Siddhartha Ahluwalia 01:20

Hi, this is Siddhartha Ahluwalia. Welcome to the NEON show. I am your host and also co-founder of NEON fund, a B2B SaaS fund that is investing in the most enterprise SaaS companies coming out of India.

Today I have another founder of a B2B SaaS fund, one of the leaders from India, Manav, welcome to the podcast. You have been founder of Eka for 20 years, one of the first earliest vertical SaaS companies from India. And now you have started Together fund along with Girish and Shubham, one of the first funds just to focus on the B2B SaaS vertical.

Welcome to the NEON show. First of all, thank you so much for being on the NEON show.

Manav Garg 01:57

Thanks for having me Siddharth, looking forward to having a conversation with you.

Siddhartha Ahluwalia 02:00

Manav, before we dive into Together fund, Eka software journey, I want to go back to your roots, right? You grew up in Punjab, tell us growing up there, right? Tell us about your parents, what they did, right?

Manav Garg 02:11

So growing up, I am from a very small town in Punjab called Moga. Moga is known because it has a Nestle factory. The first Nestle factory was there.

It’s very close to Firozpur border, Pakistan border. So I grew up till my plus two, I did there. I couldn’t even speak in English.

I was pure, pure blood Punjabi boy, I can only speak in English. And it is a very small village, way back in 89, you know, when I passed 10 and 91 plus two, there was no internet also. So from there, that time the thinking was small town, you can’t go out to college, typically you will do typical what Punjabi boys do, they will have a small SMB, you know, small scale industry, you will start and you will have a good life.

So actually, I was the first one in the family saying, you know, my parents said, you should study, I was good in education. So they said, okay, fine, appear for entrance exam. And we went to our teacher in physics, he said, don’t try all these things.

Nobody’s ever made to any entrance exam, you will waste your time. Why don’t you go back to some business you do, you will do well. We all said, we actually stopped studying in our 12th, you won’t believe Sid, we didn’t study for six months.

We said, professor has said, nothing gonna happen. We appeared in next year entrance exam and all four of us have passed. So we were the first batch actually from our small town in Moga who passed out and then went to, I went to REC, another friend of mine went to Punjab Engineering College, another one to Kurukshetra Engineering College, one in Bathinda Engineering College at that time.

So we all went to regional engineering colleges. So I think that was a turning point for me, coming from a small town and regional engineering college. Fortunately, I know, which is called NIT now, right?

They have four students from every state. So 50 percent from Punjab and then four students from every state of India.

So I got a massive, massive

Siddhartha Ahluwalia 3:46

And this is NIT Jalandhar you are talking about?

Manav Garg 03:48

NIT Jalandhar Yeah.

Siddhartha Ahluwalia 03:49

I have been there.

Manav Garg 03:50

So there I got to know so many cultures of India and English become a more common mode of discussion. So that’s where actually my journey of even starting, first of all, speaking English, learning English. First time I read a Sidney Sheldon novel and then I read a lot of Archie comics and all those things.

So I listened to English music. So that was my journey of actually coming out of adding more cultural context to myself, understanding how different cultures think, how to speak English, how to establish myself in that community which is so multicultural in nature. So that was growing up in engineering college in Jalandhar and also heart of terrorism then.

We were, I was in REC from NIT from 91 to 95. It was also the peak of terrorism during that time. So we lived through that period to get to that.

I think one more thing which has really impacted me is also my grandparents used to take us to Haridwar every summer. So I read Bhagavad Gita and I am still a fan of Bhagavad Gita even till now. So read about 10 times when I was grade 7.

A lot of spiritual and soulful discussions with Gita scholars actually in Haridwar. So that was another aspect of me growing up. So I was living in this two different kind of worlds.

One is very literary oriented. I was very good in reading all the time. Another was very, very spiritual discussions with various, various people, sadhus or what you call some Gita scholars who did PhD in Bhagavad Gita also.

So that was my growing up years.

Siddhartha Ahluwalia 05:15

Then does your also family belong to entrepreneurship like small and medium businesses?

Manav Garg 05:22

Yeah, all my cousins are, nobody works. My father used to work for Nestle and he tried starting business four times. So he failed all the four times because he is an excellent engineer.

He was a plant head, he was heading the plant in one of the plants which makes milk, Nestle milk. He was heading that plant in Moga and before that I was in Nangal in fertilizer, NFL, National Fertilizer Limited in Nangal. He started four, five times but he just could not succeed.

So every time he will start, go back to work, earn some money, start, go back to work. So growing up I have seen entrepreneurship, but at a very small scale. It is like you earn few crores rupees and you earn maybe 20-30 lakhs profit a year.

So you have a good life in a small town.

Siddhartha Ahluwalia 06:02

Yeah, and I think in Punjab small and medium businesses are respected, right?

Manav Garg 06:08

Because Yeah, this is why nobody wants to migrate out of college. When I was getting admission into NIT in Jalandhar, I was also getting admission in NIT in Trichy, which is the best, which is the best.

Siddhartha Ahluwalia 06:16

Yeah, which is the best.

Manav Garg 06:18

My grandmom said, you know, the son cannot go out of Punjab. He has to go to Punjab only. Yeah, so that’s how the cultural issue was.

So Punjab, therefore Punjabis don’t go out. Either they go to Canada or they don’t go out. So only two ways, right?

So because the life is very good. You earn good money, quality of life is very good, quality of produce is very good, clean air, it’s very developed. So therefore people don’t tend to go out.

Siddhartha Ahluwalia 06:42

And you still have family back there in Moga today?

Manav Garg 06:44

Yeah, all my cousins are still back there.

Siddhartha Ahluwalia 06:46

And you go there every year, I assume?

Manav Garg 06:48

Yeah, go there almost every year. My family, my brother moved here. He’s working for Goldman.

My parents also moved here since, what, 10 years now. Okay. Yeah, my immediate family is here, but all extended family is in Punjab.

Siddhartha Ahluwalia 06:57

And tell us about, right, what happened after 1995 till you started Eka? What went in the years between?

Manav Garg 07:04

So in 95, you know, when I graduated, I want to do something again. So I actually Chandigarh, my family had moved to Chandigarh from Moga because of terrorism. So Chandigarh is a hub for all the hardware, the Jaguar, for example, brand comes from that, which we use in our homes.

So I said, I’ll put a plant, which will manufacture all this hardware fittings. And the plan was to get 70 lakhs investment. Okay.

Back then, I’m talking 1995. So I was very audacious to put a 70 lakhs manufacturing plant without having any experience in building the business. So my parents said, of course, we cannot afford it.

So I could not get the funding. So then the next best thing was to write an MBA exam. So last moment I went, I went through JBIMS and IIFT.

There also the family got together saying, who will send the son to Bombay? IIFT, which is Institute of Foreign Trade is in Delhi. So you please go to Delhi.

So that’s how, so 96, I went to IIFT in Delhi. I think also very transformative years because that’s where first time I met people pan India. Engineering college was pan India from a cultural context here, people from IITs, IIFT was top 10 institute back then, still is.

And I met a lot of people from St. Stephen, different humanities, obviously engineering. So there I established some perspective on how Indian, you know, the best in class talent looks like. And that time, you know, India was going through the entire branding story.

The band penetration was really low. So I got really fascinated by branding for India that time, especially in FMCG sector. So my dream job was at Unilever, everybody was way back.

So at IIFT in day zero, there are three companies used to be day zero. One is Olam International, which is a very large trading company, the GP group, which back then was bigger than Olam, all foreign postings and then Unilever. So 98, when the day zero came, you know, I got bubbled up to the top and I had three interviews in parallel.

And the campus has a rule, one person, one job. So once somebody offers a job, you’re out of the placement. So my interview for GP group came first, other two were lined after that, after Unilever and after that perhaps Olam.

So I went into the interview and I told them, please don’t select me. I don’t want to go out of India. I am a die-hard Indian national.

I want to work for branding my country and I think it’s a big opportunity. He said fine, Manav. You have come, you please come have a discussion, 15 minutes.

And one of the rules for international trading was that you have to be, first of all, non-vegetarian. You should be open to drinking to some extent level and you should be open to a lot of travel because the global trading. I said, I am none of them.

I am from a Baniya family, purely vegetarian, have not drunk in college also. So I don’t drink. I don’t want to travel.

So not a fit. Then they asked me, why do you want to brand? I told them the entire story that, brand penetration is only 1%.

There are so many sectors from kids brands to so much consumer goods where things have not really gone as per India should be at that point in time. So after about 15 minutes, I said, okay, we’ll select you. I said, why are you selecting me?

Because you’re the only person, first of all, saying the truth. Everyone who came before you.

Siddhartha Ahluwalia 10:11

Trying to impress them.

Manav Garg 10:12

Saying that I can drink, I can do, I can impress global clients. You’re first of all, very authentic and very honest about who you are. Number two, you’re thinking laterally.

And in trading, we need lateral thinkers because the entire world moves in one direction. So you need a lot of lateral thinking.

Siddhartha Ahluwalia 10:27

And what does lateral thinking mean just for our audience?

Manav Garg 10:29

See lateral thinking means, for example, like we’re trading in stock market, right? If a retail investor, when the market is about to touch peak, all of us start entering to retail market, right? While you know that, you know, that’s not the time to enter and likelihood you won’t make money.

So lateral thinking means you’re able to see the trends, which others are not able to see.

Siddhartha Ahluwalia 10:47

And because you mentioned to them that there is only 1% brand penetration in India, that’s why you were ahead of the curve.

Manav Garg 10:53

No, brand penetration is the data which is available to us, right? The lateral thinking comes in, how will you actually brand? Why will somebody in tier 3-4 town will buy branded products?

See, when I grew up, right? And you’re also familiar, right Sid? So you all go to local shops.

There were no branded retail shops back then, right? So why would you switch from a normal, your next-door shop or best shop in the town, the person who knows you to a retail shop? Yeah.

So that is the key context what they asked me. So my, which is true even now, which e-commerce we’ve seen, I’ve told them the local shop is winning because of two things, relationship, your merchandise and the cost.

The retail comes in, the relationship goes away. There are foreign brands or big brands who want to come. There is no relationship one-to-one level.

So therefore, if somebody has to break that, the brand has to break that promise that I am local for you, I am relationship driven and I’m going to give you the best quality at the best price. So that’s what they like that in the entire trend of retail, I was able to pick that trend. So that was lateral thinking means that even seemingly so the big brands win, but why India has this, even today it has that, right?

In tier 3-4 towns, the small, you know, shop.

Siddhartha Ahluwalia 12:04

The relationship with the small shop owner.

Manav Garg 12:07

Or shop owner works. Because returns are easy. He will call you, sir, ma’am, you want this, he has come. He’ll do free 10-minute delivery at home.

Yeah, 10-minute delivery at home and he will talk to you nicely, right? He will offer you, if you go to even the small lanes of Delhi or to Punjab or even small towns in UP, they will offer you, sir, you take coke, eat samosa, sit. In big retail shops, no one will ask you.

Siddhartha Ahluwalia 12:26

And for big retail shops, tier 4 towns are not attractive because they don’t drive volume.

Manav Garg 12:31

Yeah, they don’t drive volume. So e-commerce has changed that. So video shopping, if you look at is a big trend right now.

The social commerce, what we call. So that really started picking up in India because of that trend. And there are many companies who are trying fast fashion now, right?

So I think that will penetrate into the tier 3-4 towns.

Siddhartha Ahluwalia 12:45

But since they selected you, right, and you were refusing, what made you convince that, hey, should I go ahead with this group?

Manav Garg 12:51

There was no option, right? So I had also won the All India Summer Project Contest in 1997. So I had an open offer from HCL back then.

So our option was to go to HCL, which I had known nothing about technology back then. And the other option was to go abroad. All my friends said, this is the best opportunity.

You’re earning $10,000 a month. Where are you going to earn? In 98 you were earning?

Yeah, yeah. That was the package. Yeah.

And the global job. So the exposure is crazy. On the other hand, my parents were crying and my family was crying because I was able to come to Delhi after a lot of fight as I told you, right?

So I was in this dichotomy. Then my father said, you know, why don’t you try? Go, come back after three months if you don’t like.

Siddhartha Ahluwalia 13:29

And where was your first posting?

Manav Garg 13:31

It was in Thailand and Singapore. It was in Asia, yeah.

And you were managing the trading desk for Asia? Not trading desk. I was a junior most trader to start off.

And when I joined in 98, I was lucky to, you know, after three months of rotating around various rice trading, coal trading, green coffee trading, I found my boss Jens Nelson, his name. He was trading in coffee.

And he was ex head of Goldman in Asia. So with him, I actually built an entire desk from 50 million to billion dollar book in about two years time. So that’s where I got a lot of exposure. I used to go to travel 29 days a month.

I used to start making calls at 7 a.m. till 2 a.m. in the morning all across the globe selling coffee from Vietnam. So I actually spent a lot of time in popularizing Vietnam origin coffee. So the green coffee that we’re drinking right now.

So that coming from various, various origin, very, very interesting trade. I opened up large accounts like Lavazza, Nestle, Marubeni, Mitsubishi, P&G, Kraft General Foods. So I had huge exposure on how to really position the Asian coffees to the global audience at that point in time.

And then the night I used to trade in New York, board of trade in London, futures exchange. So therefore, the exposure was tremendous. And during that time only I got the idea of, you know, in year 2000, my engineering college friends came for honeymoon to live with me. To live in my apartment.

In Bangkok. I was in Bangkok that time. I was in Bangkok for 18 months. So they came to Bangkok saying, we are coming there. We don’t have money. Can we live with you? I said, fine, I will move to another apartment and I lived there.

So they came to me and they had started a company called neverdistant.com, flower delivery, 2000 was dot com boom. So that’s my first, I would say, interaction with what technology could mean. So when they left, I thought, why am I doing everything manually?

Because at that time, first of all, it was cold calling. So I had to first procure all the directories of all the coffee companies in the world, all coffee buyers or coffee sellers. So I used to sit and call them blindly.

So I said, why am I doing it? Let me create a small database in access first. So I actually learned access. Created a database in that, structured some. Then I said, okay, let me also write the notes. Because first time people don’t pick up your phone. And then first time they don’t give you business.

So I started writing notes against every customer as to what am I talking, how am I talking. So that’s how the idea of system starts coming into our minds. Okay.

At our company also, we are using very, very manually oriented system where I’m doing a trade and giving a chit to a back office girl. And then she makes a lot of mistakes. So when the market is open in the evening, I’m really calling her.

Why do you make this mistake? What is the actual number? Because I have to hedge my position. I have to trade in futures and options. That’s what the idea of actually the building the entire integrated trading back office actually came to mind.

Siddhartha Ahluwalia 16:12

And this was the year 2000, right?

Manav Garg 16:14

2000 when the idea came, the first germination of an idea. Something like that can happen.

Siddhartha Ahluwalia 16:18

And how long before you quit your job then?

Manav Garg 16:21

So, you know, I don’t know how to think about it very frankly. Because coming from middle class family, earning such a good salary, I was the most decorated in my batch also. Three of us went to GP group at that time.

So there was no reason for me to quit the job. Yeah. So one fine day, I don’t know what came to my mind. I still don’t have answer. I just left my job. This is which month, which year? It was in April of 2001. So I left my, just left my job. Yeah.

And my boss had told me, you will make millions, you’re good in trading, you build a relationship. Relationship is also build a desk to build a dollar in trading book. So now it’s all, you know, scale.

So I just left my job. I went to my boss saying, I’m leaving my job. I want to do, create some system. He said, why are you leaving? I said, no, I want to leave. And in hindsight, I think good thing is I didn’t discuss with anybody.

Not friends, not my family. I said, I want to build something. That was my first, you know, I would say first step into the world of entrepreneurship.

Siddhartha Ahluwalia 17:16

And what were the first two, three years like from 2001?

Manav Garg 17:18

So first was, you know, funding. Yeah. I had, the way I thought about is, okay, I have one year of salary saved with me. I can always go back to India and do some job. I am from IIFT, HCL had given me offer. So I can do some job.

So we’ll figure it out. So first 12 months was to figure out what to do actually, because systems I don’t know, funding, I had no idea. India had no angel VC ecosystem back then.

So somebody introduced me from a trading connection. It will be to head of JP Morgan in Asia. So they actually spent three months with me. And they were like, we love your profile, but we can’t invest in you. You’re not from IIT, not from IIM. You have never run a business.

You never… know about technology. And even if you start a trading company, we can consider you. But you’re now coming, you will run a technology business, that too globally, that too building products without having any experience.

And today also, you know, in our ICs, we’ll pass such talent. It’s very difficult to invest. So they’re saying, you know, it is very, very hard for us to, to therefore invest behind any data point. So they passed. I had no option now. Six months had passed.

Siddhartha Ahluwalia 18:22

Six months of runway left.

Manav Garg 18:23

Yeah. So runway left. Then my, suddenly, you know, I know what brain wave I said, let me go to the chairman of the group I used to work for. So his name is Kirit Shah.

And he know you by first name? He knew that I am, I’m a junior most. And he is a chairman of a $4 billion company. So he knew me that I exist, but he didn’t know me as such. But I know that I’m doing good work at a junior level.

So he knows my first name from that perspective. So I barged into his office. I just went back to the office and I, without any appointment, I said, I want to meet him.

His name is Kirit Shah. He said, fine, meet me, come in. So he called me in, had a half an hour to one hour discussion. He said, fine, I’ll be back you.

Siddhartha Ahluwalia 19:02

And that was a $1 million funding?

Manav Garg 19:04

Yeah. So that’s what I asked him, how much? He said $1 million. I had no clue. Very frankly, I had no clue how much I required. I just said $1 million.

Siddhartha Ahluwalia 19:11

And that time, how much did you dilute it for that $1 million?

Manav Garg 19:13

So that time it was about 60%. Because I had, so we discussed simple that we let’s do 60-40 split. There was no, see, there was no concept of dilution. There’s no concept of even shareholders agreement. So post that, I called my cousin who used to be Supreme Court lawyer.

His name is Nitesh. She was very, very, you know, kind to help me in building the first shareholders agreement. It was all first thing for me. See, I was 27, 28 years old. What more can you expect?

$1 million. You don’t think about equity. You don’t think about anything at that point in time.

Siddhartha Ahluwalia 19:41

And that was the starting of Eka or Eka started further down the line?

Manav Garg 19:45

Further down the line. So then now I secured the capital, but the capital has not come to the bank. I said, I will draw down whenever I need.

Because I thought, what will I do with $1 million in the bank? Then the question comes now, how to build a software? Because I have no clue about software.

Then I called my friends from REC who had come to live with me saying, I want to build a software. They said okay. This is one consultant, a batch mate from REC is there. Call him. I called him. He said, fine.

You come to India and do a tour of India. I went to actually Bombay, Bangalore, Delhi. And I met all the services company saying, this is what I want to build. Quote me some price.

I went from… we put it down to everybody. He could get me to all the companies. So people quoted from $300,000 up to $1.5 million to build such a software. I said, this is crazy, man. Then I was able to negotiate with a company called E-Capital Solution, which is Trigyn Technologies listed on Bombay Stock Exchange.

Saying you take some money in equity, I’ll pay you $100,000 in cash. Because I’m like a trader. I’m trying to trade and preserve cash.

Because cash is the only language I understand. There’s no valuation game I understand at that point in time. They said me, okay, then what is the valuation of the company?

I said, 10 million. They said, fine. So my first contract I signed was 350k services outsourced to Trigyn Technologies in Bangalore.

350k contract, 100k in cash, 250k in equity. And they took 2.5% equity for that. That’s how the first test with Bangalore started.

Then I came down to move to Bangalore. And then I started traveling. Now the question is who will design the software?

Because here only services. They said, sir, please give us design. Give us functional specs.

I had no clue about what functional specs are. So then I devised a scheme. Okay, I started drawing the user screen because I was a user myself.

I used to travel around the world 25 days a month. Sit with the people I know and design the screen. So how will something like this will look like?

That’s how the user interface was born back then. And from there, the journey started in 2004 is when officially, actually the Eka was born in Bangalore in August, 4th of August. That’s when we incorporated the company in India.

Then by that time, I started getting customers. First version came out. So we got first five customers pretty quickly in the first year itself. So I actually never used the million dollars that was given to me.

Siddhartha Ahluwalia 21:54
So how much did you take it out of?

Manav Garg 21:55

300,000 dollars. And then I was profitable all the time from there on.

Siddhartha Ahluwalia 22:00

And then when did the next funding happen for you?

Manav Garg 22:04

2009-10. So we were cruising out pretty well. We crossed about 3-4 million dollars in what first 5-6 years. It was big back then. Big, still big. Yeah, still big, yeah, still big. And sell to enterprises, you know, I didn’t realize that time.

But now when I invest, right? And we look at other SaaS companies and it’s all purely enterprise sales. The minimum contract was 70,000 so that you know.

And the pricing was very interesting that time. We said we’ll help you save one person back office in Europe. So 70,000 euros is the cost of one person in the EU.

Siddhartha Ahluwalia 22:36

You must not have realized back then, right? That you were one of the first enterprise SaaS companies.

Manav Garg 22:40

Yeah, SaaS was not even a word that time, right? Simple enterprise software company. So I’m starting the company from no background in business or in software.

So all just happening organically. So then we thought in 2007 that we should get somebody, some VC who has built a software company. And Naren Gupta, who was the founder of Nexus.

He met me in the Valley along with Sandeep also. So they met me in the Valley and they said, okay, fine. Whenever you start, you know, when you reach a stage, please call us.

So 2009 is actually when Nexus discussion started. 2010, I think they invested. So that was the first initial round for us.

With that, then we started building the international team. That was the next stage. So by that time, we were three and a half, four million dollars. And 30% EBITDA.

Siddhartha Ahluwalia 23:22

And they were okay with the kind of dilution that you had done previously, like 60%.?

Manav Garg 23:25

Yeah, they were okay. See, because at that time, you know, and in hindsight, of course, I have a lot of learning, which I will share later in the episode. I know, we’ll discuss about that.

So that time the only, there was passion, right? There was that passion that I want to build a product company from India. Because in between during the tough years, I also got offer from Citibank to build the entire currency trading services desk from India.

Okay. I said, no, we won’t do services. So I had a lot of setbacks also, because a lot of large companies said, you know, we can’t give you a million dollar contract.

You’re not positioned for that. So we had a lot of setbacks selling to massive, massive, large, I would say, Fortune 50 companies, not Fortune 500. So I went through all the tough times.

There used to be times in Hamburg, for example, a customer will call me, he’ll make me waiting for 24 hours in the office. Whole night you’re sitting there trying to figure out when this guy will show up. So I went through a lot of hardships in building the so-called India brand.

In hindsight, it’s easy to say that. That why would somebody trust you? Somebody trusts a 27-year-old building software for the first time coming from India. So it was a very hard value proposition to sell back then.

Siddhartha Ahluwalia 24:28

And over the years, share a journey, right? How did you build Eka from a $3-4 mil ARR to a $10 mil to a 20 mil ARR?

Manav Garg 24:36

So the biggest learning is, you know, that people buy from people and people work for people. So I had to work on two aspects of building the company. Even going from zero to three, the team building was really hard.

Because nobody would join a product company. There were no examples. So why would somebody join?

You would rather join a services company and make more money. And your career will actually have a steady path. So I think it is that passion to build something out of India.

That mission actually resonated with some people. Some of my batchmates from IIFT actually joined. There used to be my batchmate called Shobhit Mathur.

So he joined with me. Then Varun joined with me. So my initial actually college friend joined early on.

And then Vinayak, he was actually the first employee that I hired. He used to work for Trigyn. He was actually the first person who said, Manav, okay, I will leave Trigyn for you.

You negotiate with Trigyn and I will take the team, build with you here in Bangalore. So he was an instrumental person in actually giving us the confidence that we can build products from India. And there were challenges.

The quality was not up to the mark. Team had no experience, right? So developers won’t develop for the long term.

They will write something in the code, then quality will break. So we went through all this very, very early challenges during that time. So one was that people work for people or work with people.

So people have to choose to work with you. So that is one big learning on the team building side. And then you have to be true to the cause, true to them.

And second is people buy from people. The reason I was able to sell to people is because people believe that I understand the problem. Second, people believe that I will deliver on the promise that I’m giving to you.

I’m not going to disappear. So that two things actually added to it. And that whole authentic understanding of the domain, our very clear understanding of what our strengths and weaknesses are, actually helped us build early traction in Eka.

And profitability came because, you know, I only dealt in, I understood only cash. Even till today, I understand cash more than the valuations. So, you know, how to deal with the cash, cash flows really helped.

So therefore, it gives us huge amount of longevity in the company. So that was early years of building. The main challenging part was, how do you now grow from, we have sold to first 10 customers at 70,000 each.

Now the deal is happening in million dollar license. This is all license-based business back there. So how do you get there?

So in 2007, a very large listed company called Noble, it’s a almost 50 billion market cap back then. They actually called us saying, you’re a young guy, we’re looking for something, you know, which can give me a training technology. So willing to bet on you. And they sent an RFP.

And you won’t believe Sid, we didn’t know how to write English in that RFP. RFP typically requires a lot of explanation is required. And even till today also, I don’t know how many Indian companies are actually spending time on writing it properly.

But back then we had no knowledge. So I get a lot of flack, you know, then the person said, don’t even talk to me ever. So I went, actually called him.

I said, I’m coming to Singapore. I’ll sit with you. I landed up.

I said, let’s have a coffee. He came down. So I went through a lot of tough hardships.

And team here was literally, you know, shaking. International buyer calling you on the phone and giving you all the names that you can think of. People are not just used to taking that kind of aggression from global buyers.

So, but I had to go over that, you know, tell my mind, okay, now something will come out of it. So land in Singapore in the morning, shower, go to his office, call him for a coffee and he kept coming down. So all those are some fortunate steps, something by luck, something by design and hard work.

So it all came together. And then he agreed to give us the first million dollar contract. So that was the first million dollar contract.

And then we delivered on the promise. We used to sleep in the office. We had, because suddenly this 70,000 license was for about 25 users. That was a 400 user deal. Software could not scale to 400 users.

Siddhartha Ahluwalia 28:18

And back then cloud was not in the shape that it is today.

Manav Garg 28:22

Yeah, cloud was not there. Even enterprise also was very tough. Security management.

So team really did well. So Vinayak and team did a fabulous job actually in building that. And then another person actually came on board.

There used to be a gentleman called Karthik. He used to be the CEO of Sterling Commerce, which IBM acquired. He somehow magically appeared through reference when we got his big contract.

He said, Manav, I am here. I am confident in you and your team. We will deliver.

So he joined as chief operating officer. He then with Vinayak and Shobhit actually start building that core of the team to actually deliver that kind of scale. So that’s how the operations scale was started coming.

Then the next challenge was how do you build the sales scale? Because I was the only person who was selling back then. So initially first few missteps happened in sales also.

So first we hired actually the head buyer of the company who was the first customer. He started liking the software a lot. He said, Can I join you guys?

His name was Paul Lorenzen. I said join. I thought, Okay, he is a domain knowledge.

Maybe he will be able to sell. But that didn’t come out to be true. For sales, you need a sales skill.

So we were in a fix in 2009, just before Nexus funding or about Nexus funding came in. So I thought how to build a global sales team now. So only thing I could think of is cold call all the head of sales of competition.

So we deal in a market which is automating all the commodity companies like Nestle, Kraft General Food, Unilever Food, Rio Tinto, Vale. And they were about, I would say, 10 large companies back then. Large means above 100 million dollars.

So I called top five and you start dialing the head of sales. So one person named Rick Nelson, he picked up the phone saying, Okay, fine. I will talk to you.

And then he said, Leave it. It is not a good experience to work with Indian companies. So I had to then similarly, coffee, had a coffee with him in London.

Called him London overnight. He came to London and then become a good partnership. Then he stayed in for 10 years to build the entire sales team.

Siddhartha Ahluwalia 30:21

He was heading the London office?

Manav Garg 30:23

No, New York. He was based in New York. He was traveling to London. This is a challenge. What happens is that nobody will believe you.

Siddhartha Ahluwalia 30:32

I think there was zero trust back then.

Manav Garg 30:34

Zero trust. So trust is not there.

And trust comes from the data-backed companies who have come before. So in absence of that, so the first is you build relationships and build trust. So therefore, second learning is that first was people work with people and people buy from people.

And second is that you have to build trust and relationship with the people around. Whether it’s customer, whether it is your own employees, whether it’s your own partners. So that’s the journey you have decided to getting on.

And that’s how Nexus came on board. And then in 2013-14, we touched about $34 million in revenue.

Siddhartha Ahluwalia 31:04

$34?

Manav Garg 31:05

Yeah. And $9 million in EBITA also.

We acquired two companies, one in Canada, one in Australia. And said at that the point in time. So let’s get private equity capital. So Silverlake came into play. So that’s how Silverlake investment happened. $40 million we raised. Probably the largest raise back then. So, that was a journey.

Siddhartha Ahluwalia 31:21

I think back then Freshworks were raising their what, one or two million dollar cheque from Accel.

Manav Garg 31:26

Correct, correct. They were just starting, 2010 is when we started, correct. That’s the cloud wave starting, right.

So, I am still running in a license till 2014-15. And then the oil crash happened. And the entire oil crashed led to then, you know, suddenly our biggest customer, you know, started going to losses, they closed shop, our revenue started coming down.

So, 2015 to 2017-18 was very, very hard for us. Because commodity markets didn’t support us, the end market didn’t support us at all. And that’s the point in time, it took a hard call to pivot the company to cloud.

Okay. So, that was a hard, you know, there’s a lot of learning on how to manage the board. But one thing I was very clear that I want to take all my partners along with me.

Relationship does matter. Yes, it is a hard conversation for me, for them. They also invested from the perspective that we will do M&A.

And now I’m saying, I will build, you know, cloud software from India. And back then the problem was again, the trust issue comes, because nobody in the team has ever built a cloud software. We are licensed software, we’ve done pretty good job at that.

But cloud is a totally different ballgame. So, we had to go on through entire building the trust. So, it took almost three years to pivot the company to cloud.

Siddhartha Ahluwalia 32:32

And so, when were you a full cloud ready company?

Manav Garg 32:36

2019.

Siddhartha Ahluwalia 33:37

Got it.

And I believe, at least because whenever a license-based company shifts to a completely cloud-based model, at least I have seen half of the revenue churn.

Manav Garg 32:46

2.5 times is the number. Yeah. So, 2.5, not only churn, because let’s say if I’m selling goods for you for 1 million dollars, then typical subscription will be say 50k. So, not only the churn happens, your revenue top-line starts coming down and profitability goes away. So, it’s a very, very tough pivot. And we did pivot on the technology and we did pivot on the business model and then also kept the company profitable.

Only for 2-3 years in between, we were not profitable. Otherwise, we brought the company back again to profitable. I think what has really stuck along, this is my team stayed with me for 10 plus years.

And lot of credit goes to our HR person, Shuchi. So, she, I think, joined for 13 years back. So, she actually helped me build the culture, which is one culture across the globe, which could bring the core team together and also keep the extended team intact in Eka.

Our average tenure is 7 years through all ups and downs, market going up and down, cloud wave came, India went through ups and downs. Our average tenure has not been impacted.

And that people, taking people along with you, the culture of people want to stay in the company, that had really, really made us come out of the crisis and then come out to this exit that now we have got for ourselves. So, I think a lot of credit goes to her and how she helped work with me as a true business partner. I often tell people, you know, HR is an underrated skill because we don’t think about people as much.

But I think people is everything if you think in the end. So, I think how to build global teams, how to build org structures. I think that’s also one of the key aspects of my learning in building Eka so far.

Siddhartha Ahluwalia 34:19

And it has been like brutally tough because there was no playbook back then. Right now, today we have playbooks.

Manav Garg 34:24

Yeah. So, I tell everybody that when you were building in India back then, and Girish also went through the same thing, right? You are actually building the infrastructure.

You are not only building the company. Infrastructure, I mean, you have to first hire people, then train people, then they will not know the function. You have to almost convince the investors.

Investors also very early in their journey. So, and then customers, market is equally tough. So, you get two levels of infra.

One is the core infra. It’s like you are not only running the train, right? You are putting the, you know, rail tracks as well.

So, that’s what we did. That’s how I actually met Girish in 2015 when we were building this, you know, Avinash who runs SaaS Bhoomi now. So, Avinash along with Sharad Sharma started something called iSpirit, and then Product Nation was the theme.

So, 2015, I met Girish for the first time. We always said, okay, let’s bring, you know, 30-40 software companies from India together and start writing the playbooks. So, that’s how actually SaaS Bhoomi was born along with Avinash, Girish, you know, from Chargebee, Suresh from Kissflow.

So, they all, we all came together saying, okay, let’s start building the playbook of how to really build the software company from India. And one, I think, good thing we decided that we will be very honest. We will simply share what has not worked and let people learn from, you know, context and collaboration.

So, that’s how my meeting with Girish happened. And then, you know, Girish and I had a very good journey working on SaaS Bhoomi together. Incidentally, we also started investing in Angel together.

And the reason for that was nobody will invest in SaaS back then. You know that, you know, you started five years back.

Siddhartha Ahluwalia 35:56

I started in 2012. My first investment was raised in 2015.

Manav Garg 36:00

Yeah. So, that tells you, nobody will believe that India can really gain market share in products that time, right? So, we’ll write checks, 25k, 50k US dollars.

And almost every weekend we’ll help one founder or the other. So, that’s how both our portfolio grew to 100. Girish had about 60 investments.

Freshworks really scaled like hockey stick, right? Eka still went up and down, so we had two different journeys in the same time frame, same decade. So, he had portfolio 60 plus companies, I had about 40 plus companies.

So, 100 plus portfolio companies. So, 2019 in Chennai in SaaSBhoomi when we were sitting, we thought we should do something. We should create a bit more institutional culture, you know, construct around this.

And back then COVID hasn’t happened, right? So, SaaS has beginning to bloom 2019.

Siddhartha Ahluwalia 36:45

The buying of SaaS went through the roof.

Manav Garg 36:47

Yeah, it went through the roof. Because now buyers will buy online, SME really exploded, every company has to start with some software. So, we thought good timing.

We anyway helping people, why should now we should give a little bit of more institutional structure to it. So, that’s how the idea of Together was born. And then Girish was very busy in taking company IPO.

So, we kind of put off cold storage for two years. And then IPO happened, and then COVID happened at the same time. So, we got more time.

So, during the COVID time is actually extra time that we got, which got saved from travel, is when we were able to put the, you know, early blueprint of together fund. And that’s how when we actually, which I call about manufacturing co-founder right? That instead of just getting the first person, we called Shubham. We thought we need somebody who has come from investment background.

So, we then called Shubham, he was kind enough to join the team. That’s how together was born in 21.

Siddhartha Ahluwalia 37:36

And tell us like, between this, did you reach the peak of, I think in 2015, you mentioned like $34 million in annual revenue. So, once you shifted to cloud, did you hit that peak again? Or was it tough to hit?

Manav Garg 37:47

No, we hit, we actually touched the same peak again. Touched 30 million again. Okay.

Back again in revenue. But very profitable now. So, we were able to get back the same thing.

So, value therefore increased. Because now we shifted to cloud, we survived first of all, right? Otherwise, we would not have survived.

Siddhartha Ahluwalia 38:00

Most companies don’t survive this transition.

Manav Garg 38:03

Yeah, cannot survive. And we have multiple transitions. And our global buyers are also not able to buy, right?

Why would they trust cloud software from Eka? They are buying client server software from us, which is on-premise. So, we also went through massive journey with the customer.

Like Cargill, which is the largest customer, they said, you know, why should we trust you? And then we were able to convince them to buy. So, they are the first one to adopt Eka cloud.

Then Unilever came, then Kraft came. So, that’s how then, that’s how 2019 onwards started adding customers in the cloud.

Siddhartha Ahluwalia 38:27

And I believe these would all have been like 1 million dollar contracts each.

Manav Garg 38:30

Yeah. The TCV is very high. TCV sometimes go to 5 million.

Because contracts are 5 or 7-year contracts, payment, 1-year payment in advance. This is mission critical software for all these very, very large companies.

Siddhartha Ahluwalia 38:43

And at what point you decided that, hey, I want to now transition from Eka and sell Eka, because Eka has also seen a 20-year journey.

Manav Garg 38:53

So, I think the, see the, and I tell a lot of people, entrepreneurship is emotional roller coaster ride, right? You went through up and down, up and down. So, when the company come to a stage where it is growing and is profitable, and especially in our industry, the churn is very less.

So, which means you can run company almost perpetually. So, that’s a very hard decision as to what you want to do next, whether you want to sell or not. So, I went through multiple emotions in that.

So, biggest part was emotional part, right? What will happen to my identity? What will I do?

If you sell the company, what are you going to do next? Then my family said, you know, we have come from a humble background. This is a large global company.

We have 10 global offices, you know, 100 plus global customers. Why do you want to even think of leaving something? Our children can come and work, right?

And they can, and Eka today is focused on commodities. Tomorrow it can start any other enterprise software business, right? So, the same capital can be deployed if you are profitable, right?

Just give an exit to investors, you know, buy them out.

Siddhartha Ahluwalia 39:47

You could have bought them out.

Manav Garg 39:49

Yeah, that’s what I’m saying. Buy them out, leverage the EBITDA, and then just continue to run. So, I went through a lot of ups and downs.

Siddhartha Ahluwalia 39:57
This is which year?

Manav Garg 39:58

This is 2018-19 onwards. Because things were very tough.

So, how to give an exit to investors? Because Nexus would have invested for 10 years back then.

Siddhartha Ahluwalia 40:05

The fund cycle would have completed.

Manav Garg 40:07

Fund cycle beginning to complete. Silver Lake has finished for 6-7 years. They also need an exit.

And employees have been with me for 10 years. They also want to see some money. So, I had a lot of massive pressure on what to do.

Then the AI wave also came. So, I then thought of, you know, it’s a good, you know, one of the, I think, introspection if I did was what really excites me. So, because I think we are blessed to have enough money, enough capital. So, at least finances were taken care of.

Siddhartha Ahluwali 40:34
You were profitable, so no pressure.

Manav Garg 40:36
Yeah, no pressure.

So, profitability and your personal finances actually makes a huge amount of difference as well. Because a lot of founders don’t do secondary. A lot of founders don’t think of their salaries.

So, I think my financial position also helped. You know, my compensation was good. I had done some secondary in 2013.

So, that also helped in decision making, which I’m going to explain to you. So, then I thought of what really excites me. So, what really excites me is mission of building global companies from India, which is what SaaS Bhoomi is.

The reason I’m able to passionately work pro bono for such a long period of time because I really derive pleasure in building India as a brand. And that’s what drove me back actually in 2004 and 2010 also. When I got this big contract sitting in front of, you know, Minneapolis headquarters in Cargill.

And you’re convincing that why India is able to deliver to you. It’s not just about you. So, that is the introspection I did when I reflected on it.

So, that the mission of building global companies from India is really, really the paramount mission driving me. And I thought Eka has kind of run its course as a vertical SaaS company. It can only grow in that direction.

It’s very hard to now bring adjacency to it. So, perhaps the best for me is to exit. You know, I will have very strong financial position.

I already have SaaS Bhoomi as a pro bono, which is an initiative that we do. And further Together fund is beginning to take shape. And then AI wave is coming.

So, these three, four factors start coming together. And with AI wave coming in that really, really, you know, thought it is absolutely the right time to carve out an exit. Where I can take all the skills that we have done.

You know, selling India as a brand, building global go-to-market playbook, how to look at the market opportunity, ability to work with multiple founders. And then India as next 20-30 years economy, which is a startup economy. A lot of young founders are going to come and going to build companies.

So, impact will therefore multiply many, many fold. So, that really drove my decision. Then finally to, that was a decision-making point.

But then to craft an exit is totally different. Yes. So, then my journey of crafting exit started.

Siddhartha Ahluwalia 42:25

And tell us, I will be more interested, you know, because a lot of founders don’t think about crafting an exit. They think of exit as an accidental thing in their life.

Manav Garg 42:36

Yeah. So, I think I give a lot of examples from, you know, in Mahabharata also, right? Abhimanyu and Arjun, right?

So, it’s an art and a science, I would say, right? So, Indian founders are like Abhimanyu. All won’t start and they actually go to the core.

All able to get their way one or the other. But I think exit is something you need to be a little bit more scientific and a little bit more, I would, pre-preparation is required for an exit. So, I think for exit, I think I use the same playbook which has worked for me. First of all, start reaching out to all the people who can possibly get an exit.

Siddhartha Ahluwalia 43:04

And which year you start running the process for exit?

Manav Garg 43:07

2019 is when I started first. It’s not even a process, even to start preparing your mind. Yeah.

So, you know, start talking to our biggest competition. See, industry also went through a lot of consolidation. There’s a company called Iron Group, which is a 20 billion market cap company.

Not many people know about it. But a very large company. So, I was reaching out to them.

I reached out to a lot of PE players back then. Our industry, a lot of PE players in the US are there. So, I could speak to them.

They were all interested. We are profitable. We are cloud, most modern.

So, discussions started. A lot of adjacent players also started talking to us. So, 2019 was preparing on kind of filling the water. And then I went into a little bit more. I prepared the first deck.

You know, went out to reach out to them. Then begin to understand what are they actually looking for. So, a lot of time we believe our business is best, is doing well, is profitable.

But foreign buyer has a lot of other, you know, I would say regulatory risks are there. We are, though we are a Singapore headquartered company, but our operations are majority in India. So, how the taxation regime will work.

How will the withholding taxes across 8 different locations or 10 different locations that will work. Then what buyers are going to look for diligence. You know, I can start, I can get the term sheet.

But the transaction may not close. It may take 3, 4, 5, 6 months to 1 year. And that is a very tricky period.

Because employees start leaving you. Your buyers are concerned because you are selling the company. So, I able to therefore, I would say create a blueprint in my mind.

As to what is required. So, 2019, 2020, 2021, 18 months to 24 months was actually creating the blueprint. It’s the same playbook when I started in coffee business in 2000 in Singapore, Bangkok.

And then when I started Eka. To first call and meet people and create a blueprint on what are the key drivers behind an exit. So, therefore, key drivers are this, right? Key drivers are, how clean are your books?

Is your financing really in, you know, reconciliation is in charge. Your compliance is up to mark. And a lot of founders I see miss that part.

So, financial operations become critical, critical success factor to your success of exits. So, I prepared finance operations. Are all the customers happy with you?

Yes, 100 customers over the number of years we have amassed. But do they know who Eka is?

Do they know our service? Do they really value our service? So, customer becomes another very big aspect of it.

Number three, then what will happen to me once I sell? Because a lot of investors or the strategic buyers want to stay for minimum two years, if not three years. And I don’t want to spend more time.

I was very clear because my mission is totally different. So, which means your next level has to be ready to take on almost every single thing that is day-to-day from you. So, I started the transition.

And the fourth was obviously the getting the board and the shareholders aligned. So, I understand the lay of the land, put the blueprint together, and then I started the journey. So, first was actually passing on the day-to-day operations to my team.

Siddhartha Ahluwalia 45:57

You came out of as a role as a functional CEO.

Manav Garg 46:00

My role was still the CEO, but actually it’s about creating the system and processes. Functional CEO, because if you now come out of functional CEO, half the people will leave you.

Yeah. Because they will say, why are you leaving? Why do you want to plan the transition?

So, you also give them the confidence that they can run the business on their own. And the confidence can only come when you have a data-backed and a system-driven company. So, that was the transition.

We worked with McKinsey in between, you know, the team from Sid and Noshir from McKinsey, they came on board. They helped us put some processes in place actually. So, we put all the dashboards, start measuring from product to R&D, to sales, to pipeline, to revenue operation.

So, the entire thing become more data-driven and dashboard driven. That was an 18-month transition. Finance got extremely good.

It was always very well done at Eka. So, compliance is really on the notch. So, I did all this process.

In the meanwhile, we also hired a banker in between to reach out to more investors. And then banker didn’t work out for us. And then I took over the process myself.

And then I finally shortlisted about 4-5 investors. One was strategic investor, the other were PE players. And what I was solving for was my exit. And the exit for the employees that I have stayed with me for 10 plus years. They should make money.

And they should have the option to run with the company. So, I am very glad that now when we did the exit. So, all of them have taken senior positions.

You know, global chief operating officer, global CFO, global human resources. So, they are running the company. And I am able to get my exit the same day the deal transition got closed. So, that is the process.

Siddhartha Ahluwalia 47:26

And the investors also got their cash.

Manav Garg 46:07

Yeah. All cash deal there. Yeah. So, therefore, I was optimizing for gain.

What I am doing next. Yeah. Instead of trying to maximize every single aspect.

So, that is the mistake, I think, which is very hard to step away. I can say it is easier said than done. Because when you are in the process, you want to maximize everything.

Timing is very hard to do, right? Valuations are low. Maybe after 2 years, valuations are high.

There is another debate, you know, people went to me. Why to sell now? Wait for 2 more years.

Profitable, doing well. I said issue is not whether company will be…yes company can be sold at a higher valuation. But valuation almost doesn’t matter to me as much.

What I want to do next and what excites me matters to me most. But I could say that because I am financially in a good position.

If financially I am not in a good position, I won’t be able to do that. Whatever said and done, right? I can boast out there.

I was. But I think your personal financial situation and family support are the two biggest things. You know, that is one learning I have got for all the founders. I tell them, take care of your health.

And make sure you have family support and love. Because going through all this emotional rollercoaster. Otherwise, it is very hard to come out of it.

Somewhere or the other you keep faltering. Because there is no clear line of sight. And there is no good and bad, right?

Whether you get an exit of x or somebody got 10x. Doesn’t really matter. The question is, are you happy with what you have got?

Are you able to make your employees, partners happy in that process? And did you do a fair deal or not? So, that process is the most difficult part of managing the exit.

So, therefore, I would, you know, advise to the founders. They have to think about exit almost two to three years in advance.

Siddhartha Ahluwalia 48:53

Always prepare for that.

Manav Garg 48:55

Prepare for that, yeah. So, it is a full preparation.

Siddhartha Ahluwalia 48:57

And when did the papers get signed for the exit?

Manav Garg 49:00

March 26th.

So, the paper got signed. I then transitioned out of my position. The PE firm was quite a strategic.

It was a Symphony Technology Group. 10 billion dollar PE firm. Very, very good firm.

They are owners of RSA, SurveyMonkey. So, they hired a CEO. Because they are trying to consolidate space.

They probably invest half a billion dollar in the space and consolidate. So, they are very good partners. So, I am still a board advisor helping them wherever they need my help.

So, they are now taking the forward. Therefore, my team has taken over the management team role. Along with the CEO who is based in London.

That’s how Eka has his own journey. I am carving out Together, right? Together, there is a second fund now.

That’s how the whole idea of together as an operator led fund actually born.

Siddhartha Ahluwalia 49:50

To help founders to reach.

Manav Garg 49:52

To help founders to reach. See, the issue what happens is and you know Sid, you have been an investor for 6, 7, 8 years now. Having an empathy towards founder is really, really hard.

To understand what founder is going through. To think like that. So, we are taking decisions from a founder’s perspective.

Okay, if you come to us and after 3 years said, you know, Girish and Manav, we have done enough. I want to exit. And I am making 2 million dollars.

We will say fine. Yes, we are long term investors. We will find the next investment who somebody wants to build a company for long term.

And we completely understand everybody may not want to go to, you know, for 15 years, 20 years, right? And there are some people who want to, you know, build some game changing companies out of India now. So, it’s very, very exciting time to build entire US-India corridor.

Look at SaaS and AI. So, companies, I think, can be built faster now.

Siddhartha Ahluwalia 50:36

And in your whole experience, right? Today, you are almost 51, I assume.

Manav Garg 50:42

50, just turned 50.

Siddhartha Ahluwalia 50:44

50-50. Yeah, right. So, almost you have spent the last 25 years of your life of building Eka, right?

And you have seen the ups and downs where there was zero ecosystem. Now, we have India is regarded as like the third largest startup ecosystem globally. There’s plenty of inflow of money today in India, right?

Every year, at least we cross a few billion dollars of funding across the stages. Now, the challenge with India lies is, can we give a few billion dollars of exits every year? Like you given a clean exit to your employees, to your shareholder, to your investor.

How do you think we can do that at scale now? To show that, hey, we are just not a theoretical ecosystem that you keep on money, hope that it will exit someday. But like really manufacture exits.

Manav Garg 51:28

So, I think it all starts with founders. You know, there’s a popular belief that investors control everything. It’s founders who control the destination of the company.

So, I think it all depends on the founder, first of all. Now, having said that, what does it mean, right? If you look at just a SaaS ecosystem, we have about 15 companies, about 100 million plus.

We have about maybe 125 million plus give and take on that range. And maybe we have another 150 above 10 million, above 5 million, another 200 companies, right? So, they all can possibly exit.

Even a company below 5 million can also exit for an IP sale, right? So, the founder will have to take the call. That do I want to build a company for long term?

How do I give an exit? What is my equity in the company, right? How will I create value for myself and for my shareholders?

That is the first, the founder decision-making will have to change. They have to start thinking about exit. And many are thinking, as I’m speaking like in this podcast, or otherwise also I did a session with 18 founders about two weeks back under SaaSBhoomi.

So, we are beginning to discuss openly about an exit. And when I say an exit, it doesn’t mean that founder has to exit. I’m talking about the exit of the company.

So, that the money can circulate, right? That’s what you’re thinking about. So, then exit means either you can be the owner of the company, give an exit to the investors.

You can leverage, you can take debt and then give an exit. And some few companies have done that as well. You can go for an IPO if company can scale to that level, right?

Or you can be part of the consolidation game. So, all three or four kinds of exits are possible now. I think you have to just be prepared.

And I think we’ll have to go through the emotional honest with ourselves. If you ask me, founders know. Founders are very smart.

You know, they build the company to level whatever they have built. So, I think they’re all commercially pretty smart. I think it’s the emotional decision-making which really holds you back.

And society also sometimes look down upon you, right? Let’s say your company is a unicorn. And you know, because valuations have crashed, maybe company is not at a unicorn value now.

So, then what are you going to do? That’s one biggest problem, right? Second biggest problem is that what are you going to do after?

So, identity is not figured out, right? If I sell the company, maybe I have whatever 10, 20, 30, 40, 100 million dollars. I can buy a good home and good car.

But then nobody is going to ask me. My relevance is gone. So, how do you stay relevant?

What is next for you? What is your identity? That becomes a very, very big question mark to answer.

And third is how much capital have you raised? The reason I was able to exit Eka because I didn’t raise much capital in the entire journey of Eka. But if you’ve raised 300-400 million dollars in bringing 100 million dollar company, then you have to have a very, very tough conversation or not tough.

I would say relationship-oriented conversation with the investors to see how do we come out of this. It’s good for them to take the money back. It’s good for me to understand something from that.

I think investors are very open. I think investors, when I meet investors, that too late stage investors in the US who are investors into India big time. Some of them are very, very open in saying, okay, let’s have a conversation around the table because it also helps me circulate the money.

It helps company have its own course. So, I think these three, four things we have to do. And more awareness we go around.

I think that, you know, exit is not a bad thing. There’s also timing of exit, right? So, there’s a time to enter, time to exit.

Yeah. We believe that we can run the company for next 40 years. And that is because all of us started company when we were very young.

Yeah. 25, 26, 30, maybe 32 is a most, I think, average age or 80% companies will land in that age group of entrepreneurs, right? So, people don’t think when you are 60, what are you going to do?

They all think they’re going to just continue to run forever, right? And the companies can run the course forever. They can go day after day, but people don’t, right?

So, you would think of those transitions also. I think those things have to come. So, few other fundamental things, I think, which we can do is that if there’s a self-realization with the founder, that why should I be the CEO of the company forever?

Then also help you think about exit in a dispassionate fashion.

Siddhartha Ahluwalia 55:11

And the other thing is that, right? These are the internal circumstances. What are the external circumstances?

Like, is there enough inbound from, let’s say, the US market, which is the largest acquirer for SaaS companies globally, that, hey, we want to acquire more Indian SaaS companies or built out of India SaaS companies?

Manav Garg 55:32

So, the global buyer doesn’t look at India SaaS, first of all. They look at what is the value I’m getting, right? So, what are the values Indian companies are bringing?

One is your market share, customer, churn, NRR, which is how much you’re making from existing customer cohort. And how hard you can leverage your India center. So, India, so typically in an acquisition cohort, you’re going to compete with other US companies also, right?

Then what will tilt the balance towards them? So, the two fundamental things which I think can really help is your customer score, customer NPS, voice of customer, I think, always stands out. If your customer is raving about your product or service or the company, you will stand out.

And second is the profitability profile, the gross margin profile, natural net profitability does matter a lot. Because inherently, if you’re an India-based company, right? You should be more profitable than a US-based company, right?

So, why you are not? If you are not, right? So, that question somebody has to answer really in a hard fashion.

Because so far, we went to hedonistic wave of growth. Cost of capital was almost zero. So, people just invested crazy after growth.

Now, the question is, can you be more profitable than your US counterpart? The answer is yes. At Eka, we were more profitable than our US counterpart companies.

Eka, EBITDA can go up to 50%. Our customer profile is the best in class among the competition. Even the larger and larger players.

Even half a billion revenue company has lower customer satisfaction than us. I think these two fundamental factors actually is a great question. These two fundamental points actually helped sell, actually help having Eka exit today.

Without that, it would not have been possible. Otherwise, what is the buyer buying? They want to buy, you know, IP by the time you have scaled up, IP is far behind you.

IP is almost a given. So, I think these two are the absolute business fundamental and third is the regulatory framework. Where are you incorporated?

How clean are you? How compliances are?

Siddhartha Ahluwalia 57:18

So, for the PE buying Eka, right? It was the profitability, the NPS among the customers. That was what mattered the most.

Manav Garg 57:27

Yeah. And the industry dynamics, of course. Your industry has to be up for consolidation with a strategic buyer or a PE player willing to do that.

But there are many industries like that in the US. So, these are the two fundamental factors they look for. They are not looking for Indian SaaS companies.

They are looking for any businesses which has these characteristics, right? So, NRR becomes really, really important. A lot of us, you know, avoid that.

But NRR is because NRR link to your churn then, right? So, your churn, NRR, your profitability, your customer voice or customer NPS, really, really key fundamentals.

Siddhartha Ahluwalia 57:57

So, another question that comes to my mind is, right, that we are both investors in B2B SaaS, right? But the question that globally that gets asked is, India has only produced 15 companies till now, which is more than $100 mil ARR. For example, for a Together fund 2, which is 150 mil fund.

And if you’re thinking, let’s say, I want to return back in the next eight years, $600 mil back to the LPs and still holding 10% at the exit stage, which is less probability, but let’s consider that. The total value of the portfolio that needs to give that exit to you is 6 billion across 30 to 40 companies. So, can India produce those kinds of software outcomes?

Manav Garg 58:37

Yeah, it can. So, I think if you, let’s take a little bit back calculation, right? If 2010, people asked you how many companies in India have produced?

Zero, right? So, software ecosystem started in 1980s in the US, right? So, India started catching up in 2010 onwards.

Let’s take that decade, decade, right? So, three decades after US. So, in 2010 decade, 2000, 2010, zero.

Maybe there were a few companies like iFlex and all those things, but they were all multinationals, right? 2000, 2020 or 22 right now, 15 companies. So, it’s 15x growth.

If you look at just pure growth, right? And today we have about, I said, 200 companies about 5 million dollars, maybe 100 companies about 25 million dollars, somewhere around. So, I think India can get to 100 companies at $100 million by 2030.

Why not? Definitely India can get to that. So, typically 15 in this decade.

In the next decade, I would say 2030, 2032, give and take plus two years here. We can produce 5x of what we produced before, first of all. Definitely, because the playbooks are there.

Founders are going to take more risk. Investors are going to take more risk. And that is the promise of Together Fund, because we think we can give operational help at those critical stages of whether to early PMF, then early scale, full scale, and even lead to pre-IPO and IPO companies where Girish and I can provide those inputs, which are critical at some stage of the company.

The founder does all the work. And founder is the master of the ship. But we can give that coaching and mentorship during that really, really critical times of the company.

So, we believe India can create. And we have the data now. I think enough data is there to create that.

And also, as the fund size grows, typically you can go for 15-20% ownership also, because we can double down. So, a lot of capital we keep in isn’t doubling down, because we believe in founders. We are a founder first.

A lot of people say that, but actually we walk the talk. So, we’ll double down. As I said, if you come to us saying, okay, I want to continue to build a billion-dollar revenue, we will back you up.

We’ll find more capital even when it is required to help you out. So, therefore, we believe that yes, it can be done. And especially with AI coming in, even more.

Think about it, right? So, if you look at the SaaS is about $400 billion in revenue. Enterprise software is 2 trillion.

So, penetration of cloud is growing. It’s about 30-40% right now. And then AI is coming and adding another $150-200 billion as we speak today.

Because lot many industries like legal tech, your entire documentation, financial advisory, wealth advisory, there are many such areas which was not possible through software alone. Now software and AI are penetrating. They are called AI first markets.

So, that has added another $150-200 billion market cap. So, India has to just gain very, very small portion of that. And with the kind of skills, scale and money that is riding behind India today I think this is the best time to start and best time to take a shot at it. But I firmly believe we will touch anywhere between 75 to 100 hundred million dollar companies in 2030.

Siddhartha Ahluwalia 1:01:29

And right now India occupies roughly the Indian software export like pure B2B products in software would be 10 to 15 billion dollars.

Manav Garg 1:01:40

10 billion dollars as of 2022-2023 yeah. Yeah. It’s a total SaaS revenue.

Siddhartha Ahluwalia 1:01:44

Correct. Which would be what today? Like three to four percent of the global?

Manav Garg 1:01:49

One percent. One percent. Yeah.

So if you look at it, 10 billion, it’s only one percent, one to two percent.

Siddhartha Ahluwalia 1:01:56

Well, this is another wave that you know, this can go up to 10 percent In the coming year.

Manav Garg 1:02:00

We’re projecting about six percent. If you go to six percent, because SaaS is also penetration also going, we will touch about 60-70 billion dollars in revenue. That’s what we need to touch.

To get to that half a trillion to trillion dollar market cap. So I think India can touch that. I think for me, the larger question is different.

One is that can India touch 75 to 100 million company? Yes. Yeah.

But can you build a company with more capital efficiency, which means see on average a SaaS company takes 125 million dollars to touch 100 million. Yeah. A fintech company probably takes 250 million dollars.

Right. So that way SaaS is extremely capital intensive and B2B marketplace will take probably 300 million dollars to touch 100 million revenue. Right.

So can we create companies from India because we can run operations much more leanly at much lower capital cost. That will also create a massive value creation. Can our gross margins and net margin ratio be higher, right?

Typically gross margin in software is about 70-80 percent.

Therefore, can I create a 20 percent EBITA company instead of, you know, negative or just about to break even company? I think these are also important aspects which believe I think India has a huge role to play. And services companies have shown that.

Services company, if you notice, they went through all the waves from after Y2K people said it’s dead. Y2K was one off. They came and, you know, started looking at maintenance and support business in a big way, right?

And then building software as services from India. Then came the cloud.

People thought it’s dead. Cloud doesn’t require any services. Again, they grew.

Then digital transformation wave came. All this while 25 percent net margin, they’ve all maintained more or less.

Yes growth has come down because scale has also increased. So, which means from India you can build that.

And now with AI coming on board, we have SaaS. We also have a massive AI in services opportunity, by the way. See, services today are 300 billion dollars in revenue.

All of them are going to undergo a change because some of the services now can be automated, especially the supply side. So, if you can, so, therefore, new category is going to emerge, in my opinion, which is now software as a service, service as a software.

You automate 50 percent of your workforce to software and then start selling as a service, which is AI in services. There also, I think, massive value creation…it is profitable, you know, not as capital intensive as SaaS is, for example. So, I think the entire B2B is very, very attractive.

Siddhartha Ahluwalia 1:04:18

I think in India, there is also a problem that people are not used to, at least in the startup dynamics, getting an external CEO. How many companies have external CEOs?

Manav Garg 1:04:27

Freshworks is the first one, actually, now.

Siddhartha Ahluwalia 1:04:30

Before Freshworks, I think, just Kunal, when he was in Freecharge, he got Alok at that point. But not many examples. So, that’s why we don’t even have a layer of CEO in India.

Manav Garg 1:04:42

It will come, but think of ecosystem also, no? I think in the next five years, you will get that.

Siddhartha Ahluwalia 1:04:46

Manav, I want to talk about, since we touched a little on the AI wave, because Together is very bullish on the AI wave. What do you think the value that AI is currently unlocking in terms of creation of companies, scaling of companies, and replacing similar tools in the US with AI-first tools being built out of India?

Manav Garg 1:05:01

See, first of all, let me start a disclaimer. AI wave is too early. I think just 18 months, ChatGPT was launched in November 22.

So, 18 months, right? So, I think everybody’s trying to figure out, first of all.

Siddhartha Ahluwalia 1:05:13

But there’s a disclaimer again that, right? In just these 18 months, right, NVIDIA is the second most valuable company globally, has $3 trillion of market cap, and probably might also become the globally the most valuable company, just because they produce the compute for the AI.

Manav Garg 1:05:30

Yeah. Yeah. So, I think definitely there is a wave.

So, all I’m saying is, if you look at the waves, the winners may not be the first people to start, right? Look at Facebook came much later. Guess when TikTok was born?

Siddhartha Ahluwalia 1:05:42

TikTok was born in 2014.

Manav Garg 1:05:44

2016, yeah. Byte transfer, it was in 2014, but TikTok was launched in 2016, right? It’s much, much later into the internet in the cloud wave, right?

So, first of all, therefore, when I say that it’s very early days, whether the value creation is going to happen, definitely yes. Large value creation, definitely yes. But where the value equation will happen, remains to be seen.

Definitely at a compute level, and see, at a conceptual level, the human intelligence is getting into the compute of, right? So, the compute, therefore, is going to take 50% of the value equation share, at a chip level, then AI cloud, AI tools, AI ops, right? Which is coming up.

So, definitely the compute is going to take a lot of value creation from it. But enough value creation also left for the application layer. Because what is going to happen is, software is eating the world, right?

Which all we talked about, right? But now it’s eating even more, right? Because every user is now consumption of AI, right?

So, your number of users are really, use case is really expanding. And therefore, I’m talking about AI first use cases, right? Which are to start off the productivity use cases.

Presentation state, we have a portfolio company presentation.ai for example. Typically, it will take 2-4 days, a non-IT user takes 2-3 days to create a presentation. Now, in 10 minutes, 15 minutes, maybe one hour, using some tools like that, you can create that, right?

So, massive productivity gain. So, wherever the productivity gain is anywhere between 10 to 100x or 1000x. You are seeing a massive adoption, first of all.

Even in creation of all these different videos, and text to video, text to voice, voice to video, all that multimodal, you see all the models also getting there, right? Massive value equation. Otherwise, you know, you and I sitting on one Canva, it should take us so much time.

One pamphlet will take 2 days, 3 days, and we’ll make a lot of mistakes. We’ll find a, you know, a UI expert who can do that. All that is not required anymore.

Siddhartha Ahluwalia 1:07:24

I think the old days of being, using a clunky Photoshop software for building one design multiple days is gone.

Manav Garg 1:07:31

Yeah. So, the value creation is huge. The summary, right?

Look at, if I have to write a blog, typically, it’ll take 1 week, 2 weeks, and 3 weeks to write one blog. I will first write some concept, then I will go and find some writer, then he or she will write, then I will again create some 5-10. So, I think the first wave, I would say AI has solved the cold start problem.

I can go to ChatGPT or Grok or Gemini and say, I want to go to Sid for this podcast. Give me what should I talk about. At least I don’t have a cold start problem.

So, at least my first playbook is ready. And then I can start building. So, I think 80% or 60-80% is able to do.

Second, if you look at it, the individual-oriented use cases are far easier to do, right? Where I have to write something, I have to draw something, I have to use a speech, I have to use somebody as my diary, I have to use somebody for my summaries for meetings. They are all use cases are going extremely fast.

Wherever you and I have to collaborate, I think their deficiencies are still less, right? Because I have to depend on you, you have to depend on me. A lot back and forth conversation is required, right?

So, I think that is the second level of use cases, right? And the third level of use cases, which I think which will come is also machine-led use cases, right? Right now we are talking about AI only in software.

Now, unless I put a summary, the voice, my own profile into a robot, the robot will become very-very intelligent robot, right? So, I think the next wave will come into a combination of machine and software, which is AI coming in and going to day-to-day life. Today, we are not even seeing that, right?

That, you know, we saw cleaning robots only, which can clean, I would say, in a more dumb and simple fashion right now. Take away 10-15% of the cleaning job only. Yeah.

But then when you have a much more smarter AI coming in, computer vision going to next level, right? Along with generative AI, which can communicate with humans really-really intelligently to large extent, you are then looking at massive amount of use cases, right? So, I think the physical will, therefore, if you look at the future of AI into 5 year plus, I do not know time, it could be 10 year plus or 3 year plus, it is a merging of physical and software boundaries as well.

So, therefore, the value equation potential is huge. And I think the critical role, which I am very passionate about is what role India can play in that.

Siddhartha Ahluwalia 1:09:32

And what do you think that India has an advantage versus disadvantage as compared to US AI companies?

Manav Garg 1:09:36

See, first of all, US and China. China is also far ahead. TikTok came from China.

They mastered the algorithm, right? They are competing with Facebook and taking the market share away from that, right? The entire video thing came, innovation came from TikTok and then Facebook kind of copied it, right?

And then YouTube followed that with the YouTube shorts. So, I think China is also, we have to be careful about China as well. They are also innovating very fast.

India definitely have a role to play. Can India be number two? Number one, I doubt it.

I do not have visibility to it. Can India be number three? Yes.

Because of sheer economy of data, scale, data, people, talent, and Indian young population.

Siddhartha Ahluwalia 1:10:10

The number of AI companies getting produced from India will be huge, right? Because we are now riding the wave where people have made money from Freshworks. They have made money from Eka.

And I assume in the next 10 years, there might be 100 such outcomes. Now we have a handful of outcomes.

Manav Garg 1:10:25

So, I will tell you, it is a very interesting, you brought up the statistics, right? So, in Together Fund, when ChatGPT was launched, first six months, it is silence. We saw maybe one company a month, which is AI.

We thought something is wrong, maybe Indians are not getting it, we are not able to get it, what we can do as a fund. After six months, we started seeing about 10 companies a month. Right now, for last three months, we are seeing 100 companies a month.

Yeah, that’s a scale. And all kind of people are jumping in. So, the first time we are seeing actually people from MNCs also coming.

Facebook, Google, LinkedIn, they’ve all worked on AI teams. And Indians are there everywhere, thanks to technology and our superior education. So, we are seeing that cohort.

We are seeing very young people from the college who are coming and saying, I want to do a small project in AI. We started seeing that. We are seeing a lot of second-time founders who are coming into play as well.

I think it is because the scale of the value creation opportunities is huge. So, you are absolutely right. So, we are going to see a huge amount of companies getting started.

And some will break out from that.

Siddhartha Ahluwalia 1:11:24

Just by the sheer economies of scale, as you said, the number of AI companies that win or at least reach 100 million ARR will not take 10-15 years, might take 5-6 years.

Manav Garg 1:11:33

I think if you take a little bit forward, see India has a clear advantage in applications. If you look into SaaS also, the number of applications SaaS companies are huge, 90% are applications SaaS companies, 10 are infra or dev tools. So, I think definitely, India has a playbook for application AI companies.

They can take an open AI, they can take Gemini, take another foundation model or open source foundation model, Lama 3 and what all is going to come and start building applications for that. And that is where I think definitely a wave has to come. Now, the capital cost of building a company, how do you gain market share, that playbook still have to be repeated and go to global scale.

But definitely, India has an advantage there. I think when you go a little more deeper into it, you want to see how to build a fundamental advantage in data and build some homegrown foundation model companies also. Every single country is doing that.

Middle East has Falcon, Europe has Mistral, US of course has open AI, Elon Musk has started Grok. So, I think India eventually, from a geopolitics perspective, India will have to do something on their own also, so data can be protected.

Siddhartha Ahluwalia 1:12:33

I think the other way is, SaaS India had an advantage that 75-80% gross margins were there. With AI, the gross margin are shrinking because pure AI core applications SaaS, if we talk about, let’s assume 50% of the compute gets eaten up. So, earlier you were just paying the cloud providers 15-20% of your revenue, let’s say AWS, GCP, Azure.

Now, on top of that, you are also paying the likes of foundation models like OpenAI or another 20%. Do you think then the advantage of India cost structure is getting taken away?

Manav Garg 1:13:08

See, I never thought India is basically cost structure because you cannot win in the product business just by the cost structure. So, I think it is also added to, yes, of course, cost is one part of it because you can start the company at much lower, cheaper cost of capital, right? But I think it is also the customer service, it is also what you follow on through.

I think enterprise business is different, I have different experience. See, if you look at even AI also, enterprises are still not adopting the AI software.

Siddhartha Ahluwalia 1:13:31

They have budget for AI, but they are not sure what to put it on.

Manav Garg 1:13:35

No, I think the issue is that the trust is not there, because of hallucination, right? If you are a Unilever, if you have a Kraft, you are not going to depend on AI to run your supply chain as yet, because you have to put goods on the shelf in the morning, right? So, you cannot depend on AI as yet. So, I think there is a bit of lag in enterprise adoption to what AI promise shows right now, that’s number one.

Number two, so enterprise will pay you that premium if you can deliver a trustworthy software to them. Because they are not optimizing for the cost from you, right? Whether they are paying a million dollar a year or 1.2, it is not going to hit their bottom line as much, right?

What they are looking for actually is something which is secure and it is not a black box. Today people are scared because they really don’t know what the foundation model is learning from you, right? It is going to come and eat you and eat your business, you may give away your competitive advantage.

I think those are larger concerns. So, therefore, the companies that are able to transition into the enterprise side of the business, will be able to retain the gross margins to a large extent, so pricing it just automatically. The cost of compute will come down, right?

Cost of API is a very high right now because there are very few companies, but now when there are open source coming in and the foundation models are becoming more specific and some are more generic as well, the competition is coming there. So, your cost of APIs will come down because adoption will increase multi-fold. So, they will make money and the cost of usage API, same thing happened with cloud also, right?

2013-14 when the cloud came, how much was the co-location of one server costed? Massive. This is a company called Rackspace.

If you go back, they used to charge $5,000 a month or that range. Now it is even fewer. That is what AWS came to innovation saying that you pay as per use, right?

Therefore, startup can start with $100 credit or $1000 credit, right? Same thing is going to come here as well. So, I don’t think that compute will become a massive cost structure.

In the short term, yes, but in the medium long term I don’t think so. The larger battle to win is can you win the trust of enterprises?

Siddhartha Ahluwalia 1:15:27

And how do you win that, right? Sitting here in India when your tech is in India, you face the same challenge like building Eka. How can we at least come on par?

Manav Garg 1:15:36

I think if you produce a product which is at par. First, always the first game in the product business is your product has to be the same quality as any other company in the world offer, whether from Australia, which is Atlassian or number of US companies, European companies to do that. So, I think today our entrepreneurs can definitely do that.

Especially hybrid teams, today we are seeing teams where one person is based in the valley and one person is based in India. So, those teams can definitely do that. Even companies starting from India can also do that.

So, I think the first, we have to make sure that we don’t rush into it. If I was building a company again today, I will make sure that I will absolutely offer the superior product quality. When I say product quality, it is not simply the workflow anymore.

It is how do I handle hallucination? How do I handle the security? How do I handle the entire black box, right?

How do I make sure testing is transparent to enterprises? I think those things will really help. And then how do I build a relationship?

Go and sit with them, tell them you are going to be around for a long time and you are going to invest along with them, do experimentation along with them. That’s how you win the trust of the enterprises. So, I think that if the trust is won, you are going to get the premium pricing.

So, definitely that is going to happen.

Siddhartha Ahluwalia 1:16:40

And why do you think like as Indian B2B SaaS companies, we haven’t won in distribution yet? Because for example, if you see US SaaS companies in the last 3-4 years, Viz, Ramp and many, there are many other examples. They got to the scale of 100 million ARR in 3 years, even Ramp crossed 300 million ARR in 4-5 years.

No Indian company has ever done that. We are still patting ourselves on the back that we can build a 100 million ARR company in 10-12 years.

Manav Garg 1:17:09

So, I think it is a question of time, Sid. If you look at India’s economy, India was got 15 rank, 15 bought 5-7 years back. India is now top 5.

So, I think it is a matter of time, first of all. So, this decade, we may see more 100 million dollar companies. As we enter into next decade of 2030, 2031 to 40, you will see this dream coming true.

Siddhartha Ahluwalia 1:17:28

The first billion dollar revenue SaaS company getting produced very soon.

Manav Garg 1:17:33

Zoho already is a billion dollar for example. But it took 30 years.

It is fine. There is nothing bad about it, right? Because value creation happens, right? So, I think it always depends and tell about to my children also.

It depends on where you start. I started from very small town, right? So, SaaS ecosystem also started like in stone ages, where we learned how to build a global product.

Then sitting, see what is the beauty of India. Sitting in India, Chennai, Bangalore, you know, small towns, Udaipur, Jaipur, Bhopal founders able to build a world-class product. People ask us all this time.

Some of LPs in our fund ask that how Indian founder who has never travelled abroad is able to produce a world-class software sitting anywhere in India. That is the first big win if you ask me. Second big win will be when we are able to crack the distribution.

There are early signs of cracking the distribution right now. There are a lot of enterprise companies have come. When Eka was there, there was nobody, absolutely nobody.

But now there are many companies looking at enterprise. SMB playbook is pretty well known right now. So, I think in next decade, you will see where companies will also touch 100 million in one year, two year, three year, billion, more billion dollar revenue companies will emerge from here.

So, if we are able to touch 100 companies, 100 million, see Zoho is 1 billion, Freshworks is about 800 million dollars right now. So, they will touch billion dollars. So, you already have two companies touching billion dollars.

So, in next decade, maybe we will produce, you know, 10-20 such companies. So, that is the question of time. I do not think it is a question of if that will happen.

It is a question of when that will happen.

Siddhartha Ahluwalia 1:18:56

And do you think Indians can crack the distribution advantage and what will it take them to the time they will learn the playbooks, right?

Manav Garg 1:19:04

I think it can accelerate. By taking larger risks in go-to-market. See, now the capital availability is there. So, next wave actually, you know, next, the company is starting now.

If I was starting company again, I would spend disproportionally amount of more money in go-to-market. By going with open eye saying that I might fail. So, that is what is required.

You take bigger risk, bigger outcome. See, look at when people start company, we spend 80% in building the product, and maybe 20% in go-to-market. Some companies even do not spend 20%.

But if I invert, okay, 20% building the product, 80% go-to-market. It will, some people will hit the bullseye.

Siddhartha Ahluwalia 1:19:39

Agree. And India as a market, right, has never been believed to be a large consumption of SaaS. You think that has changed, that will change in the next 5 to 10 years, that SaaS companies building product for India will become 100 million ARR companies.

And now we have only one example, which is Tally.

Manav Garg 1:19:55

Yeah, Tally is one example. Zoho to some extent is beginning to build in India as well. Freshworks has some revenue coming from India.

Otherwise, you see, I think, let us look at the data. So, Salesforce is almost crossing billion dollars of revenue from India, you know that, right? Slack had almost had 125 million dollar revenue when they started in the first 3-4 years from India.

So, India’s spend is coming from MNCs, large companies and a lot of SMBs, right? So, once Indian economy touches 6 trillion is when I think the wave will start. So, in the next decade, you will see many more domestic opportunity also becoming big.

Because the Indian corporates to grow, they will have to invest money in technology. So, that we begin to see that right now, but the scale is not there. So, scale will touch maybe after the early part of 2030, I think, that decade, I think you will see a lot many more companies coming into play, where domestic market is also large enough.

Second is a presumer market. I am very bullish on presumer market. Like Presentations.ai. Presentations.ai, where every consumer now can pay you 5 dollars. Or gaming, why can’t we do competition to Roblox? Think of Roblox as a company, right? India has a huge gaming consumption market.

Developer on one side and consumer on the other side. That’s a new category. And with AI, I think we will see many more companies there.

Photo editing, right? A lot of e-commerce needs a lot of photo editing, right? So, you have again developers on one side and the consumption on the other side.

I think we will see a lot of, Canva for example, right? Why can’t Canva be produced, not be produced in India? I think those are the set of companies, I think, which will be very, very interesting to see.

Siddhartha Ahluwalia 1:21:21

Got it. And right now, you know, you have many lessons in cold calling and in sales, right? And if you have to summarize founders that, do they still work and what will be your top three lessons?

Because you build your entire career out of cold calling.

Manav Garg 1:21:35

Yeah, I think I built my entire career in building relationships. Cold calling is one of the mediums to build, is to start a relationship. But relationship don’t sustain with cold calling.

So, if I have to summarize, I built my entire career, which I strongly believe in building relationships actually. A lot of my relationships are very, very long-term in nature, including with my co-founders, right? Now with Girish 10 years, right?

Shubham now four years plus. So, I think I believe in long-term relationship. Often the start happened cold call because I know the medium.

Somebody coming from a small town, who’s going to ask you, right? I land in Bangalore, nobody knows. So, I have to cold call, right?

So, it’s not about cold calling, it is about ability to invest in the long-term relationships. So, that’s the first learning. Think long-term and think relationships.

Don’t think the activities involved. Activities changes from time to time, sometime it’s a cold email, sometime it’s a chance meeting in an event, right? I met Pallav, for example, who’s also invested in your fund in an event, for example, right?

And then he’s a friend for last 15 years now. So, a lot of time it is the relationships. So, it is the, therefore, invest in the relationships.

Second thing is, invest in your physical and mental well-being. We didn’t discuss mental well-being, right? So, I was able to manage so many ups and downs because of my early years of grounding in Gita.

A lot of time it went bad, a lot of down times. See, imagine you’re going in cold winter, you know, harsh December, January, there’s nobody there and sometimes people refuse to meet you, you’re just waiting days and days in a small hotel and I was vegetarian back then, right? So, a lot of mental toughness is required and here, expectation from family is sky high.

So, how do you live to that, you know, expectations is you have to invest in your mental and physical well-being. And that can happen if family is a big supporter, you need some support on your emotional side to be able to go. And third is the fitness and the physical side, it’s late learning for me.

First 15 years, I didn’t take care of my health at all. I traveled like crazy, I ate whatever I can. Thankfully, I didn’t drink much because, you know, my family is a tea-totaler family.

So, I started drinking very late. So, I’m not a big drinker. So, I think taking care of your health on physical fitness is really, really important.

So, second is, therefore, take care of your physical and mental wellness. And third, treat the funding as your own money. Treat the investors as your partners.

Because they’re also riding the ship along with you, you know, you are the founder, you are the ones who actually are in charge. People say investors are driving me crazy, investors are doing things. In my experience, nobody can drive you crazy.

Founders are crazy enough to start the business, right? So, what more craziness do you need? Founders know exactly what’s happening.

The question is, can you tell the first lie to yourself? Are you truthful about things, right? And how do you navigate through that part?

I think that is really, really important. So, these three things are the main learnings that I have, right? So, therefore, invest in long-term relationships, physically fit and treat your investors.

And that investors also include employees, by the way. It’s not just the financial investors or VCs or, you can be bootstrapped company, right? You’ll have employees who would have invested 5 years, 10 years, 3 years with you.

So, you have to value them. So, it comes down to people basically.

Siddhartha Ahluwalia 1:24:31

And you talked about manufacturing co-founders, right? Tell us more about that. How did, because you and Girish know that you are complementary to each other at that point in time.

And how do you start building that relationship?

Manav Garg 1:24:43

So, I think it is again started about how do you, I think we’re talking about a lot of emotional roller coaster, right? So, one thing is very clear and we were talking in the break. In the US, they’re more dispassionate culturally, right?

Because that’s how they’re born and brought up. So, I think the first, therefore, is a business is an enterprise by itself. A founder and business are not to one thing.

We believe that they are one, but they’re actually not. Business has its own journey, you have your own journey. So, first of all, I think we need to learn how to emotionally separate ourself at some point in time from the journey of the company and the journey of you as a founder.

So, that’s the first step towards getting to understand. Now, if I have hindsight of doing that, a lot of us just jump into entrepreneurship. Now, I will see who is my best team to be successful in this particular area that I’m starting on.

So, I think you have to choose for the best team. It’s the same as, you know, a cricket team, right? We don’t choose all the people from Bangalore or Bombay, right?

Our Indian team is all from tier 3, tier 4 towns because now there is a system of IPL, system of meritocracy where people are coming in, right? So, your co-founder has to be meritocratic in nature instead of the first friend from school or your first love from your college coming and willing to work with you. I think that’s what I’m calling manufacturing co-friends, which means co-founders, which means you know that if I’m starting in AI, let’s say I want to start a foundation model company to compete with open AI, let’s say I take that challenge today.

Yes, I can attract funding because I have an exit, I know how to build enterprise business. Now, what my college friend is not going to be my best co-founder or my previous co-founders who are very good at Eka are not the best co-founders to building the foundation model company. I need the top end AI talent.

I need the best researcher with me, right? I need the best security expert for me. I need the best public policy person with me.

So, my co-founding team is going to be very different and I will then go and code. Actually, I will meet such 20 such people and then get to know over six months time. So, I think building or manufacturing a team is six months to one year process or even more.

Truly understandable kind of team will be successful for the business that you’re starting from. The core issue is not with a co-founding team. The core issue is that we all jump into business too fast.

Siddhartha Ahluwalia 1:26:49

But as a founder, you’re always geared towards biased for action. So, how do you take a backseat on that? Not starting like two people liking each other, not starting the same company in the first couple of months.

Manav Garg 1:27:03

So, I think one of the things that I’ve used and that’s what I really go back to a lot of support from my family and wife who really was there brainstorm lot of ideas all the time. Even today, we spend a lot of time together discussing that. I think one of the key thing is that you have to those reflection or contemplation moments.

For me, for example, it’s early morning. So, I get up at 5.30 in the morning, two hours is just the reflection time and then discussion with my wife.

Siddhartha Ahluwalia 1:27:27

And what do you do like in those two hours?

Manav Garg 1:27:29

I just think, nothing else. Sometimes I maybe 15-20 minutes, I look at the email, so I clear my inbox. But then I would say on an average minimum one hour is thinking time.

Reflecting, when I say thinking is reflecting what went right and then I have a partner in my wife for which I can brainstorm a lot of ideas. For example, VC business is new to both me and Girish. So, a lot of reflection is required.

So, look at it. Operating, as you said, is actionable business. VC is non-action.

You think few decisions, you take few decisions, but they are more impactful as operating a company. So, I think if you create those reflection moments, whatever works for you, whether you’re getting up in the morning, your wife as your partner, you said you started a business with your wife. So, for example, with a partner or you go to meditate or you, for example, Bill Gates go off during December reading books in a cabin alone.

So, whatever method works for you, you need to have carve out on your calendar. So, my suggestion would be put a calendar and say every month, every week, maybe every day if possible, put a time for reflection.

Siddhartha Ahluwalia 1:28:27

And you are doing this 2 hours of reflection even when you were a founder running a 24-hour ship.

Manav Garg 1:28:32

Correct. Because I got that as a inheritance. See, when you read Gita 10 times, you are bound to reflect because you start understanding it the inside out.

Every time you read it, you get a different meaning. So, I got in this habit of reflecting and spirituality a little bit very-very early in my life. So, it got, automatically I was lucky.

This got ingrained in me. And for me, thinking for first principle was the only way I could come up, Sid. Coming from such a small town in day and age when internet never existed, funding never existed.

The only way I can come out is first principle. Thinking of, you know, think about learning English. How can I learn English just like that?

No teacher, no books, nothing, right? So, I had to go first principle. Okay, how do I become good in spoken English?

Then from there, how do I get rid of hesitation of public speaking? Then from there, how do you go down to, you know, starting a business? Then I went to IIFT.

Then I went to working in a GP group which is a global business and working with, you know, top executives in the world. So, for me, the first principle, thinking and the reflection, that virtuous cycle, I think really-really helps you. That really helps you think through, okay, am I spending in the right direction or not?

Siddhartha Ahluwalia 1:29:35

And I now believe that the entire town of Moga must be really proud of you, right? The kind of value that you have created for our society, for the ecosystem. A lot of folks in Moga would be looking up to you.

Manav Garg 1:29:45

Definitely, a lot of people in Punjab look up to me. A lot of founders look up to me. My parents are very proud of me, of course.

So, that’s all we get as a family. That’s what I am saying: you love your family. I think family is a bigger support.

In my case, my parents in early years and my wife really been a big supporter for me. Therefore, I am saying invest in those relationships. See, as founders, the reason I am repeating it again and again, as founders, we are so action-oriented and we are so much into a business, nothing, you know, we don’t look at anything else.

Siddhartha Ahluwalia 1:30:07

I think the biggest challenge for Indian founders is, as you mentioned, how do you detach your identity from your business? That has not happened till yet.

Manav Garg 1:30:18

So, because we came, most of them have come from middle-class background. So, this is the first money they are seeing, or first success, even if money doesn’t drive you. So, therefore, it is pretty natural to me like that.

I think more people, more you reflect, more you are able to dissociate.

Siddhartha Ahluwalia 1:30:31

But now you are able to tell it as a 50-year-old experienced person. Back then, 15 years ago, when you were a founder, it is very hard to digest it, that take a pause, take time for reflection.

Manav Garg 1:30:44

Yeah, it is very difficult to digest. So, I think the lot of daily habits, that’s what I am trying to explain, or at least try to communicate through this platform, that lot of your daily habits helps you scale later on in life. Whether discipline in the early days, the way you communicate.

A lot of us are also not very good communicators. I came from Punjab, I don’t know how to speak English, don’t know how to present myself to the investors or to the buyers. So, I think work on your communication, work on reflection, work on your physical mental fitness, that also is a part of building a company. It’s like an athlete, right?

So I often say it’s like sports, right? Virat Kohli or Sachin is not Sachin because they are just good in batting, right?

They are disciplined, right? They get up in the morning before every match, they practice, they’re very disciplined about their diets and they exercise regularly. So I think that also goes in making an athlete, right?

Which entrepreneur is much like a, that’s what we call in Together, we’re trying to find Olympic champions, right? So to become an Olympic champion, you have to work on all around personality and other traits. It’s not just only building the business. They all help you.

Siddhartha Ahluwalia 1:31:40

No, thank you so much, Manav. I enjoyed this conversation a lot. I learned a lot.

Thank you for sharing your journey candidly. Thank you for sharing the lessons, right? For the last 25 years, what you have built, what you have created, right?

Looking forward to working together more with you as Neon and Together. And thanks again.

Manav Garg 1:31:57

Likewise, really enjoyed the conversations Sid you’ve done a brilliant job in building this platform over the last five, six years. And that really helps in building the ecosystem. As a SaaS enthusiast that we are, I think every such step that you’ve taken, I think adds a lot of value to what people are doing.

And more you communicate this platform, I think more founders and entrepreneurs will bond.

Siddhartha Ahluwalia 1:32:15

The goal is, right? From at least this conversation that we do, how can more founders think about creating exits for themselves, for their partners, for their team, right? I think if that message goes well, I think both, like both the time that you and I have invested would be a huge success.

Manav Garg 1:32:31

Absolutely, Sid.

Siddhartha Ahluwalia 1:32:32

Thanks again.

Manav Garg 1:32:33

Nice being here. Thanks.