Read the full transcript here:

Vijay 0:00

We have onboarded 25,000 gated communities. And we have built the operational scale and capability, and muscle to onboard 1 million and these 25,000 gated communities host close to 4 million homes. And the journey of the last five years in building this product and scaling this product has given us some deep insights in terms of how do you keep this product running 24 by seven. So our product is like a banking product. Opening a bank account is one problem, and making sure that the bank account is actually being operated profitably, there is saving as well as credit, keeping the consumer engaged for the lifetime is another muscle. I think at Mygate we have built both these muscles, both in terms of acquiring new gated communities, onboarding these communities, and making sure that the product is running 24 by seven at this gated community site. And at this point in time, we have built the muscle to acquire 1 million new homes and maintain the existing 4 million homes at scale. I think this is the muscle that we have built.

Nansi 1:21

Hi, everyone. Before we begin, I would like to share that this podcast is brought to you by Prime Venture Partners. An early stage VC fund led by Amit Somani, Shripati Acharya and Sanjay Swami. Prime is often the first institutional investor in category defining tech startups in FinTech, SAS, healthcare and education, such as Mygate, Quizizz, PlanetSpark, Bolt and Glip. To know more about Prime, visit https://primevp.in/

Siddhartha 1:51

Hi, this is Siddhartha Ahluwalia. Welcome to 100x Entrepreneur Podcast. Today, on the podcast, I have someone who has created category. So listeners, if you will learn how to build category creating products, how not to be in a race that, let me build a better product than the competitors in the market. But to go after a niche, which nobody else has called for, nobody else has thought of. This is the podcast to listen to. Welcome Vijay Arisetty to the podcast. Vijay is co-founder and CEO of India’s best known mobile based security and community management solution for gated communities called Mygate. After graduating from National Defense Academy, Vijay joined the Indian Air Force where he trained as a helicopter pilot. This was to be a pivotal moment in his life as the devastating tsunami of 2004. He performed search and rescue operations for hundreds of people stranded in the islands of Andaman and Nicobar. Not only did this lend him shourya chakra, it also laid foundations for what would part the rest of his career decisions. Let’s dive into Vijay’s journey and the journey of Mygate. Vijay, we’re so glad to have you on the podcast.

Vijay 3:07

Thanks, Siddhartha, it is equally exciting to be on your podcast.

Siddhartha 3:11

Today, I have known you for more than three years now, from my first stint working with Prime Ventures and being awed by your journey. First is, you have served the nation in the highest possible manner which anybody could serve. So salute to you for that. And secondly, now you’re serving the nation in another manner being an entrepreneur, building for the Indian citizens and this is again a very second level of security, first you provide security at the borders. Now, I will say through my gate, you are providing security for our internal homes.

Vijay 3:51

Yes, yes.

Siddhartha 3:54

So, Vijay, before starting the Mygate journey, I would like to know about your background, your parents background and your education. How do you choose to join the armed forces?

Vijay 4:05

So, I was brought up in a place called sunabeda in Odisha, which has got the biggest factory of Hindustan Aeronautics Limited, my father used to be an engineer in Hindustan Aeronautics Limited and I studied there from my LKG to 12th. And then a lot of these Air Force, Air Force was the biggest customer of HAL. So, a lot of these Air Force officers used to come to that place, for meetings with the senior officials of HAL and then I used to see them. Their uniform actually excited me a lot. And I was always, much more, a person with sports and our outdoor activities and studying. Yes, I was good at studies, but I used to enjoy sports and outdoor activities. And somebody told me that in the armed forces this is all outdoor and it’s less of studies and more of action.

And also the uniform excited me a lot, and then I figured out that NDA is the best way to get into the armed forces. And that also happens very early in life soon after failing. And I didn’t have to prepare for IITs, or medical and all those other, competitive exams, and the NDA exam is also very much different than what these other competitive exams are, I prepared for NDA, and then managed to get through NDA. And then, I joined NDA, did four years of training in NDA that includes my flying training as well, one year of flying training in Air Force Academy, and three years of training at NDA. And then got commissioned as a helicopter pilot in the Indian Air Force, and served in the Indian Air Force for close to 10 years, and did various things in the Air Force, participating a lot of disaster relief, and search and rescue operations, as well as flying the VVIPs of the country, to representing India at United Nations to again, coming back to India, and teaching people how to fly helicopters as well. And then leaving the Air Force in 2010, again, stepping into the corporate world through Indian School of Business, and then after, joined Goldman Sachs, in 2011, wherever, for five years, so, this has been my career journey before, coming into Mygate. Hope I answered your question.

Siddhartha 6:54

And tell us about the first startup that you did, in the trucking and logistics space, and how that led to the evolution of Mygate?

Vijay 7:03

So 2015, when seeing commerce in India, e-commerce was picking up and the way in which commerce was being done was completely going through a change. Earlier, it used to be the local mom and pop stores used to supply things. And now the E-commerce company started supplying things. So the logistics, the need for logistics increased. And said that, how can we create something like an Uber-like platform for people to book the small scale trucks, which are used by most of these e-commerce companies, and help them enable their commerce. And that’s how we started a company called Purple road. Fortunately, I like the time period for which I did Purple road and pivoted to my gate. It was only three months, and we didn’t even get time to register the company. But on the whole, we used to aggregate these vehicles and give it and rent to these e-commerce companies. And I did it for a period of three months. And the whole point was to give logistic support to these e-commerce companies.

Siddhartha 8:19

And what insight led you to build Mygate? Can you share how you transitioned from the logistics company to Mygate?

Vijay 8:28

Yeah, so one of the key things that we observed in 2015, in India generally in gated communities. What you see in gated communities is they’re designed to keep people out. There are a lot of security guards, making sure that anybody who had to go inside had to be validated and had the right reason to go inside. Otherwise they would not let in. And with this booming e- commerce and more and more these ecommerce delivery executives, or the service executives used to be coming to the doorsteps and what we say is 2015-16 we started seeing this phenomenon of commerce coming to the doorsteps. So when our vehicles used to go with this big basket and Amazon consignments to these gated communities, the vehicle was asked to park somewhere the driver used to go write his name number in the register, figure out which flat is supposed to deliver, write all those things in the register. The security guard will pick up the intercom and call one by one flat and he will say sir/mam someone has come to your place from Amazon, should I send him?

And one by one he’ll call all the flats and he will do the validation and then send this delivery boy inside.This process used to take 10 to 15 minutes per delivery boy, it gets to these communities, And just imagine, when we used to get these, vehicles, these trucks for eight hours duty and almost 25% of the time was getting restricted the gate. And then to solve that problem, what we did is, we used to send a biker in advance with the list of flats that are supposed to be visited by the delivery executive. And we used to give the list to the security guard, and the security guard used to call one by one and before the van arrived, he did the validation, the van went inside seamlessly. When we did this process, we saw that the efficiency of the gate increased by not the efficiency of the gate efficiency of those trucks who we were providing to these e-commerce companies increased by around 25%.

And that was the aha moment that if I’m able to solve this problem for just myself, this problem is being faced by all the E-commerce companies, and in those days for 100 House gated communities close to 60-70 people used to get e-commerce deliveries every day. So that’s a big enough problem. And why don’t we solve this problem for all the E-commerce companies? And said that, how can we position a product in the heights of the security guard that is communicating to them about the arrival of these delivery executors to various flats, based on which he can communicate to the residents that so and so delivery is coming Should I let him in, and then let the person in.

And this was creating a lot of operational efficiency for the part delivery companies, and they will pay something to us. And that was the time when we pivoted from the purple road to Mygate. And then I sounded this to my co-founders like, and that time friends, one of them was a colleague at Goldman Sachs, and one was my batchmate at ISB. And it sounded like they were also equally excited that this is a good problem to solve and a large problem to solve, All of us dived into this thereafter.

Siddhartha 11:53

And during those three months, what was the number of vehicles or rough estimate of scale that you were able to achieve in the logistics business?

Vijay 12:01

So that was, we scaled from eight vehicles to around 23-24 vehicles.

Siddhartha 12:07

Once you switched to Mygate, how much time did it take you to, let’s say, acquire X number of communities before your first funding round?

Vijay 12:17

So I think, for our first product itself, it took us, we started the company in 2016. We started building the product from probably December 2015. But we shipped the product, the first product at my own community where I was staying somewhere in August, September of 2016. And then, from 2016, August, September, till April 2017, we deployed in close to 40 gated communities. I think the journey from zero to 40, or 0 to 100 was very difficult, because it’s an extremely new category, And the feeling that a tech product cannot be used by a security guard. Security guards are not tech savvy, they have never used a smartphone in their life. How can a complex problem at the gate be solved by such a simple solution by the security guards at the gate? I think people took time to buy into the concept. But once they experienced it, they said yeah, this is such a simple solution. Why didn’t anybody else think about it before?

And, once we crossed 10,000, homes. That was close to 200-250 communities. Then we started actually seeing some signs of viral effects, Like, say, for example, you were coming to my home and my gate had Mygate. And that experience of going through the gate was so seamless, you liked it. And you said that, why don’t I also have it in my community? And that’s how you referred me to your gated community. And Mygate was installed. So when people started going into these gated communities, they started experiencing it. They started telling their own management committees that why don’t we get such kinds of products. And that helped us to grow from 10 to 600 was much faster than my 0 to100 and 600 to 2400 was much faster than the earlier this thing and 2400 to 25,000 was even much faster. So that’s how we started and scale.

Siddhartha 14:47

And you mentioned it, it was really tough, for the initial 100 communities. So how did the first funding round for you happen? Because what you built is truly innovation, Nobody has built before. And category creation is really hard, because there is no example in any other country or any other part of the world that you can give to any investor

Vijay 15:12

Yeah, so Siddhartha, all these categories creation and new categories, and all these things are the words that I learned as we were building the product and scaling the product, and mostly from, I think VCs and, the startup folks. But once you look at it, once as an entrepreneur, I’m taking myself back to 2015, or 2016, when I was building this product. I just saw that it’s a problem, And I didn’t know whether this problem was being faced by anybody else in the world or not. But this was a problem being faced in the country in India, especially. And I’m observing it every day. People are observing this kind of problem every day. And the problem was that we were living with it till the time we saw this solution. My whole point was as a resident, you see this problem, but you’re not looking to solve it, because you think that this problem is only affecting me.

But from the other side, when I saw the problem as a delivery executive, I saw the problem. So that was a problem not only for the resident hosting instead of earlier, from that perspective itself, it was also a problem to the delivery executive who’s coming in, it was also a problem to the security guard, who is doing the matchmaking. So everywhere this was a problem statement, and that’s how we identified this. It was pure first principle thinking and experiencing the problem in a multi dimensional way. I could think of creating a solution for this. First of all identifying the entities is the problem statement, and thereafter identifying that this problem statement is happening at scale. And third, it is very specific to India and we have to solve it in India. So that’s how we created the product and it so happened that it was a category creating product.

What happens is this category creates products. Let’s say for example, today, right or not the five years back, you’re talking to anybody about how you manage the security of your community, the top three things will come. What will come, I have an intercom, I have a CCTV camera and a boom barrier to stop the vehicle and verify the vehicle. These are the three kinds of ways in which you manage security in any gated community or anywhere for that matter. We said that intercom is, and we wanted to build a product that is completely asset light and can solve the purpose of each one of them without actually having them. See a lot of people in India think that you can solve this problem of vehicles like say for example, vehicle management. Whether a vehicle is supposed to come in or not, this vehicle is authorized to come in or not. What they do is they put boom barriers and will stop the vehicle. What will the boom barrier do eventually, it will stop the vehicle. After that, what you’ll do, you’ll identify whether the vehicle is authorized or not. And today there are various ways to identify RFID, automatic number plate reader and all those things to identify whether the vehicle is authorized. And once you identify, the boom opens, and the boom closes, the vehicle goes in the boom closes the problem.

If you see one vehicle, is it to say a good solution? Yes, this is a good solution. But what happens is, the Indian gates, the gates of these communities, they’re built much more royally. There are two big metal doors that will open, the length of the gate will be almost 10 meters. What happens when you force these kinds of boom barriers and normal solutions? So you will put a boom barrier. Boom barriers globally are designed only for two and a half feet, probably four feet to five feet. And the length of the boom barrier is four feet to five feet. And this four feet to five feet boom barrier, it just opens and closes. The time to open and close is almost four to five seconds.

Now, just imagine if the length of the boom is increased. Just to open it, it’ll take liuke, it’ll go up and because the length increases it takes a longer time to go up and longer time to come down. And then the vehicle to pass. So given the traffic, when I say traffic, the number of people coming into these gated communities. Just imagine an early morning when people are going to offices. Just imagine the number of Ubers and Olas and this office picks up cabs that are coming to pick up people from their homes. The volume is so high that the boom barrier never gets the chance to close, it’s always open. And if it’s always open, then what is the use of having a boom barrier? It takes up so much operational hassle and maintenance and installation, all these things at the end of the day, it is not useful. So you have to come up with solutions that will not require a boom barrier, but give the impact or the outcome of what a boom barrier can give.

So, in India, if you have to build efficient gait management or efficient platforms, anywhere, there is a lot of validation that needs to take place. You need to build, asset less platforms, just imagine you’re going to Metro, Delhi Metro, you’ll have to buy the token. And then even going through the turnstile, there is a huge cube, because there’s a little bit of friction. Solutions that need to come up, you don’t need to have even turnstiles and how can people go, but you can, fulfill the requirement of identifying the person and fine him.

So you need to come up with those kinds of solutions and constantly at Mygate, what we did is we identified that we can’t incorporate physical infrastructure, and even if we do, it wouldn’t work. But how do we meet or solve the problem without having this. We’re constantly thinking about how we make the system asset light and not for Mygate to operate efficiently but for the gate to operate efficiently. So I think that insights, and that way of thinking has actually helped Mygate to reach what it is today.

Siddhartha 21:25

Dear listeners. Before we dive further into the podcast, I would like to welcome Prashant Kunti, Head of Product Management at Zoho payroll and Zoho payroll. Prashant, Zoho products are an interconnected ecosystem that solves problems across all functions of a business. How is Zoho payroll solving problems beyond payroll?

Prashant 21:47

Thanks Siddhartha. That’s a very good question and comes to the heart of Zoho. So from the very beginning we decided we are not going to be a single product company. And we also believe that the systems have to be deeply integrated, that data should not be present within one system, data has to flow across multiple systems and payroll, by its very virtue straddles both HR and finance to extremely critical departments that are important for the functioning of the organization. So, we provide bi directional data synchronization between our HR suite of products as well as the finance suite from the upstream when employee giants’ details automatically flow to the payroll system. And when the payroll processing is done right, it automatically flows to the accounting system.

So it helps with end to end automation, it helps that HR department tells the finance department and furthermore, this going forward will flow into the analytics also. So this complete end to end bi directional data synchronization and this helps with everything. So basically, businesses spend less time on any of the administrative tasks and can do more value add.

Siddhartha 23:04

Thank you, Prashant. Dear listeners, you will find more about Zoho payroll in the show notes.

Now let’s further continue with the podcast.

And right now can you share some numbers on the scale of Mygate? Number of consumers, number of society.

Vijay 23:20

We have onboarded 25,000 gated communities. And we have built the operational scale and capability, and muscle to onboard 1 million and these 25,000 gated communities host close to 4 million homes. And the journey of the last five years in building this product and scaling this product has given us some deep insights in terms of how do you keep this product running 24 by seven. So our product is like a banking product. Opening a bank account is one problem, and making sure that the bank account is actually being operated profitably, there is saving as well as credit, keeping the consumer engaged for the lifetime is another muscle. I think at Mygate we have built both these muscles, both in terms of acquiring new gated communities, onboarding these communities, and making sure that the product is running 24 by seven at this gated community site. And at this point in time, we have built the muscle to acquire 1 million new homes and maintain the existing 4 million homes at scale. I think this is the muscle that we have built.

Siddhartha 24:43

And where would you be in terms of your revenue in a ballpark figure?

Vijay 24:48

So in revenue, I would say that we are in early two digit, two digit million ARR as of today.

Siddhartha 24:57

And in your monetization channels, you have made some changes over the course of Mygate journey, can you share how that has evolved?

Vijay 25:08

So, as I said to you, our core belief was that we are creating efficiencies at the gate and the people who were earlier facing friction at the game would pay for interacting with the product. But till we achieve a certain scale, like what I said, can we give all these e-commerce companies some way to get a seamless entry for their delivery executives without compromising the security that is designed at the gate of this community? And for this, the e-commerce companies should pay us and all these e-commerce companies would not integrate with us till the time we had a scale. And since this was a category, creating products, till the time we achieved that scale of integrating with these e-commerce companies, we were charging the gated communities a license fee, monthly license fee. And that has helped us to reach almost a scale of 6000 communities, and that’s when we opened up our API’s for all these e-commerce companies.

Today, our monetization is partly by this, giving seamless access to these e-commerce companies. And second is what we have started one of the things that was organically identified at Mygate is, we were having access to the I would say the truly high net individuals of India or the ACC, A population of India, by the design itself all the way to do population use staying in these gated communities, and they’re self segmenting themselves with by staying in a gated community, the self segmenting themselves. And this became an useful, segment for a lot of these brands to curate deals for our these members, a lot of brands started reaching out to us during COVID times that I want to offer certain things because my consumers are all staying in gated communities, I want to offer some day for disease can I communicate from Mygate, And, a lot of brands reached out to us, we said boss, we can build a really nice, community engagement platform where this, Brand’s can reach out to these gated communities.

And we started this somewhere in June, July last year. And we scaled up that business to 25% of our gated communities. And, yeah, that’s the first line of business that we have established at Mygate, and we also started another, partnering with local Home Services or facility management companies to give, cleaning services, or this any diagnostic services, or all those different different services that people take at home, and they became partners, and we created a marketplace for this, Home Services, and we opened it up to around 600 odd communities in Bangalore. And that’s also doing pretty well, I think that’s still too early for us to comment on the home services part, but the community engagement platform where brands can curate deals for these consumers is actually scaling up very well for us, and that will contribute to contributing significant revenue for us.

And what we also do here is, not only because most of these deals are shown to gated communities, we share part of this revenue with the homeowner association or the Management Committee, because the access to these households is through these management committees, we share a part of revenue to them. And that actually is in the last one year, we have shared revenue, almost 20 crore worth of value with these management committees. So, when I say management committees actually go to the society accountant, not to the individual Second, by the way. So basically the more societies there are on our platform, the more brands are reaching out to us, the more revenue we’re sharing with the gated communities, and the more revenue they are sharing with the gated communities more gated communities are signing up those and that whole cycle is actually becoming more and more wishes. So, it is actually creatingI would say, network effects there as well.

Siddhartha 29:47

Vijay , can you describe what are the various challenges that you faced in the zero to one journey, if you can describe zero to 1 million ARR journey or the first 1000 communities and then one to 10 journey and out above 10.

Vijay 30:03

Yeah, so I think zero to one, that’s the most interesting phase. And zero to one problems that every entrepreneur faces When they’re facing, they are the most difficult problems that they face in life. But once they’ve solved and gone to one to 10, they’ll figure out that zero was very trivial. Don’t even talk about it. For example, the first challenge is letting people know, most importantly, your immediate friends and relatives. When a thought occurs to you, you discuss with your friends, And you discuss with your close members. And most of them don’t have that entrepreneurial spirit to discuss, you are discussing something, a first principle, problem solving if the key or identifying a problem, and you want it to say that I’ll solve this at scale.

First of all, your friends want to have the DNA to think like that. And once you’re explaining it to them, they will not be able to appreciate it and they will not be able to give the right feedback. So every entrepreneur wants to hear music. Like yes whatever you’re doing is right. And it’s very important that you reach out to people smarter than you or who have been in that, have done something, started something and gone through this journey. failed or succeeded. Go to them and speak to them about this. Don’t speak to your friends and relatives who probably will not be able to add value to your this thing.You should speak to somebody who has been on a journey and speak to four or five folks. 2 out of 5 will say no, this is not scalable, or they’ll have different views.

But even if I would say, two people or even one person says that there is some meat here, go after it. I think that is the first problem. Second is, once you’re over it, you have decided that, I want to pursue this, and getting the right people to be on board with you is the second. And I think the most important problems that people face or difficult problems people face.

What happens is wherever you go and discuss this kind of solution to any of your friends who is really smart, but he’s actually disgruntled with his job now The moment he is disgruntled with his job, and he’ll see this opportunity he’ll be like I’ll do it. Probably he’s not the right person Because people should get passionate about the whole thing, what you’re talking about, they should appreciate the problem by heart, they’ll say the product should be appreciated, or the solution should be appreciated. And you should figure that out, Is this person just coming because of the opportunity cost? Is he coming because the grass is greener on the other side or actually, he’s leaving something on the table and coming to you.

And that’s the one more request is that, okay, this guy is signing up for a long term or not. And identifying those people is also equally important, who will be the right partner who will compliment you in your skills, and help you build this product rather than who is thinking like you to come on board this. And third is once you get those people, how do you keep them together. Because there’s so much uncertainty in the initial days, so much of iterations you need to do. And during those iterations,how is the relationship building, or the relationship is actually getting weaker. And then attracting the right folks to come to your company. And most of the guys who start, they don’t have any, like any entrepreneurial journey before.

And the younger you get, fortunately, we started Mygate at 15 years of our career. During 15 years, we worked with lots of people, and we were able to create some kinds of bondage and show our professionalism to some people who are actually aspiring to join us. And we had some good experience behind us when these younger folks coming out from colleges had trust in us to join us. But once you’re very young, you just came out of college, two years, three years, you’re not built for that kind of professional competence. Or I would not say competence, but people trust you. If Siddhartha has like say two years of experience, after that he says that he’ll start something. Can I test Sidharth? So it becomes very difficult to attract talent also. And that’s one more challenge that you need to solve. And then keeping all of them together, and hustling to get the product out and to scale.

I think zero to one, to get the product out, to get the right co-founders working with them, building and attracting the first set of talent, building the product and taking it to the market is one challenge. Once you take it to the market and you see that there is a product market fit established, I would not say established Are you seeing initial, Telltale indicators of yes, there is a product market fit. And testing that product market fit at a small scale like 30-40 Paying consumers, and a couple of people using the product, and the interactions, I think that is the next set of problem statements. And then once you get to this state, attracting capital is the next set of problem statements. And then once you attract the capital, scale the business from one to 10 again, all these are like different chapters of the book. And there is no relation between the first chapter and the second chapter, you’ll see that at each of the stages, the way you need to solve the problem is completely different.

So what this means is, as you’re progressing to different chapters of your startup, you as an individual should actually change and multi fold. At every level you get an experience of 10x. And more than 10x experience, you get so many challenges and obstacles and learnings, that these are almost, every chapter is a 100x learning for you. So I think all these things will happen together. And you are all alone in this, you and your co-founders. And most of the time your investors, and your family members also don’t understand how much of a problem you are and what kinds of stress you’re in.

So it becomes even more important whether, if you’re like, on a scale of zero to 10, if you’re putting five efforts of five to select your life partner, here, you have to put on a scale of zero to 10, almost 10 efforts to select your co-founder. And the initial team members. It’s very, very, very, very important. Like it just cannot be undermined. Any wrong step you take during this phase zero to one will actually get you back by almost three to four months. And in zero to one phase three to four months is a lot of time. Hope I answered.

Siddhartha 37:34

Yes, you have. And wasn’t there any existential crisis that you faced during the Mygate journey?

Vijay 37:41

Yeah, I think our existential crisis we faced, even before we took our Series A or I would say seed round. Because we raised almost 15 Crores from our friends and relatives. And 15 Crores, almost for a year’s time we started somewhere. We left our job somewhere in November, December 2015. And our first product was sold in August, September timeframe, almost for a year. We had team members, we had ourselves and we were building the product. Out of 1.5 crore, 1.2ccrore was over. We were just left with 30 lakhs. And we were still thinking that, I would say the way we are planning to grow the business was our sales will fund our growth. Like, we didn’t have so much experience in, how to raise money because it’s the first startup for us, how to deal with VCs, all those things were not known to us, We are always meeting more and more consumers asking them to buy our product and we’ll keep building the product. That was the thought process. We never thought that we would start with the product, go and approach a VC, we didn’t have that thought process.

I think for us, it’s very interesting in terms of how our first VC also came on board. Within a month’s time. Three partners of Prime Ventures were staying in three different communities in Bangalore, it so happened that we ended up putting in all these three communities Mygate in a span of one month, and they said that and these people live all the three partners live at a distance of almost from one partner’s home to the other partner’s home is close to 12 to 13 kilometers and 13 kilometers range was completed by this startup in three months was very interesting to them. And all three of them saw something interesting in the product, a new kind of a new way of solving a India specific problem. And they reached out to us, we were selling the business to gated communities, they reached out to us through some network, and they said why Don’t you come and meet us.

And then that’s the first time we say Prime Venture partners fund reached out to us, we Googled and got to know that these guys are VCs or investors And talked to our Angels, do you guys know them or not, and it so happened that one of the angels Amiya Tripathi, he was co founder with Sanjay Swami at ZipDial. And he said that yes I know these guys, it’s a good fund you should talk to them and I said okay let’s go talk to them. And the times given to us was so short that we didn’t even prepare any pitch deck, we just went there, we explained the product to them the way we explained to any gated community management committee, and they liked the way we were solving the problem and the problem that we’re solving and how it could be scaled Probably in the meeting they understood our DNA and thought process the way we are talking about.

It so happened that the mentors for two to three times over a period of three days. And they said that we want to sign a term sheet. Prepare a business plan. Luckily we knew how to prepare a business plan because three of us did MBA, so we made a thick business plan. We went to them. And the deal happened. I think Prime says that that was the fastest deal from the meeting to term sheet signing that happened in one week’s time.

Siddhartha 41:30

And what was the amount that you raised from Prime in that round?

Vijay 41:35

So from Prime, we raised 2.2 million in that round. And that was, I would say seed round. And then when we raised money from Prime, we were at 40 gated communities. And then in a span of six months. We went from 40 to 600 gated communities. Not six months, but almost seven to eight months. We went to 600 gated communities. That’s the time our series A happened. Series A happened from one of the LPs of prime and prime also participated in that.

Siddhartha 42:11

And at what point when the series A happened, what point did the next round happen to series B?

Vijay 42:19

Series B happened a year later. And we grew from 600 communities to 2500 communities in one year’s time. And that’s the time our series B happened. And from series B, the first conversation to the money in the bank itself. We grew three times, 2400 We grew to almost 6500 communities.

Siddhartha 42:45

So almost you never had to reach out to VCs, VCs reached out to you and closed the round.

Vijay 42:51

Yeah, I think all these seed, series A and Series B. It’s so happened that we never did much outreach. I think this is very important, Once you keep doing your product what do you think is the right way to keep building the product and always have in your mind that, we’ll start the business from the money that’ll come out of business. And then, VCs are part of, they’ll come into this journey, and they look for a financial return, and they’ll help you in turn, grow but actually you do the business. And then, if you’re building a business in the right way, VCs will come automatically to you. Yes, there will be some VCs who will give you, magnanimous valuations. And some VCs will give you, I would say the correct valuations and some VCs will be, they will actually go bottoms up, and they’ll give you the valuation based on the bottoms up approach.

That is a call you need to take whether the VC is meeting. Mostly, he’s good to be a partner on board. In fact a lot of people tell you, how do you hire a team member? It is that if you’re able to have meaningful conversation with a team member, who is adding value to your conversation, I will say the same thing is with anybody who is investing into the company and being on the board of your company, you need to see whether that person would be able to add value to you, Or you will be able to derive value. It’s not you, but the company would be able to derive value from that person being on the board. So it’s a two way thing that happens during this, VC entrepreneur conversations. And that’s a very, very important thing that the VC that is coming on board should sign up with a vision and the thesis that you have in mind.

Siddhartha 44:54

And can you share how the last two years of COVID have been for Mygate? Your insights of operating in such difficult times and how do you assess your persistence and grit during such time?

Vijay 45:08

I would say during COVID, if you see what Mygate was doing, Mygate was actually letting the right people inside that front gate of your community reach your doorstep. But what happened during COVID is the way gates used to operate changed. Earlier people used to come inside. During COVID Everything was stopped at the gate, everything was managed at the gate. So, we had to reconfigure the product to manage at the gate. And what happened during COVID Is every state every, PIN code had a different norms and rules, Containment Zone, non Containment Zone, who is in a containment, in whose home we can go and who is coming from an odd Containment Zone, and the whole country was divided. And we had products in the entire country, during COVID, the mygate was operating, I would say are mostly in 30 to 40 different configurations. For example, in community A, they want everything to be collected at the gate. The resident will go and collect the item from the gate.

So we had to build, I would say something like, a locker system at the gate. Again, all these when I say locker system, these are all virtual lockers, nothing, we don’t believe in physical assets. So we built a almost like a virtual locker at the gate so that, the delivery boy will go and put it in the locker, and this resident will go and collect it from the locker because this is all happening in a sink way is not that the delivery boy is going to wait till the time the resident comes from his home to the gate. All that will happen in a sink way. This is one configuration. Second extreme configuration is that I want to allow everybody inside the gate, but I want to make sure that he is vaccinated, his mask is on. His temperature is recorded. And he’s not coming from a Containment Zone.

So all these things. Measure all this and then send him to me, in between some gated communities used to allow people and they will only allow people and the items should be collected at the lobby level of every tower. So all these different configurations we had to do, Each and every community was operating with a different configuration. So I think Mygate, during COVID, has become very, very flexible, in terms of solving and especially, once we had to become this flexible, the entire architecture, design and engineering thinking and the organization thinking changed, to become so flexible to meet the consumer needs. I think that’s one plus point, as a talent that the organization develops. But that was very short lived, this problem was very short lived. But the organization had to do so many things within such a short time.

So I think that is one one of the biggest challenges that we have identified or, I would say, gone through in the last two years. And I think our ability to solve them in this flexible manner, by reconfiguring ourselves, because I think, at some point, we were thinking that whether we have to do something for COVID or not, it’s going to be a short lived things, should we do so much for it, but what we realize is to win the hearts of consumer, you need to adapt to the consumer needs at every point in time, And the more you adapt, and actually you should be a step ahead in terms of thinking about the consumer, the more you’re ahead, thinking about the consumer, the better love you get from him and the better NPS and more consumers will take the product. I think that was, I would, I don’t know, whether it comes into the category of patients and grit. But we had to be constantly evolving and constantly ahead to meet the consumer’s demand, I would say, and that’s what was the greatest learning during this time.

Siddhartha 49:03

And you mentioned in our offline conversation that right now you have 83% market share.

Vijay 49:10

Yes.

Siddhartha 49:12

Being an army man. So we can almost compare, like, both are equally grueling journeys, being an army man, being a sports person and being an entrepreneur. What are the similarities between being an entrepreneur and being an army man?

Vijay 49:31

So although I was in the Armed Forces, I spent the majority of my time flying helicopters. And I’ll just give you certain tenets of a helicopter pilot or I think I would not say tenets, but these are the QRs are qualifications required to be a helicopter pilot. See, a helicopter is a machine. It is in a low flying machine and it always operates at very high risk environments, And it’s a very three dimensional flying object. Any externality in one dimension will actually create disturbance in all the dimensions. So it’s very difficult to fly a helicopter. So you always need to keep observing what’s happening around you, you’re flying at a low level. So you need to keep seeing where the obstructions are, always look out that there are no obstructions, and there are no birds and all those things coming.

Second is you always need to be prepared for, if a helicopter engine failure happens it is almost fatal. So always you’re on the lookout, like the way a helicopter pilot is trained is five minutes from now you’re going to have an engine failure. What would you do if you had an engine failure? So constantly, you’re thinking that hobby engine failure on Avila, or we make alcohol and coffee? So you’re looking for a force landing field surface. So you’re always on a lookout for things. And it so happens that, there’s so much of intuition, you start building over a period of time when you’re doing your mind is constantly getting, these kinds of situations, you’re constantly developing intuitions, and you’re able to see a little bit ahead of times and what a normal person would be able to see.

And second is you’re always, and in the armed forces, everything happens on standard operating procedure, everything has a procedure. And your mind is constantly revising the standard operating procedure. And this standard operating procedure becomes our DNA action, it becomes so deep that everything in our life we do in that manner. So everything is planned. So I think some of these qualities of situational awareness, constantly being aware of what’s happening around you, and what are the steps that you need to take. When I say in the correct balance, you always need to know what’s happening in the ecosystem. What’s the new technologies coming up and how these new technologies are going to help or disrupt your existing business? How do you need to know, adapt to these challenges, how early or late should you do it? All those kinds of things actually help us out.

And we are also able to see that right now the organization is of 500 people, in the next one year it’ll become 1000 people, how do I first attract that talent? How do I make sure that we create scalable employees or team members, human capital management tools, and various designs and all those things to keep all of them happy, and keep all of them motivated? All those things you start foreseeing before, things happen, and you start gearing up for that. So, I think the situational awareness, and the deep intuition and ability to foresee ahead of time, some of the things that are likely to hit you will actually help you be prepared. And the armed forces may have the DNA of or I would say, not DNA, but it becomes that process orientation, which is actually embedded into the DNA.

So, as I told you offline, when we hustle, there is some, it is there is some method to that hustle. And it actually gets embedded into the hustle itself. So I think these are some of the aspects that I would actually contribute to my experience in the armed forces. And I think the fear of failure is also so low we constantly keep experimenting things, and very confidently keep going into this. uncharted areas and uncharted territories. So in the startup parlance, go to things that you cannot, you don’t know what your destiny is going to be, what’s the outcome going to be. You go all in and come out successfully from it. I think that all those kinds of experiences helped quite a lot for me to shape up this startup journey.

Siddhartha 54:10

In India, how much of the market remains to be uncaptured by Mygate?

Vijay 54:16

See, India, there are 150,000 gated communities as of today. And in India, the only way any residential, real estate is developing is happening through gated communities, the phenomenon of gated communities just not limited to urban India. Now, that has become a norm in the tier two tier three cities as well. Unfortunately, in India, the public infrastructure is not catching up with the pace of development that is happening around and the pace of urbanization that needs to happen. Hence, these private builders are able to provide these amenities in these private properties which are gated communities, like for example, you and me in our childhood had some park or something to go and play. Today, I don’t have any, if you go around Bangalore, especially in the outer ring road and the new development areas, do you have a single place like a park, or a swimming pool or a place where you can send your kid free of cost, you don’t have it.

And these all are basic amenities and necessities of every Indian. These gated communities offer you a playground, they offer you a swimming pool, they offer your clubhouse for you to pursue your extracurricular and your community engagement, related activities. And hence, we see that these gated communities today, which are 150,000, are going to go up to 240,000 gated communities in the next, five to eight years. And as of today, 16 million households are hosted in these gated communities. And this number is going to go up to 30 million households. Coming to the question that you asked, what is the amount of market that is left to you? I would say that 30 million homes is the market that is left to us. And we are right now in 4 million homes, I would say that we have barely scratched the surface. There’s a long way ahead for us in India to capture the remaining 90% market.

Siddhartha 56:26

Any parting thoughts for entrepreneurs, like how you thought about the various parts of Virginia and even how you’re thinking from now from the double digit million ARR to 50 million ARr?

Vijay 56:38

Yeah, I think for founders. Every day is going to be different. And it’s not like a book that can be written by 10 founders talking and writing a book, and even if you read the book, the actual syllabus, when you enter the ground, is going to be entirely different. Every journey is, every startup’s journey, or every founder’s journey is unique to himself. All these gangs of, do this , do that, all of it’s just going to be some insights to you. But will you face that problem? I don’t think you will face a completely different problem statement, which nobody else’s face. So I would say that, be prepared. Do whatever you can do, be prepared for the worst. And it’s not going to be an easy battle, it’s going to be a difficult battle. And be prepared, that you’re going for a difficult battle, and make good friends and leverage your friends and leverage the community for whatever you want to achieve.

So there is no cookie cutter. I will say, solutions or advice that I can give, but I would only say founders that, thinking of starting something, or already in the initial stages, the journey is extremely hard. It’s not impossible. And we require more and more people to go through this, harder path so that we can create value in the, for ourselves, as well as for the people around us. But trust me. It is going to be an exciting journey. The path that you’re going to take, whether you’re successful or not successful, every day in this journey is going to be 10x more rewarding and insightful and experiences are going to be such that nobody else would be able to get that kind of experience. It’s a fantastic journey, although it’s a difficult, fantastic journey.

Siddhartha 58:43

Thank you so much Vijay. It’s been a pleasure hosting you and knowing your journey so deeply. Thanks.

Vijay 58:50

Thanks Siddhartha, I know this podcast was long and we could not coordinate calendars, but finally it happened. And yeah, thanks for hosting me.

Siddhartha 59:00

It’s been a pleasure. It’s almost three years to make this podcast happen. But I’m glad you took almost that much time because he could get that whole perspective of that journey.

Vijay 59:10

Awesome for that. Thank you.

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