate that way.

Because I’ve not only told investors good news all the time, I’ve told them all kinds of news, right? And I’ve always maintained that open form of communication. So that’s something I think founders should do.

You have to always be prepared. For me, it’s easier to tell the story as Sanas because I’ve now raised so much. But even at Observe, me and Swapnil, and Swapnil actually a lot more than me, was always prepared to go out to the market and raise money.

And I used to be amazed.

Siddhartha Ahluwalia 53:12

And what does it mean to be prepared?

Sharath Keshava Narayana 53:14

Right, I think having your books in order, right, running it in a very disciplined way, having a budget. Even though you’re not reporting these numbers to anybody, right, in the early days, you always keep everything very clean, right? You always have a target, you meet your target, and always keep those lines of communication open.

It’s not that you always spent too much time on this, dedicate X number of hours a week or a month. And you don’t have to do much, we would dedicate about six to eight hours a month to talk to investors. 15 minute call, 30 minute call, very casual, very impromptu.

Just pick up the phone, schedule a coffee, go for a walk, go for a hike, right? Meet them in as much non-formal settings as possible. Because like people in sales say bye from people, investors also invest in the same way.

If they know and trust you as an individual, everybody knows, especially investors, they look at so many startups every day, they know it’s never a straight line, right? The more human side of a founder they see, the more comfortable they’ll be when they have to write a big check. And I think across Observe and Sanas, every single round we’ve raised has been a preempted round.

We’ve never prepared a data room, prepared for a formal fundraising process. And I think this is true across almost four different rounds at Observe and three different rounds at Sanas. All seven times it’s always been preempted.

Siddhartha Ahluwalia 54:47

And let’s talk mostly about the first round, 5 million round at Sanas and 8 million round at Observe. What did it take to raise those two rounds?

Sharath Keshava Narayana 54:56

I think at Observe it was fortunate, right? I think because we had gotten into Y Combinator, generally once you get into Y Combinator, you start getting reach outs from people. And then generally month one, we were all busy with YC, so we didn’t talk to anybody.

When it was like 30 days before demo day, we started entertaining a few conversations. And we were not sure whether we’ll raise a round then. Our thought was we’ll go into demo day, raise whatever 1-2 million dollars in demo day, and then a formal seed round will happen.

But what we were very clear on, hey, this is a problem that large enterprises face today. They have massive volumes of voice data, and nobody is deriving any insights from that voice data. So this is a large problem to solve for.

We’ve gone and pitched to 50 enterprises so far. All of them have confirmed that this is a problem that they want to solve for. Today, they solve it in a very manual, archaic way.

But with all technology enhancements that’s coming in, they want to solve it in a more scalable manner. And the first one, we’ve signed up a six-figure contract. They want to be our product partner.

And here are 10 other people who have similar problems who want to be our product partners or pilot customers when the product is ready. So this was the narrative that we went and spoke to people about. We didn’t have a deck.

We didn’t prioritize who to speak to. We had about six to eight people who reached out to us. We just went and shared their story.

That’s when we realized that people want to come and now actually to have a very serious conversation. And that’s when we started preparing. And even when we prepared our first deck, it was all the basics that what Sequoia talks about.

Hey, have a very clear problem statement as to what you are wanting to solve. And I was telling this to Swapnil also. It’s less about product-market fit.

Let’s think about whether this is a market-product fit. I always have reverse engineered the way I think about problems and solutions. Everybody thinks about doing product-market fit.

But what people don’t realize in this whole product-market fit journey, you will only capture a small segment of your customers who want your product. But if you apply a market-product fit, then you’re almost justifying that there is a very large market for the problem you want to solve. And for that problem that the market wants you to solve for, you’re building a product.

I think it’s more surgical with a market-product fit approach than a product-market fit approach.

Siddhartha Ahluwalia 57:40

Can you describe the process more to a layman?

Sharath Keshava Narayana 57:43

So I think if you think about how we started Observe, we went and spoke to a lot of large enterprises about this problem that we think the market has.

Siddhartha Ahluwalia 57:52

And the problem was?

Sharath Keshava Narayana 57:53

The problem was there is a large amount of voice data, which is never mined because it was very expensive to mine voice data. We said that, hey, if we build a product or a platform that gives you a scalable way to mine a lot of voice data, will you be interested in solving for it? Everybody that we spoke to, and we went top-down, so we spoke to leaders who actually experienced this problem.

Everybody said, hey, my call center is my black box. I don’t know what happens in that call center. Everything is very reactive.

Somebody tweets about the problem and my CEO picks up is when we go and pay attention to the call center. That’s the product-market fit approach, where you now know that the market has this large problem that everybody wants to solve, but they don’t know how to solve it. Even when we started Observe, we didn’t know what those insights will be also.

We just knew that there is a black box in customer conversations in a call center. If we find a scalable way to mine all this data and derive insights, enterprises will be interested in knowing what they were. Then when the what came, that’s when the product came in.

First, we identified the market problem that everybody wants to know what’s going on in their call center. Now we know what insights will be helpful. That’s when we said, hey, isn’t the first message when you call a call center is that this call is being recorded for training quality and compliance?

Why don’t we build a workflow which can scale away in which quality monitoring happens? It can scale away compliance monitoring can happen. It can scale away that coaching can happen.

Then I think we have a strong product. First we established market, then we established product, then we fit the two together.

Siddhartha Ahluwalia 59:42

How did you do this in Sanas?

Sharath Keshava Narayana 59:44

In Sanas, exactly the same thing. When I first spoke to Max and Sean, their thing was, we have built an algorithm where it can do speech to speech synthesis in real time in a sub 200 millisecond latency. They had not heard about the word called call centers.

They didn’t even know what call centers were. They just said that, hey, today people are trying to solve for real time speech in a speech to text, text to speech format, we have built an algorithm that can do speech to speech in real time. And the way we can do this is by phonetic mapping of parallel pairs.

Once they identified that this is a problem we can solve for, I said, hey, who in the market will want to use the speech to speech in real time? And then we said, hey, enterprise communications, everybody’s talking over Zoom, there are people from India, people from Japan, people from Korea, people from the US who all talk with each other. If we can do speech to speech in real time and derive some insights, it might be helpful for that large audience.

Then we said, hey, to solve a problem for that large audience, you have too many dialects, too many types of speakers. Is there an isolated use case? And me coming from that call center, I’m always partial for this.

I’m like, hey, why don’t we solve this for call centers? It was a very crude analysis. In call centers, you have 20 million agents who are overseas who talk to people in the US and Europe, mostly US actually.

If we can find a way to do the speech to speech synthesize, speech to speech synthesis just to harmonize accent, because everybody in India or Philippines have a strong mother tongue influence. I came from the southern part of India. Before I moved to the US, anybody who speaks to me would tell that I’m from the south part of India, because I have very heavy mother tongue influence on this.

By talking to more and more people, I’ve been able to soften that. But what if technology can help me do that? Because it took me 10 years to soften my accent.

But if technology can do this in real time, this can be a great problem to solve for. And then we went to all these call centers and enterprises, this time finding them was easier because I came from that industry. Hey, if I can solve this for you, will you like it? Everybody said yes, this will be a game changer and everybody were talking about, that’s when I met Andy from Alorica and Andy said hey, the number one reason all the jobs moved from India to the Philippines two decades ago, everybody knew you had the largest talent footprint in India, but India had this strong mother tongue influence where irrespective of how many accent neutralization classes you spend from, you’re almost trying to change somebody’s identity, but if technology can do that, a lot of jobs can move back to India.

Today, Philippines has reached its saturation point, there’s not many more English speakers available in the country who can support this industry and this industry is still growing double digits even today. So, he said I will move all the jobs back to India. So, that’s when I knew the market had a strong need for this.

Then we figured out how this real-time speech-to-speech product can be used to actually change accents in real time. So, our need even for Sanas was to first establish a market problem, then find a product that fitted that market problem and then build it. So, it’s been a very unique approach, but in both approaches the reason why it worked is because we could find a large enough market where there was a problem that was unsolved.

Call it stroke of luck, but I’m pretty sure like I think you guys have invested in this logistics company, transportation company, even when Flexport became a multi-billion dollar company, again shipping is a large industry. All they tried doing was digitize shipping. Today you can digitize transportation, you can digitize so many construction technology that you guys have invested in.

So, there are so many large markets where technology can play that enabler role. Many a times founders are egoistic building a product and then they go around the market to see where this product fits versus think like a business owner. You think about a large industry that needs technology enablement, build a product for that industry because then that whole industry supports you.

Siddhartha Ahluwalia 1:04:07

This is the same reason like why as an investor we like at Neon backing founders who are building for large enterprises because large enterprises humbles you to the core.

Sharath Keshava Narayana 1:04:18

I think the level of sophistication that you need, it’s hard for us to think because a lot of founders you also see are also much younger. They’ve not worked in large enterprises, they don’t have 20 years of work experience and even my co-founders for Swapnil, at least he had worked for Twitter before he started Observe. But Max, like Sean didn’t even graduate.

Max just barely graduated and got into Sanas full-time. They never have the experience of what an enterprise truly wants. That’s where I think as founders you have to be very humble and very receptive.

That’s where building the other way of market product fit, you are more humble because now you know that you have such a big market and you have to build a sophisticated product to cater to that market. But if you go with a product market fit approach, you build a product and now you’re too emotionally attached to that product. As we were building Sanas for contact center, we knew this market was large enough to solve for other use cases.

If we had failed in the call center market, we would have gone and built Sanas for some other industry. It could be education, it could be telemedicine, it could be telehealth or it could be for Zoom or Teams. We could have always gone and pivoted our product because we were emotionally vested on solving a problem for the market and less about, hey, this is a product I have built, I have to make this successful.

Siddhartha Ahluwalia 1:05:46

One thing I would like to ask from you is, now you have been investor in Neon fund for over a year. What’s your view on Neon?

Sharath Keshava Narayana 1:06:01

I think there were two specific things that attracted me to Neon. One was obviously your focus on mostly immigrant and Indian founders. I also run a small fund, not as successful as Neon, but still very small.

That focus was that. So give more opportunities to people who deserve that opportunities. But what you guys have done with Neon is one step beyond.

You also have a strong distribution channel with this podcast. Every founder who gets invested with Neon also gets a reach of million plus people who will probably listen to the show, tune into the show. And that’s that distribution advantage that most founders need.

Because today, the pace at which technology is going, it’s very hard to have 12, 24, 36 month lead up in the market. Everybody has an idea. That whole execution of that idea will make the biggest difference.

And if execution becomes your biggest moat, then your distribution channel becomes the most important thing. Which is why I invested in Neon because you guys have a distribution channel like nobody else has. And that becomes very important for founders.

Because with chat GTP, every idea can get disrupted in 90 days. How can you very quickly identify a market need, build a product for that market need, and use your distribution channel to get out to that market as quickly as you can, will give you your right to win.

Siddhartha Ahluwalia 1:07:33

One area that you have built your expertise is building the bridge between Bay Area and Bangalore. What do you think are similarities and differences that make both these ecosystems exciting? And which one do you think is a better one?

Sharath Keshava Narayana 1:07:50

I would not pick one versus the other. I think naturally, almost every startup that is built out of India will want to address a global market. And I think the reason why people move a lot to the US is probably US gives you the best representative sample of how a global market would look like.

Which is why moving to US becomes easier and also building a startup, running a startup in the US, access to capital, all become so much more easier. So they’ve built an ecosystem, which even India is getting there. Where if you have an idea and if you have the tenacity as a founder, the whole ecosystem around you will try and support you to become successful.

I think that’s why people move to the US. Similarities between founders I see between the two geographies are generally, I think, in both markets, you find founders who are extremely humble. I’ve seen founders who are extremely tenacious.

And founders who are generally much, much younger, right? I think in both markets have seen majority of the founders who are sub 30 when they’ve started their first company. I think these are very similar between both the economies.

I would say Indians, Indian founders are a lot more obsessed about the sophistication of the product. While I’ve seen founders in the US have the fail fast approach, they’re like, hey, build a feature, see if this feature works, then build the next feature and then finally build the product. I think Indian founders coming from strong engineering backgrounds, they have a very high bar of how the product should look like before they actually ship the product out.

The shipping quality is very different between India and the US, but the pace at which they build is much, much faster in the US than what I would see in India. And US entrepreneurs are much better exposed on going to market. I think that is one thing that I see lacking the most in Indian founders.

We are very strong engineers. We can be very strong product people. We are not naturally very good in storytelling.

We don’t like to toot our own horn. We don’t naturally go on LinkedIn and talk about us, about our company, about our product. We are not naturally good at going to enterprises and be a little more shameless.

I think that comes very naturally for a founder who spent a lot more time in the US.

Siddhartha Ahluwalia 1:10:28

And why is that like many people…

Sharath Keshava Narayana 1:10:30

I think naturally that whole ecosystem is about how do you market yourself.

So I think in India, I think you are always in your comfort zone, in your cocoon, where you can still build a strong product and somebody else will go and take it to market. I think in the US, it’s a lot more ruthless that way. And also naturally, as you’re growing up in the US, you’re more exposed to social media, you’re more exposed.

Almost every kid I meet there, I almost feel that he’s the best sales guy you can ever see. Then I think the schooling system, all of that promotes you standing up in front of an audience and talking about who you are. It’s more natural there.

I think India’s economy is also moving in that direction. Our schooling system has gone through a change. But I was a terrible public speaker, till I started my first company.

I started reaching out to people’s sheer desperation. Otherwise, if you had left it to me, I would have never reached out to people.

Siddhartha Ahluwalia 1:11:41

But let’s say our common friends like founders at Unbxd, they call you the best sales leader they have met in their career.

Sharath Keshava Narayana 1:11:48

No, I think sales happened naturally for me. Again, I’m also this typical engineer who accidentally landed up in a sales role. But this was with a company called Akamai where the whole concept of selling was very different.

Their whole focus was, hey, make people trust in you, then they’ll buy from you. Having a strong engineering background and having a strong technical depth, I started feeling that people started trusting you more because you’re not a Rolex wearing shark. That was my introduction to selling.

And then after you start your own company, you naturally become a salesperson, right? And I think…

Siddhartha Ahluwalia 1:12:29

As you said, as you start your own company, you become desperate.

Sharath Keshava Narayana 1:12:34

So I think that’s when I started picking up. It was not natural. I think I would not speak the way I speak today, even a decade ago when I started Happy Feet.

And then I learned a little more at Unbxd and then I learned a lot more at Observe. I think by the time I came to Sanas, I could feel natural under the skin of being a salesperson. But otherwise, I was always the reluctant salesperson who’s doing it because nobody else is doing it.

And you are the only person in the company to do it. I think that’s how it happened. But I think that is one skill that I every founder has to develop.

And I strongly feel that if you might not have to go to that extreme of what I did, where till I hit the first $5 million, I did not hire a sales team, hire a sales team, but at least the first million, you should do it on your own. Trust me, the amount of learning you’ll have because nobody has the visibility of what your product can do that a founder will have. And even as when you go and talk to enterprises or even with mid-market or with SMB, the level of confidence and trust that you will get as a founder, your sales rep will never get it.

I genuinely feel it’s criminal to hire sales team and expect them to sell because all you’re doing is setting them up for failure. And that’s where you have so much of churn and poor sales people get a bad rep. Because as a founder, if you cannot sell it, how are you expecting somebody else to sell it for you?

So I’ve learned it the hard way. But I don’t know how it came naturally to me. But I think it comes naturally for founders because as founders, the passion at which we can talk about the product we’ve built can never come naturally to anybody else.

I think founders have a hidden sales guy in them, which they have to just work towards unleashing it. But it’s not natural, man. I think at Observe, Swapnil used to tell me like, why do you spend so much time in front of a mirror?

Because I would product my pitch every single day, right? You have to put in a lot of work. Today, at Sanas, I don’t have to do that because I’ve now done it for so long. But I think at Unbxd, at Observe, the amount of time I’ve spent on my own, just practicing how you pitch because see, I’m not from the US, I cannot talk weather, I cannot talk sports, I cannot play golf. I’m like least qualified to be an enterprise sales rep. But I have to do it because there is nobody else in the company who can do it.

So if you cannot do any of those things naturally, then you have to be so good in storytelling about your product, that you capture the other person’s attention for one to two hours. That’s where I spent a lot of time practicing this. And then after the point, it becomes your natural state.

Siddhartha Ahluwalia 1:15:35

I think as a founder, first you learn asking for help, that’s what right? Displaying your vulnerabilities.

Sharath Keshava Narayana 1:15:44

Well, I think all of that is just being yourself. But at the same time, when you start talking about the product, the other person should also feel yes, you’re asking for help. Yes, you’re showing that you’re vulnerable.

But at the same time, you must almost make sure that that person understands that you know his problem. And you probably have the best shot in solving his problem also. Because without that confidence, they won’t give you that shot.

Siddhartha Ahluwalia 1:16:08

And how do you teach that to founders that let’s say you invest in that, jump into the problem that this person has and make sure that this person knows that you are the best qualified person to solve this?

Sharath Keshava Narayana 1:16:22

I think it doesn’t come on day one, right? So that’s where you’ll have to start practicing the art of storytelling, right? And I keep telling that, hey, if you can’t tell your story, nobody else can tell that story for you, right?

And that’s where I asked founders to spend the most time on, right? And your story is not just your product, your story is you, right? People still buy from people, right?

So when you’re selling, I think the first two to three years of your company journey, people are buying you, then they buy your product, right? There is a natural curve, when people start buying your product, then they know that you are the founder. That’s when you have to expand your go to market team.

Till then, it’s all you, right? So you’ll have to have a very coherent story of trying to relate what you’re building to the problem that he or she has as an enterprise audience, that they almost feel that you’re building the product just for them. You have to make them feel special, right?

That’s when they’ll have that appreciation to what you’re building. And that’s why they want to take a shot, right? And that becomes very important.

And that requires a lot of prep, a lot of NOs, right? And I would, like even today, like in 2024, I’ve taken about 106 flights, right?

Siddhartha Ahluwalia 1:17:44

106 flights

Sharath Keshava Narayana 1:17:46

All across the US and also around the world.

People still ask me like, Hey, now you can have your sales team travel, and them go and sell. But I always felt as a founder, you have the best odds of success. And I generally now like meeting people and telling my story, right?

Because you have to be the biggest ambassador of your company and your product, right? The more people can hear the Sanas story and Sharath story within Sanas, the more likability that they’ll buy. So I’m providing the air cover for my sales team to go and sell next.

Because as a founder, I feel it’s my responsibility to make every person successful. When my salesperson fails, I take it very personally that it’s my failure than the other person’s failure.

Siddhartha Ahluwalia 1:18:39

And then it becomes, that’s why you mentioned you hired the first salesperson after reaching 5 million. And I assume that person would have job have been to upselling the existing contracts rather than going into new.

Sharath Keshava Narayana 1:18:51

Yeah, at least he has a pipeline and he knows who to go and sell to and how to sell. Because again, founders are also a lot more process-driven people, right? We would have written documentation, we would have written selling guides, buying guides, right?

We would have mapped the ICP very, very clearly, right? You would have done so much of prep that the first person who comes in can take that and amplify that. And that’s what Anand did for me, right

Yes, I helped getting the first few customers onto the table. But now Anand has helped me amplify that to a 5x journey and hopefully take us to $100 million in ARR. But without me doing what I did, why will Anand do what he did, right?

Because he’ll be like, hey, he’s not put a skin in the game. He’s not become uncomfortable. He’s not heard no’s.

And now if I don’t sell, the only thing he’ll do is come and replace me with somebody else. Now I have the bragging right to go and tell Anand that, hey, I sold the first 5 million, right? And now Anand is doing the same thing.

He took us from 5 to 20. And now he’s building a team. Now he has the bragging rights to go and say that I was the founding sales guy.

I’ve taken us from 5 to 20. Now you guys should take it from 20 to 100. That’s how you build the natural order of respect to each other by doing that.

Siddhartha Ahluwalia 1:20:13

And one observation that I have is like Indian founders, even if they’re selling in the US, they underprice themselves. How did you overcome that?

Sharath Keshava Narayana 1:20:22

I think there are two pieces to it. I think a lot of it is to do with the general natural confidence we have, right? We somehow feel that, okay, now we have overcome this awkwardness of being a sales guy as a founder.

Now when you are in front of an enterprise customer, your single goal will be somehow I want this customer to buy from me, right? Even the first pushback you get, you drop your price, right? And it’s natural.

And I’ve also done this multiple times as well, right? But that’s where your learning comes in, right? That’s where I always remind myself to stay true to what is this problem that is solving for this customer?

Is the ROI 1x, then you’re right to drop your price. If your ROI is 10x and higher, and why should you drop your price, right? And what does he have as an alternative, right?

Today, if somebody does not want to buy Sanas, okay, what else will you buy? That does not mean that you leverage this position to overprice, right? Or arm twist them.

That’s not how you do because I have one of the biggest interviewing criteria I have to hire salespeople is I have this factor called likability. That’s the first factor I look at. If the person is not likable, I won’t hire them.

They could be the best salespeople in the world, right? So that’s where I think coming back to this thing, you have to price it right. As long as you were 10x ROI, then you have all the rights to hold your ground.

The customer on the other side, it could be the enterprise buyer, or it could be somebody from procurement. It’s their job to ask for the best price because that’s the role they’re playing for their enterprise, right? But as long as you have the right justifications on your ROI, you stay at your price, people respect you.

There have been enough customers at Observe and Sanas who’ve said no to me. I’ve lost in an RFP because I was, I stuck to my price. Forget it was high or low, but there was somebody cheaper than me.

They went with them and they’ve come back to us three months, six months later, right? So that’s the typical approach. But again, there’s no silver bullet to this set.

I’ve also given up my price. I’ve dropped the price. I’ve regretted it.

Siddhartha Ahluwalia 1:22:40

Regretted after dropping the price?

Sharath Keshava Narayana 1:22:51

Yeah, yeah, because I knew that I could have gotten a lot more. I have two simple philosophy.

One is in SaaS, you ideally want to be at that 80% margin. So first thing as a founder, you should know what is your cost, right? Then you should know what is your ROI.

Then you come up with an equation of what the price should be, right? Once you have a price and a range to that price, you keep talking on value. But as long as you’ve done your homework right, you’ve established that likability factor, you’ve established that you’re solving a very core problem to that consumer and you’re best equipped to solve that problem than anybody else.

People come around, there’ll be a 10% difference here or there. But beyond the point, you don’t have to drop your price. But it’s important as a founder that you hold your ground.

And sometimes you will see your deal slipping away. But as long as you are justified in your position, customers always come back.

Siddhartha Ahluwalia 1:23:42

Sharath, in my interactions with you, right, and now I have met you so many times in your home, in your office, in Palo Alto, the biggest thing that stands out for you is, you are extremely genuine. You never try to portray yourself as somebody who you are not, right? It comes from a position of strength, confidence, right?

But being very comfortable in your own skin and knowing what your strengths are, what your weaknesses are, right? These things I have highly appreciated about you. Right? And more important than saying that, saying that Sharath is the best salesperson.

I said to others, Sharath is one of the most likable founders I know, as you said.

Sharath Keshava Narayana 1:24:25

Oh, thank you, man. No, that factor is coming with a lot of learnings. At the end of the day, I want to keep going back to my customers and make them my friends, right?

I think most of my early customers in Observe, most of my early customers became my early customers in Sanas. And most of the early customers in Sanas became the early investors of my fund, right? Most of them have been lifelong friends.

And I’m committed to this journey of being an entrepreneur and to support entrepreneurs. So when my lifelong mission is this, why do you want to alienate anybody? Because if I just sell for short term gratification, and that person then regrets the association that he has with me, that’s my biggest loss, right?

I never want to be in that position, right? Every person I’ve hired, every person I’ve fired, every customer I’ve onboarded, I try my best to be friends with them and see them to be, yes, I would like everybody to like me. But beyond the point, I don’t want anybody to call me an asshole behind my back, right?

I would rather have them call me an asshole in front of me. Because I genuinely don’t try to do something bad to anybody. Even people whom I’ve let go, I’ve tried my best to get them another opportunity because just because you were not good at Observe or at Sanas does not mean that you’re not good.

So that’s the genuine attempt I try making with everybody I meet. Because man, this is a wonderful journey. The more friends you have in this journey, the more fun it is.

And I want to do that.

Siddhartha Ahluwalia 1:26:08

No, thank you so much Sharath. Through this conversation, I really got to know you more.

Sharath Keshava Narayana 1:26:14

Thank you.

Siddhartha Ahluwalia 1:26:14

Thank you for that. And thank you for being a great friend, investor and partner to Neon.

Sharath Keshava Narayana 1:26:19

No, man, thank you. And what you guys are doing and giving an opportunity for a lot of founders like me, a much larger global forum to share our story is an awesome service. Both you and Nansi are doing right.

So I’m immensely grateful for you guys to have started the show, to have started the fund, to back a lot of non-sexy founders like me. I have not gone to IIT, I have not gone to an Ivy League. Wherever I am today has been sheer grit and sheer hard work.

And I think there are millions of people like me. I think the Neon Fund and the Neon Show has given a lot of opportunities to people like me to dream and to be hopeful. So I’m personally very grateful for this opportunity.

Siddhartha Ahluwalia 1:27:12

I think through this podcast, I don’t care about how many views that it reaches. The metric that I care about is, if your journey can inspire one entrepreneur to take the path.

Sharath Keshava Narayana 1:27:13

I’ll feel blessed if that happens.

Siddhartha Ahluwalia 1:27:25

Then we have done a great job.

Sharath Keshava Narayana 1:27:28

Thank you so much. And yeah, thanks for the opportunity.

Siddhartha Ahluwalia 1:27:21

Thanks Ya!