Episode 185 / August 23, 2022

Building SaaS-Enabled Market for Indian Manufactures: SourceWiz

01 hr 12 min

Episode 185 / August 23, 2022

Building SaaS-Enabled Market for Indian Manufactures: SourceWiz

01 hr 12 min
Listen on


How can an experience being a VC come handy while starting up? To answer this today we’ve with us Divyaanshu Makkar, Co-Founder, Sourcewiz.

Prior to starting Sourcewiz, Divyaanshu had already tasted entrepreneurship with his first venture in EdTech space, Connect2Teach in London. Post that after working with EY-Parthenon for a brief period of time, he joined Bessemer Venture Partners in California, United States.

At Bessemer he focused on EdTech, Consumer Tech for India/SEA and Enterprise/SMB SaaS being built from India/SEA for the world.

In today’s episode, we talk with Divyaanshu understanding his journey from being a Entrepreneur to becoming a VC and then going back for Entrepreneurship, his learnings and networks from his VC-period which came handy while starting Sourcewiz and more.


Notes –

02:24 – Intro

03:53 – Early Career and background in Venture Capital prior to Sourcewiz

07:35 – After VC what made him come back as an entrepreneur?

09:38 – Learnings from Mistakes from his previous venture

13:02 – Mistakes he observed other founders make while being a VC

15:04 – Key criterias for him while selecting a market from a VC’s lens

20:03 – Zoho Sponsored – Prashant Ganti on Where do founders struggle with Payroll and how can they fix it?

21:58 – Quitting at Bessemer Venture Partners to starting up Sourcewiz

31:10 – Connecting with Sajith Pai from Blume Ventures

35:02 – Identifying and Focusing on the problem statement within SaaS

41:08 – Getting their first paying customer

44:45 – Figuring out a scalable GTM for Tier-II customers

47:34 – Acquiring 400+ Paid customers in within first year

49:20 – Building a marketplace and its current traction

53:59 – His path to a $1Mn ARR and then for $10Mn ARR

56:16 – Building mechanism for scale

1:00:34 – Unknowns in the market they are still figuring out

1:02:12 – Closing their second round of Seed funding with ​​Matrix Partners India

1:05:02 – Selection criteria for Angel Investors 1:06:44 – Key pointers of Do’s and Don’ts for new founders

Read the full transcript here:

Divyaanshu 0:00

I think one thing that I talked about my learnings as a VC was that and this you’ll hear from a lot of entrepreneurs that VC don’t know and VC don’t understand this is, I think that has to be just accepted. As a matter of fact, like a person like me sitting there at Bessemer, I personally cannot know 100 industries, I cannot associate with 100 problems. So you have to go in knowing that this guy doesn’t understand. And it’s okay for him to not understand it or understand it, and then you have to sort of explain it that way.

And especially in SAS when you’re building, let’s say, for insurance or for like, like manufacturing, which is the unsexy industry, I know for a fact that if I go talk to VCs, they will never have stepped into a factory also. It’s very, very rare that I come across a VC who probably has any relationship with manufacturing, or maybe it doesn’t happen very often. And as I start pitching to, let’s say, global investors, that will never happen, essentially. So how do you sort of, I think that is one part where I saw that a lot of pitches wouldn’t communicate that very well, as a consumer, it’s a lot easier to relate to a value proposition. So it’s easier for consumer tech startups, I think, in that sense, but for SAS, I think it’s very, very important to explain the problem and figure out what it will take for that guy to be interested and at Bessemer at least, we were very very metric driven right. And I think we published the best of SaaS Global SaaS out there.

So pretty much that’s how I’m gonna evaluate. They were companies in oil and gas. I have no idea about oil and gas, but a couple of those metrics. I intend to learn more about the company. So that I think was one thing that I felt was missing. When startups would pitch SaaS companies especially.

Nansi 1:48

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

Siddhartha 2:20

Hi, this is Siddhartha Ahluwalia Welcome to the 100x Entrepreneur Podcast. Today I have with me Divyaanshu Makkar Sourcewiz, co-founder and CEO of Sourcewiz is a SaaS enabled marketplace for manufacturers, helping them streamline internal processes as well as sell better and more. Divyaanshu has been a founder previously then became a VC to see how VCs see founders. VCs see founders differently, how do VCs evaluate, and then he went into a B School at University of California, Berkeley, and immediately dropped out.

So it’s a very interesting journey that we are going to cover we are going to see in today’s podcast, how like most of the SaaS businesses today are getting started for US market, whereas the team at force was decided to focus on manufacturers, which is the hardest segment to crack in India because these guys operate offline, DNA is going to how do you crap a business with its feet on the street? How do you build revenue in that? And how are you able to get funding from some of the top tier one VCs from India, also 100x Entrepreneur fund has been a very fortunate partner in Sourcewiz. It’s been an amazing journey thanks to Sajith Pai and Divyaanshu for making us part and getting a skin in the game on the journey. Divyaanshu welcome to the podcast.

Divyaanshu 3:48

Thanks Siddhartha. Thanks for having me.

Siddhartha 3:51

So Divyaanshu first I would like to start with your background before the Sourcewiz, What were you doing?

Divyaanshu 3:58

Got it. I’ll start with a little bit from childhood so I was born and brought up in Delhi. And I lost my dad very young so I was brought up by a single mother and the goal was very simple for me like through college, I went to IIT Delhi. The goal was very simple. I wanted to solve monetary issues. So I wanted to take the highest paying job and get out of college. So for me that happened to be consulting. So I joined the Parthenon group, which is a management consulting firm right after college. It was based in Mumbai. And that’s where I started my career. Very interesting couple of years there. It was a global consulting firm, I traveled to maybe 15 odd countries and spent a lot of time in Africa, Middle East, Southeast Asia. And typical work, strategy, consulting, private equity due diligence, but sort of gave me the exposure that I really needed there and was able to sort of save enough money to then be able to take a risk and start my first company which was Connect2Teach, ran Connect2Teach for about two years.

We were building software solutions for higher education, like universities or a lot of the new age higher education companies that were coming up more in the recruitment space. So almost like an up work for higher education, most focused on the UK and the US markets, I ran that for about two years, two and a half years. And then a couple of things happened in my life, that business was not scaling to my expectation, and my co founder at that time, and I had very different ambitions from the startup, she was a decade old family business background, she would have been happy with a profitable, small scale, recurring business, whereas at 24, my ambitions were very, very different, especially coming from IIT, and seeing what was happening around me in the world of technology and how fast companies were scaling.

So I sort of moved out of there. My fiancee was in the US, I was still trying to figure out what I want to do next. So she had completed her MBA, she was going to SF, and which is where you mentioned, I went to Berkeley. So I decided to also, at that time, at least think that we can solve one part of my life, I can, at least personally being closer to my partner. So I decided to do my MBA and apply to mostly West Coast schools and got through. So the idea was to go to Berkeley and spend some time in Silicon Valley trying to figure out what I want to build next there.

And COVID happened. So I changed my plans, delayed my MB by a year. And fortunately at that time, when I was thinking about what I can do in that one year, VC seemed like a great option and opportunity with Bessemer came about. So I joined VC with a mindset of being able to see other industries being able to understand from a VC lens, what companies raise and stuff like that. But most importantly, to build a founder network of my own, I really wanted to see other people’s journey, learn from them. So VC, for me, was a perfect place to sort of do all that. So did VC for a year.

And towards the end of my journey, I found that the manufacturing space was very interesting, and wanted to sort of explore it further. So I did not tell my partner that I’m doing all this for her, I was going to come back to Berkeley, in six months, we’ll set up our house, etc, there. So I started exploring this manufacturing space, we figured out some problems, built some prototypes and got very good traction, and then I told her that I want to build this and I want to build this in India. And then she told me that if you can raise some money, then we’ll talk about it. And then that’s how it all started.

Siddhartha 7:34

Got it. So after VC what made you come back in the second innings as a founder, you could have continued longer as a VC to build more social capital, as well as personal financial capital for yourself and then thought of being a founder.

Divyaanshu 7:50

Yeah, number one, I think I always wanted to be an entrepreneur. And that was never a question in my mind. So I always knew that I’d go back to entrepreneurship, it was, I think the first experience tells you and I got into that experience, very young, I had a year and some months of total work experience. So I did not know how grueling it was, I did not know how much time it would take. I was very like, captivated by stories in the media, about how companies quickly scale and stuff like that. So I think one thing that I learned was that it’s a 10 year journey, and you have to be really sure of where you want to spend your time.

So I wanted to take some time to figure out where that industry is going to be. Second, the skills that you learn in VCs are not really applicable to what you will do as an entrepreneur. And that became very clear to me very quickly, it was clear to me when I did consulting, because none of what I did as an entrepreneur, outside of maybe thinking a little bit of being able to present the business well, etc, are applicable, the first 0 to 1, 1 to 100, it’s a very, very different skill set. So I knew that if I continue longer in Vc as a skill set, I’m probably not building anything towards my startup. If it was an operating role, I could probably have taken some learning back and applied.

So VC for me was always an intermediary step in that way, I wanted to, as I said, build a founders network, figure out a space or species that I’m finding interesting and just understand from a VC perspective, why some businesses get funded, and some don’t. And one year was enough for me to do that. And to at least know all the VCs etc. And the market sentiment at that time was really good. So it felt like the right time to start entrepreneurship.

Siddhartha 9:37

And what are the mistakes that you documented from your earlier venture that you’re not making right now in Sourcewiz?

Divyaanshu 9:44

I think the first big part of it is how you build your founding team and your co-founders. So the first time was very hasty, it was as connected to someone to some friends and I mean, the way I decided to go into it was not very thought through. I think this time we were very, very thought through. So I wanted a founding team, which was completely complementary in skill set. So Vikas, my other co-founder, has been a product manager, so he controls product, he controls product calls, Mayur is a software engineer, he controls coding everything, do infrastructure etc, goes to him, and I will just trust his judgment on it. So we move really, really fast in that way.

And, also, the second part is ambition, you should be equally ambitious about your business and what kind of business you want to build. So if it’s a large business, all of you should want to build a large scale business. And as soon as you take VC money, you have decided a trajectory to follow for your business. You can’t then say that, okay, I don’t want to grow this rapidly, or I want to probably build this a different way, you have to build it in that way. So ambition and complementary skill sets were really important. And that’s one of the core learnings that we applied. Second was to not be married to a solution. In my first tint, we were like, Okay, this is what we’re building. And we just kept sort of building that right to keep pushing that rather than ever taking a step back and saying that, hey, this doesn’t work. Like maybe the solution is a problem. Maybe the problem is also not rightly identified.

So this time, we were like, Okay, we will identify a space, we want to build something in manufacturing, and we’ll talk a little bit about I think, why manufacturing, but we got married to this president with built in manufacturing, and then we just iterated on what approach would work best and SaaS was also an outcome of that, we did not start thinking that okay, let’s build a SaaS business for manufacturers, we got married to this space, and then sort of kept retreating. And then third is to hire very good people. So L one team, etc, and decentralized decision making. So that is one thing that I keep constantly applying.

And my role as a founder, I see, is to keep the company well capitalized. So I can bring great talent, and then give that talent sort of the right decision making power, so they can do their job. So that is another thing that we didn’t do really well, in the first startup. And think of tech first. I think when the two, three business people are trying to solve a problem, you always sort of first and India, it’s very easy to put people on the problem. It’s like people are cheap in India. So I think that’s one thing that we didn’t do really well. We ran it very, very, operationally, we never thought about it, our solutions were never tech first. And that’s because most of the solutions are coming from non technical people.

So now we sort of make sure that tech has a seat at every table in terms of when we’re solving a problem, even if you’re solving the customer acquisition, tech will come up with 10, sort of automations that you will probably not even think about. Your solution will be keeping a four person team to do that.

Siddhartha 13:02

And what are the mistakes that you see if SaaS founders made and other founders made while you observed and evaluated them as a VC at Bessemer?

Divyaanshu 13:13

I think one thing that I talked about my learnings as a VC was that and this you’ll hear from a lot of entrepreneurs that VC don’t know and VC don’t understand this is, I think that has to be just accepted. As a matter of fact, like a person like me sitting there at Bessemer, I personally cannot know 100 industries, I cannot associate with 100 problems. So you have to go in knowing that this guy doesn’t understand. And it’s okay for him to not understand it or understand it, and then you have to sort of explain it that way.

And especially in SAS when you’re building, let’s say, for insurance or for like, like manufacturing, which is the unsexy industry, I know for a fact that if I go talk to VCs, they will never have stepped into a factory also. It’s very, very rare that I come across a VC who probably has any relationship with manufacturing, or maybe it doesn’t happen very often. And as I start pitching to, let’s say, global investors, that will never happen, essentially. So how do you sort of, I think that is one part where I saw that a lot of pitches wouldn’t communicate that very well, as a consumer, it’s a lot easier to relate to a value proposition. So it’s easier for consumer tech startups, I think, in that sense, but for SAS, I think it’s very, very important to explain the problem and figure out what it will take for that guy to be interested and at Bessemer at least, we were very very metric driven right. And I think we published the best of SaaS Global SaaS out there.

So pretty much that’s how I’m gonna evaluate. They were companies in oil and gas. I have no idea about oil and gas, but a couple of those metrics. I intend to learn more about the company. So that I think was one thing that I felt was missing. When startups would pitch SaaS companies especially.

Siddhartha 15:04

And from a VC lens, once you are now evaluating, jumping back onto entrepreneurship, what are the key criteria for you while selecting a market and selecting a problem?

Divyaanshu 15:17

Yeah, I think the TAM, or just the total addressable market, or just the space should be large, like, it should be large for you to keep innovating. And I think the VC perspective there is that if the space is large, you’ll figure out your positioning within the market, you have places to pivot and like,figure out your own selective positioning. So that was one thing that was always in my mind that I have to go after a large problem. And in an evolving market, it’s always better to go into an evolving market. So manufacturing, at least, both of these supply chains were shifting China plus COVID had really changed how people thought about supply chains, and there was a Bangladesh with numbers, some of these emerging geographies And supply chains were not that streamlined in these countries, and still aren’t.

Still, if you place an order in China, even though you don’t know the language, they’ll give you a very good user experience as an importer. But in India, in Vietnam, the markets are very, very opaque, they haven’t been solved. So manufacturing was a large problem in general, and India was evolving, or at least trying to be and people were looking at India now as a sourcing destination.

So large market, and then a lot of unsolved problems. So when we went into this market, we just saw problems and problems and they were very, very hard problems, like the supply chain is very, very complex. And so we thought, there’s multiple places where we could see that tech can play a role in streamlining it. So this market really lends itself to tech innovations in that sense.

And I became a fan of unsexy markets at Bessemer. I felt like, everybody’s thinking about the creator economy or like, what’s the next sexy. And that’s how a lot of founders also start. That’s how I also, frankly, started thinking about new ideas, like, what’s the new sexy thing out there. But as I was looking at a lot of businesses at Bessemer, I found that there were a lot of these founders building in very unsexy spaces like, like detect technologies, for example, is one committed, I really, really liked it my best days building for oil and gas, and those business have very strong business fundamentals not a lot of people are competing in those spaces. And it gives you a lot of time to build something of value to your customers, you’re not always chasing numbers, rather you get enough time to build core solutions.

So I really like that about manufacturing, it is hard, very unsexy and one last thing that I really liked was when I went and met these factories, like the perception that I had and everybody had about manufacturers wanting a Lala ji type of company. Nobody cares about technology. But when I actually went on ground, I met the second generation, everybody studied abroad, or has gone to a good university, they have their ambitions, they don’t want to run it like their fathers, and they are, demand first in the mindset, they want to give a good user, value proposition to the end customer good experience to the end customer, compared to the previous generation, where they were very good, I would say, operators taskmasters they will know, accounting really well, they know where every man is going, that’s not the current generation, they are not like that. They don’t think like that. So I saw that as a big change as well, then at least I was meeting customers. So a lot of these different different things sort of came about when we were selecting the space you want to go after.

Siddhartha 18:50

So how many customers did you meet before you finalized Sourcewiz?

Divyaanshu 18:56

So I had a notion document and we were very, very methodical. And this is one of the reasons why I think one of the earlier investors invested because we literally opened a notion there were like hundreds of notes. So we probably met 90-100, like a ballpark 100 factories before we started. And in some of these factories, we spent two weeks three weeks shadowing, like the owner, just seeing how they work. So a lot of time was spent in factories, and we also went to different geographies. So we spent time in Panipat, which is a city close to Delhi, a small exporter hub. And then we went to Moradabad, which is a metal handicraft hub. Then we went to Jaipur, which is handicraft, but that’s a little bit of a parallel. So we try to cover different micro segments in terms of categories so that we know the problems or at least high level or these industries, people, the processes, their workflows or the other similar so, yeah, I think we met a lot in four or five months. I think we just spent time, we did nothing else that time.

Siddhartha 20:03

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 Book. Prashant, what is your long term vision for Zoho payroll?

Prashant 20:17

Thanks, Siddhartha. So for us at Zoho, everything we invest for the long term that includes Zoho payroll, we will continue to invest in r&d, pushing innovation to the payroll domain. And what we will also do is prepare on straddles both HR and finance. And many times what we do we see many of these problems as situated applications like payroll or something that just addresses one domain. What we have observed is all these applications have wide implications. All these departments like payroll have wide implications across the organization. So we will continue to ensure that the data residing in payroll applications disseminate across the organization, and help with decision making across various departments. Furthermore, we are emerging as a payroll platform, we encourage our customers to solve problems that we ourselves have not imagined.

And they are also seeing that payroll plays a larger role in the ecosystem, like for example, payroll, be connected banks are going forward with my top 10 insurance providers with regulatory authorities, so end to end automation across the entire ecosystem. So that’s our long term plan for payroll.

Siddhartha 21:49

Thank you, Prashant. Dear listeners, you will find more about Zoho payroll in the show notes. Now, let’s further continue with the podcast.

So you quit your job at Bessemer in April 2021.So after April, how much time did you spend on this activity?

Divyaanshu 22:09

So I think April, march 31, was my last day, April 2, I was at a factory. Because while I was quitting, I had already figured out that I want to explore this manufacturing space. So April 2, Vikas and I were at our first factory, we went to Panipat, my in-laws live in Panipat so we literally spent like, I think we spent a full month there. And then we came back to Delhi, then we went to Jaipur, then we went to Moradabad and this was all throughout the second wave of COVID.

That we were doing all of this.

So we did not lose momentum. Like we just kept meeting factories. And I think by May, May mid, June, we had sort of narrowed down on the path that we wanted to take. And we wanted to be like a SaaS enabled marketplace. So we at least figured out that this is a SaaS thing that we want to solve first. And then we spent another month or so just pitching a prototype. So we built a prototype, it was a figma prototype, no tech, no coding involved, but it was literally you could look at it and you would, we would pitch it to you in a way that you will, as a manufacturer, you will not know that I’m pitching to you a prototype. We’ll pitch it like a ready product. So we spent like the next one month, just pitching it to customers. And at our core, this thing was simple. Like, we’ll ask for money after every pitch so that if you pay us X amount, we’ll build it for you and we’ll give it to you.

And when we saw that a lot of customers were happy to pay us for that prototype is when we realized that, okay, there’s a real need that we figured out and then we started sort of fundraising building the actual product. So the time was spent in figuring out what to build, like a lot of time spent and also validation of okay, this is the right thing to build first and people will buy it and pay for it. It really drives value.

Siddhartha 23:55

And during that phase when you were meeting 90-100 customers in the starting of April 2021, what time did you start your fundraise?

Divyaanshu 24:06

So we started a fundraiser I think sometime in June, after we’d done a lot of these pitches, people had said they’d pay us. And as I said I had like July when I was supposed to start business school, I was sort of on a timeline from that perspective, to just basically be able to take that call. So June is when we started our fundraiser and fortunately at that time it didn’t take us long to close our series, it probably took us like 10 to 15 days to put together, it was quick. And that time was also very different compared to now.

Siddhartha 24:42

So the entire 15 days, you would have pitched to how many VCs?

Divyaanshu 24:47

I pretty much pitched to almost all of them like 10-15. Maybe I did ICs every day like I was basically doing two to three ICs a day also. So I think one of the things I did was I put myself on a time I said, I’ll wait for two weeks, I’m not going to go and then get feedback and then wait. Because I think the best thing you can do as a founder is time it, if you time it, VCs also time it. Otherwise, it can go for an infinitely long time and nobody wants to make a decision. So I kept myself on a very tight timeline. And I did like pitches every day. I think after a week, we knew we had started getting term sheets. And next week was just probably putting together like, the round between different term sheets that we had. So we had like, three, and then some were evaluating.

Siddhartha 25:44

Got it and how did you find life? Would you take money from among those three?

Divyaanshu 25:50

I think, like I heard, I took a lot of founder feedback. So thanks to Bessemer I knew some founders. And so I took feedback on funds. And then I had some people who could give me good feedback, like,authentic feedback. So I mean, every fund will connect you to founders, but I had my own network, who would give me genuine feedback. So it was mostly founder feedback that I took, and in terms of value add, etc, etc.I thought like manufacturing is such a, I don’t know, which VC will be able to help me sort of figure this out. So my thing was that I want patient investors, I want good people to partner. And I heard great feedback about, both my investors, from a bunch of entrepreneurs, especially people whose company didn’t work. So I asked feedback from people who were, who couldn’t sort of build it out, had to shut the companies, and the response that the VCs gave them and how they were with them through that journey, of multiple pivots, and then maybe something didn’t work. So that was very telling.

Siddhartha 27:03

So out of the three term sheets, I believe one was from Bloom, the other was from Alpha wave incubation. So you combine both of them?

Divyaanshu 27:15

So that took some engineering, but we were able to combine. And we also, yeah, so that was the mechanics that went on in the second week, first week was just me pitching to everyone. I did not, Like, I was not very selective in that, I pitched to almost everyone I knew, and then funds started approaching you when you’re in the market. So I pitched to everyone.

Siddhartha 27:40

And During that phase, what are the preparations that you have done, which can be useful for founders listening to this podcast, so that you don’t have to take one week to prepare or two weeks to prepare what VCs have asked you?

Divyaanshu 27:54

So I think that might be very different now, because now when there are, It’s a hard question because at that time, the pace at which investments are being done, and the valuation criterias were very different from what you will see now, I think, and I’m speaking to a lot of founders. So now that the market has slowed down, people want to dive in more. And the competition within the VCs has slowed down a little bit in that sense. So people have more time with us, number one, we were a pre product. So I was very clear that I don’t have a product, I don’t have customers. So I need to sum up. People don’t believe that you can make money from SaaS in India, and a lot of people didn’t believe us. In fact, Matrix literally didn’t believe that we would be able to charge our customers money. And then when they saw that we actually were able to charge them money they came in, in the next round

But basically, the preparation I did was that, I was thorough with all my pitches, all the customer pitches that I didI would record them. And I couldn’t have charged money to them. But I literally gave everybody access to the recordings, I said, like, these are these 10 Customer recordings that you can listen to. And then you can see that my prototype works for them. So that’s the preparation that I did. But if you are pitching at a different stage, you probably would have more metrics, numbers, I didn’t have any metrics. So I what I wanted to give to VCs was customer validation that, hey, we’ve done our research, this is the prototype that we are building, this is the product that we will be building and we know for a fact that this will sell and these are some conversations that you can listen to, to ascertain if it sells or not. And then people had questions about industry, etc. So wherever we had spoken to a lot of industry experts, we had very freely shared those numbers so that you can talk to these guys and they might be able to explain to you the industry. So that was the preparation that we did.

Siddhartha 30:01

So projections and everything was handy with you, when you went into fundraising.

Divyaanshu 30:08

Again, this could be different now. But at that time, I did not have any projections. And I think only one VC asked me for projections. And I remember thinking that he’s not going to invest, because we were pre product. So asking for projections for a free product company five year out is, yeah, it’s I’m just gonna do some art there. And I felt like almost all VCs, 99% of the VCs didn’t ask me for it, only one or two hours. And the moment they asked, I knew that they would not invest. They’re not right for the stage because it was pre pre-production. So I think everybody should understand that it will take six months to maybe figure out PMF, and then to scale and a lot of good VCs also understand that you might need to pivot. So at the seed stage, I think the right partners for you are people who understand that, at the same time, you might not have options to choose. So you should do your duty of pitching to everyone that you can, including angels and stuff like that.

Siddhartha 31:11

And once you have, how did you and Sajith connect? I think that’s a really interesting story. And how did you finalized that you both want to partner with each other?

Divyaanshu 31:24

So I had met Sajith. So Sajith and I had been connected by chance, like a couple of times. So one of my partners from Parthenon. And this was after I deferred my B school, and I was figuring out what to do for that year. So Amrit and Sajith knew each other from I think IIM Bangalore, they were in the same batch. I think so. And Sajith was trying to find somebody for Leverage Edu. So Amrit recommended that you should talk to this guy, he’s done pattern work on education, he was an entrepreneur, like he might be a good candidate. So that was the first time we were connected. And I was actually considering it. But then I’d gotten Bessemer. And I felt like I wanted to not do education for a bit.

And then when I was at Bessemer, we’d built like, we made an edtech thesis. And Sajith also had an edtech thesis, which is like, sort of publish, etc. And Bloom had done a fair amount of edtech investments in seed stage. So we reached out to Sajith and we showed him our thesis and just exchanged notes. And so when I was starting to raise, I reached out to Sajith, I knew him a little bit. And that’s how we’d been connected.

And other side stories that sujeeth had met Aniruddha were my other investors, at one of the parties in Bangalore, and this was before I even this was when I was just exploring ideas. And Aniruddha told him that a friend of mine is exploring ideas, and you should maybe consider him as an EIR smart guy who might do something in life. So Sajith had heard about me from there as well.

Siddhartha 33:04

Sajith is a wonderful person. And it’s because of that he’s also a partner in your journey.

Divyaanshu 33:12

I had actually asked Sajith for an internship at DOMA after he approached me for his portfolio company. I told him that I’m more interested in VC. And he straightaway said no to me. He said Divyaanshu , we are not hiring, we get too many applications, this and that. And I said, Okay, he was very straight up about it.

Siddhartha 33:34

Okay, awesome. So one rule is, which I figured out when meeting with people in the VC industry, look for people who are more straightforward, rather than people who keep on beating around the bush.

Divyaanshu 33:50

Yeah, definitely. And I took feedback from every pitch, after every pitch, I took feedback, okay, this was not clear to this guy, or this was not clear to this guy. And so every, I had like some 20 versions of my pitch. And every pitch changed something about how I was explaining a certain concept. And I think a good thing that I learned from some founders would pitch to us, like, you can actually a lot of VCs, you can ask them about if they have a thesis or how well they know the space. So you should have, if somebody’s already invested in this ecosystem, you don’t need to go through every minute detail. So then spend time on the pieces of it.

And every VC comes with baggage. I think that is one thing that founders should probably, I understood because I saw that at Bessemer. Every VC has baggage, they will try to connect you to some portfolio company that they have seen. And that has nothing to do with you that has nothing to do with what you are building. But it’s a complex, like as a VC, you’re making a very complex decision based on very limited data points. So that’s how they think about it. So you should probably know what the portfolio companies are and if you know what you’re going to be pegged against. You can sort of Prepare for it.

Siddhartha 35:05

Let’s dive more deep into the product. Once you have identified manufacturing, once you’ve identified that SaaS is a tool to help you build trust of manufacturers, SaaS also there are 100 problems to solve for manufacturers in SaaS. How do you identify the problem that we’re solving right now?

Divyaanshu 35:26

So I think the decision, so we had, broadly, I could have solved two problems for them. I could either be in their sales and marketing side, or I could be in their manufacturing, like core production side, our basic learning was that they, like ERPs have been around for a while. So there was a lot of baggage of legacy tools. People had tried to implement them, it had taken them years. And if you talk to somebody and you tell them that you bring your new ERP, they’re just scared, they’re like this will just eat up two years of my time, and nothing will fucking happen. So we realized that there’s a lot of baggage there, on the sales and marketing side, nothing had ever been built, nobody had actually built a tech stack for their front end. Second was that the front end appeals to people more, so if you go talk to a factory owner they are okay, they’re like, I’ll build it, production will be done. Selling, and because of COVID how people were buying was slightly changing, and nobody was coming and meeting in person anymore. So everything was happening virtually. So that gave us a clear indication that people are more excited about this part of the system, and we have less baggage to deal with.

I am not going to be pegged against 100 systems, which have failed, and they failed, because they’re actually not built for India, they’re really, really clunky, etc. So I can definitely build something better there. But this just seemed like an easier way to acquire customers and take something new to them, which they would not sort of have seen before. In a space, which is also changing for them, because everybody was trying to sort of adapt to new ways of selling digital, etc.

Siddhartha 37:09

What do you mean by front end here?

Divyaanshu 37:17

Yeah, so basically, the way our industry or the manufacturers that we work is, is simply, it’s very design, we work in a design oriented category. So we work in lifestyle categories, which could be home products, furniture, home, textile, rugs, carpet, cushions, gems and jewelry, apparel.

And so, the way this industry works is that as a consumer, you’re always going to these platforms, if you’re going to buy things, you’re always looking for something new and trends shift very fast. So a lot of the manufacturers have to constantly build new products, and then try to market them to their customer base, as well as new customers, new customers, they would typically go to trade shows, etc, which now wasn’t happening. So they were trying to basically do more email marketing, or reach out to the people that they met before.

And so every bit of it will be 1000s of products every year. And then, they’re trying to basically build custom catalogs. And let’s say, if there’s a rug buyer, and you build 10, different categories, there’s no point sending a rug buyer, let’s say 10 different categories, you want to send them rather than you want to send them customized for them, because these are large b2b contracts. So you don’t want to be like sending a 10,000 page catalog. And then that took a lot of time. So we realized that out of all the inquiries that are coming to these people to show products, they were only able to get to 20% of those inquiries, and the rest will be delayed to next month, etc, etc.

So that was a low hanging fruit for us in terms of the front end . We want to help to give a better user experience to any customer that you’re meeting at a trade fair or meeting online. And that is the part of the problem we solve, so anything pre sales, like post sales, is when you actually order your raw material, you start building products. So currently what we built is on the pre-sales side, so we have tools for them to reply to inquiries faster, do invoicing quotations, there are a lot of complex calculations that you need to do when sending quotations to buyers. So a manufacturer for example, that used to take seven days to build a customized catalog, according to buyer needs. Now I can do it in literally 10 minutes. And they don’t even have to be number one if they didn’t have a digital system to keep their products.

So one is we digitized that, second is they can literally just upload a PDF and a buyer typically sends you a PDF, they call it a mood board to then give you an idea of what they’re looking for. They can upload a PDF and we’ll just automatically create a catalog for them. And so the journey starts and then there’s longer quotations etc. Previously, when they didn’t have a digital system. Nobody’s maintaining excels in India. They’re constantly calling people in the factory about what was the material in this, they’re constantly calculating the cost of products again, and again, they don’t have a centralized way to calculate cost. So let’s say your price of a raw material changes, there’s no way for them to change it across all the products, they would have to literally calculate that cost again. So we automated that part.

And now we have a bunch of tools for them to take to trade shows where they would see manufacturers with like piles of paper, because they’ll take like 500 products to the tradeshow and then every product they would have information for. So if somebody selects something, they’ll flip through those pages, give that information. And then after the buyer goes, they have to consolidate all of that. And they would basically carry notebooks, they would write notes in the notebook, and paste the card of the buyer. So we automated all of the QR codes across the showroom, buyers can scan products automatically, it creates like a catalog, which needs to go to the buyer after the show. So all of those things, that is what we are solving on the front end, for them to give a better user experience to their customers.

Siddhartha 41:07

And In which month, you had your first paying customer.

Divyaanshu 41:12

So we started, our fundraise happened, I think the first team member joined us in August. So August, September, we were building the product testing with some early customers. November is when the first customer paid us. So two to three months into building the product. And that was by chance, we went to a customer, we raised a pro forma invoice and they just transferred money. So we then realize that okay, maybe the product is at a level that people will be ready to pay for it now. Before that we were just building in, taking it to a place where people, so that first customer paid. And then we said that Okay, now we can maybe charge people money. So then we started charging customers and then tried different pricing models, etc, for the next few months.

Siddhartha 42:00

And what was the first payment if you remember?

Divyaanshu 42:03

It was 30,000 rupees, so something like that.

Siddhartha 42:09

And once you have figured out like the customers are paying 30,000, or you repeated a scale from there on?

Divyaanshu 42:14

We had to sort of understand how to price it. So we went through a different pricing strategy, we said should we price it? I think the first thing is that it did not decide whether you want to charge monthly, you want to charge annually. And that choice, we took very early on that we will only charge annually because number one, we wanted to build a SaaS enabled marketplace. So for us, SaaS is a way to get customers in, charging an Indian factory owner monthly is the worst thing you can do to yourself. And it’s like collections will become a huge problem in India, we just keep following up. So we said okay, even if we get paid less we’ll charge upfront.

And so that call we took very early on, and we tested it. So we initially had like, quarterly payment semi, like annual payment, and then we had like only an annual plan. And we saw that doesn’t really change our conversion rates, because we were not charging exorbitant prices. So that’s the decision we had to take and then of course the pricing model, what do we charge or do we charge on the basis of products, they keep, do we charge on the base of users that use our platform.

And so those are some of the decisions that we had to take before we could scale it and even pricing, we went through iteration. So when I presented my first deck, when I was pitching to investors, the price point that I’d written on that deck was that people will pay 12,000 rupees annually for this. And I had written that this is not a SaaS business, we’ll just have these hooks and then we’ll build something else on top of it. But 12,500 is what people will pay. But when we went to the market, we didn’t have a 12,000 rupee price as the minimum is 30,000. And we were selling it for 70k. We sold it for one lakh, we sold it to a customer for 1,80,000 also.

So we kept sort of increasing our price point and seeing to what point can we take it and now we are at a point where some customers are happy to pay $5,000, talking to some larger factories, we’re happy to pay $10,000 which is a price point we didn’t think we would ever get to right. So pricing is an iterative strategy and we kept increasing and experimenting and you always thought let’s charge and Indian users will always ask for discounts so we can then discount it and sell it to them.

Siddhartha 44:44

But did you face building feet on the street sales team as a challenge?

Divyaanshu 44:50

So I think the most difficult part was figuring out a scalable GTM in the segment because we were selling to customers in towns like Mirzapur. Literally I have customers in Mirzapur, Bhadohi, Varanasi and we have people in Panipat. So very, very tier two towns. And we realized early on that this is not a product, they’re not like sales if we start trying to do it digitally. It becomes very hard like people don’t convert digitally. This is a segment which is burned by technology so many times that they will not trust you if you’re not, if they don’t have a face for you. And I don’t blame them. Because if you go to a tier two tower like Panipat, people are constantly coming in trying to fool these people, people will sell them websites for five lakh rupees, people will take money to implement ERP and never come back again.

So almost every manufacturer had the perception that if you take my money, you will run away. I think these are the best businesses to milk for money. So, everybody tries to do that. So trust, and our whole premise was that we want to build trust. So we realize that we have to go in person and sell and then build teams and Panipat, Bhadohi, Mirzapur. Super hard to find talent, super hard to relocate talent.So that was definitely a very, very hard part. And we’re still figuring out how to sort of build teams across these small small cities and then run that feat on street operation. One thing I didn’t do is shy away from it, a lot of people shy away from going feet on street.

And I think if anything, like Byju’s and like all of these people have been able to scale feet on street to some level. So one thing I didn’t do was shy away from it. I said, Whatever it will take us to sell it, we’ll do that. So, yeah, we’re still trying to figure out how to scale the C to D, like we’ve not hit it out of the path. But that’s like one of the most challenging things. But in India, like for SaaS companies, this might be the, at least for this segment, this is the right way to do it.

So we spent time figuring out who that talent moat is, should we hire from India mart? Or should we hire from a different kind of company? And sorry, one more thing that you have to decide is, what is your model? There are some companies where the sales guy will also be the customer success manager interview, they’ll also handle the customer onboarding to and then almost be an account manager. And then there are companies where you want to like, basically say that, okay, this guy will sell this guy will handle. So we’ve gone through those iterations as well, for the first six, eight months to figure out what that model is for us. Should we keep it with the sales guy or should we keep it separately? So these are some of the decisions we have to take.

Siddhartha 47:35

And what is the total number of customers till now.

Divyaanshu 47:39

So this month, I think we’ll close with about 400 customers. So we really started scaling our sales from January. So till January, we had like maybe five, seven customers. And then January onward, we started putting the first salespeople on ground. And now we’ll close this month with about close to 400 customers every month we’re acquiring about 80 customers, paid customers, not unpaid customers.

Siddhartha 48:05

Got it. And the average price point you are now charging is $500, which now as height goes up to $5000.

Divyaanshu 48:13

Yeah, so 5000, we’re just starting to sell to bigger factories now. And that is a change that we’ve just made, because I think we kept building small factories. And in the beginning, whenever a large factory would approach us, we would not engage that much, because we thought the implementation cycle would be too large. And anyways, we have to build a marketplace on top and probably these smaller factories will be easier to sort of bring on to the marketplace. They have more, unutilized capacity. But now people started approaching us and we started seeing that, okay, the price points at which they are happy to pay for the product are quite high. So this quarter, now we are going to say, we’re basically selling to a couple of large companies and trying to figure out if it can fit in the same SaaS operational model or do we need a different kind of model? Do they need different kinds of features? Because the scale changes. Like they will have 20 people using your software, they’ll have like hundreds and 1000s of SK use compared to like 10,000, 5000 Small so we’re trying to figure that out. But yeah, that’s something that we want to test out in the next few months.

Siddhartha 49:21

And can you share your thoughts on the marketplace that you have built? What are the things that the marketplace solves? And what is the current traction that you have been able to get in the marketplace?

Divyaanshu 49:32

So the marketplace is very new for us. So our vision from day one has to become an operating system for factories operating system for us means that tech will be our mode. So we’ll build a tech system which runs everything in their factories, right from sales and marketing to the production lifecycle. And then on top of this, we will add different layers of services. So the options that we had were to either start with procurement, like help these factories, procure raw materials, or get into the front end, which is like helping them fill their capacity.

So we decided to start with the front end. But overall, I think our vision over the next five years is to have all of these pieces built out. And we get approached by a lot of people who want to sell to our customers. And again, I think the one of the things that we’ve solved is selling in these geographies. So we can make an origin of the network, we can open that for other people to sell their services. On the marketplace front, I think what we’re typically solving is that every buyer, and mid to mid sized buyer be it an e-commerce be it a retailer, let’s say, a retailer sitting in GCC with 20 stores or being in the US 30 stores, 20 stores of furniture and home goods stores, for example, will want to bring new products to market every few months.

And that is where the challenge is that you have trends which evolve constantly. And then you’re always going out and trying to find these products and trying to bring them to market. And that is what we solve. Because we have a SaaS platform, which helps these manufacturers keep all the samples etc. What we’re now doing is giving that ability to these buyers to not just discover products with their themes. So let’s say you bring a theme to me, I can actually show you 1000 products, which match it across categories, and then be able to procure that for you. So that is what we are building there. And the kind of traction you’re getting is interesting. So the people, we’re helping people launch new categories.

So there’s a client in Dubai 20 stores, they’ve, we’ve helped, we’re helping them currently launch like five new categories, which range from aroma oils to candle holders to bags. There’s another customer that we’re currently working with who wanted to launch ladies bags. And they wanted to launch it in two months. So after two months, we’re helping them launch 50 New SKUs across marketplaces again, it’s a US sort of focus customer. So our value proposition that we’re bringing to the buyers is that, hey, we have 20-30 Odd categories. Within each category, we have multiple price points, at which, we can help you procure multiple materials that our manufacturers work with. And we can help you expand categories, launch new products, according to your themes very, very quickly.

So currently we’ve just started a month back. And we’re still in the process of closing some initial orders. So working with about five odd buyers and trying to close out the first few orders here. And the plan is to scale across GCC over the next three, four months and then launch in The US early next year.

Siddhartha 52:44

And which are the geographies the SaaS is presenting right now?

Divyanshu 52:48

I think we’re in 14 cities, so Delhi NCR, greater Noida,Panipat then the whole UP belt like Moradabad. We have Moradabad, Mirzapur, Bhadohi, Varanasi. That’s the carpet belt, Moradabad has more metal handicrafts and some metal furniture, wooden furniture, then we have the whole Rajasthan. So Jaipur, Jodhpur is a big geography for us. In the south we have Karoor, we have Tirupur. And then we are expanding to Ludhiana right now. And expanding to some other geographies as well. So we are currently in space like we’re trying to get to all Indian cities as soon as we can. So deploying teams there, and trying to build scalable systems like operational systems within the company to manage such a large feet on street team. And the one thing is that in tier two, the salespeople are your brand, eventually, those are the people that customers will interact with for the first time. So building strong training mechanisms to refine them to be able to present the brand value to those customers, so those are some of the things that we’re doing internally to scale the sales team.

Siddhartha 53:59

And what is your pass rate right now you are at between 200,000 to $250,000 of ARR. What is your path to 1 million ARR? How much point in time and the bigger path under certain media is fast business and how much time?

Divyaanshu 54:16

I think that by next year, like the same time next year, we should be like maybe July, we should be hitting our million dollar era. We could get there faster. But right now we’re conserving our capital trying to spend it more on the marketplace front, which is a new zero to one journey and expensive because you’re doing it across multiple countries, etc.

I think the path to 7 million in India is, we have a path to, five and to $7 million ARR in India, as we start selling to bigger factories where the price points are 10,000 $15,000. And as you build more modules some of these items we think that can become like a $30,000 ACV type of a customer because as I said we’ll only solve the front end right now, as the factory becomes larger the back end is actually an even bigger problem. And so these factories are on their own telling us and that’s the good thing about unsexy industries, you almost even if the WiFi goes out, they’ll call you even if the big problem they’ll call you. So you are the only tech company they know, essentially, and they’ll come to you for every problem.

So I think getting to these bigger factories will help us get to $5 million ARR over the next few years, and then expanding our offerings to Vietnam, Bangladesh, Turkey, some of these other geographies. So we’re already sort of thinking that next year at least, we’ll start doing some GTM experiments across Vietnam and Bangladesh. And then as we sort of tailor the product to those geographies, because there’s a different language etc, then we start sort of scaling those systems. The goal right now is to focus, I’m at least trying to focus a lot of my energy on the marketplace front, which is a zero to one journey.

Siddhartha 55:52

At what point of time you think the marketplace can hit a frame, a one million take rate, no GMV. And similarly, a 10 million take rate.

Divyaanshu 56:02

Too soon to comment on that. But at least hopefully, at the same time next year, we should be at a one minute takeaway, at least that is the goal with traps, like trying to build tools.

Siddhartha 56:16

And how are you thinking of scaling right now at sources? What are the mechanisms in team building and processes that you are building? Yeah. So I think one of the things is that I have a very good elber that I’ve built. So for example, my SaaS business is led by a very close friend from IIT. The same batch trust him really well and very, very good at operations.

So the one idea is that I should not be the bottleneck for anything. So decentralized decision making, and I have owners for everything, and they are accountable. So we said, we have very, very strong accountability, we do like very stringent weekly reviews, we have every metric across every department that we need to review. So if it’s sales, every step of the funnel, there are weekly goals that we set for every step of the funnel, there are weekly initiatives that we plan monthly initiatives that we’ve done, and then we track them. So that is, and then I don’t have to go and get into minute details or micromanage. We do all of that in those reviews, etc. And then we sort of drag them across months, and then have strong people and let them drive it right. So you can’t be everywhere, and you should not be the bottleneck. So that is one thing that I’m doing like building strong leadership across different verticals.

Second, in terms of scaling, as I said, we will scale our sales team. But one of the things that I’ve observed with Indian companies, is that when you scale your feet on the street, you lose control of quality very quickly, and that guy will go and present your brand and whatever way they feel fit. Eventually, my goal is to build trust with my users. So I don’t want my brand to be misrepresented. Or I would at least try to control mis-selling as much as possible. And that has happened with some edtech companies also that we see, at best selling at scale with feet on street did happen.

So we have just put in very, very strong training mechanisms and made sure that the number of processes to make sure that misselling doesn’t happen. So that is another thing that we’re doing on the sales side. And on the customer experience side, again, a very, very stringent mechanism like we have to onboard a customer in less than 10 days. So we go to the detail that okay, if this is not hit, like why did what happened to this one particular customer who was accountable for this customer, and to that level of detail. And then we’re doing partnerships across different hubs.

So a lot of SaaS companies, at least when you think about the marketplace, don’t try to build a brand, that’s not one of the things that you do. But we are partnering with almost all local organizations across all of these hubs that are exporter organizations, so we partner with them, we’ve actually built some communication apps for some of them. So let’s say there’s a society in Panipat which has like 200 exporters. So we built an internal communication app for them, which is, and then we do events, etc. with them. So build multiple services. We are sponsoring something called JPL. So it’s a Jodhpur exporter Premier League, so it’s a cricket match with about 200 exporters participating.

So we’re doing a lot of those regional partnerships with export associations, which is also helping us build a brand. So the idea is that when we go to a customer, they heard about us, and that has actually started happening in a lot of these geographies. Now that we’re and we’re seeing that transition, like in the beginning, when we used to go to factories and when we were just experimenting, people will not let us enter their showrooms where they keep their products. And these guys think that the products are their IP, so they will not let you enter their showrooms because they’ll be like you click a picture and give it to somebody and this happens a lot in the cities. Like you will hear anecdotes like people will make the driver follow the other factory owner to see which buyer they’re going to meet. And people will bribe the courier guy to bring samples to them of the other exporters so that they can offer the same product at a cheaper cost. So all of that happens.

So it’s a very trust deficit society, as I said, But now when we go into people to bring them to the marketplace, nobody has said to us no, everybody is happy to expose all of their products to us and be very transparent with their prices. And that kind of trust is what we want to replicate across other geographies as well.

Siddhartha 1:00:33

And what are the unknowns of the business that you’re still figuring out?

Divyaanshu 1:00:41

So I think once we start executing, manufacturing, so one of the things is that a lot of products in India are handmade. So India is not known for a lot of consistency in their products compared to China, which is very mechanized as a setup. So the products are going to get out with a certain quality fail rate. And it’s going to be largely the same as what you’re expecting. In India, because rags are completely high, a lot of products are completely handmade, and people come to India to buy handmade.

But quality, there is an issue. And we still don’t know how we would go about solving that, to make sure that there’s consistency in products that are being shipped out through our platform. So that’s a bit of an unknown. It’s unknown, because you’ve not executed many orders yet. So over the next few months, we have to figure that out. And then GTM on the US expansion piece, how like building that scalable way of acquiring these buyers, across the US and GCC, that’s something that we’re still working on.

We have some initial at least early adopters, but we haven’t yet built a scalable mechanism. So how would that happen? What would the economics of that seem like? Those are some of the biggest two unknowns, at least right now, which we care about. Otherwise, I know that habit was on an everyday basis that we have to just live with.

Siddhartha 1:02:12

And how did the second round with the Matrix happen for you?

Divyaanshu 1:02:17

So matrix had, we posed to them in our seed round. And as I said, like they believed, nobody believed that we would be able to charge batteries, and they would pay even a single dime. And I kept in touch with them, like we would every two, three months, kept in touch with them. So around, I think, February, March, they had reached out and by that time, we were closing in on about 100 customers, we had a part to 100. So it was like three months of sales every month we had grown, and customers were paying us. And we still have very, very good monthly active usage of our customer base.

So we focus a lot on retention from day one. I think that they just couldn’t, I think the one key concern that they had that we wouldn’t be able to do, and we’ve sort of done that. So they came in and we sort of engaged with them from there. So we were not out in the market to raise funds. It was just, we’d met them before we’d like the team. I think it’s one of the strongest teams in b2b. So Avnish had super knowledge, they’ve done b2b investments across almost every category. If you think about it, they’ve Agri, they’ve devop business like this, they’ve seen the breadth of stuff, Captain fresh, so they’ve done it all.

So they’ve seemed very knowledgeable in that sense. And, they were the one of the few investors who from day one, at least told us that they believe in SaaS enabled marketplace, and I think they’ve had some success within the portfolio companies. So in that sort of alignment of vision. And those are questions that we always had to answer, like, manufacturers will pay you, India is a Dhandha first country, why are you going after suppliers first? So when you have that kind of alignment, it’s good to get those kinds of partners whenever you can.

Siddhartha 1:04:08

So initially in your first round, you selected bloom because of the founder love they had in the ecosystem.

Divyaanshu 01:04:20

I spoke to founders who literally told me that no matter what happens, do not leave bloom. when we had multiple term sheets,choose between the others, but do not leave bloom because they’re some of the nicest people around the block. The same I’d heard at Bessemer from other people. I was very clear that at an early stage when I’m just starting out, things might change, and I have to be, I have to get the most patient, the most loving people around me to go through those changes with me. And so bloom was the obvious choice there.

Siddhartha 01:04:54

Got it. And alpha wave because they had a strong GCC network, Aniruddh was a personal friend of yours.

Divyaanshu 1:05:00


Siddhartha 1:05:04

How did you bring in Angels In the first round, in the second round? What was your selection criteria for that?

Divyaanshu 01:05:11

Oh, angels, I think the first round, I brought a lot of SMB SaaS, folks, so the Class plus guys and then a couple of people from the industry, we have some angels from Wayfair, etc, because we always knew that at some point, we would make that transition. Selection criteria was basically that I’m building an SMB SaaS company. So Ashish, Mukul and Bhaskar they’ve been quite good in terms of helping us figure out as we scale initially. Class Plus was a feet on street, for example.

So in the early days I had taken a lot of inspiration from that. Similarly, Ashish has given me some a lot of words of wisdom, around like, basically going all out to enable the customer to use your system, because, given technology is one thing, but we’ve worked a lot on onboarding. And I think a lot of the mods that we built are not just the product, it’s like, the whole process of onboarding the customer, and kick, like making the time to value. Sure. Second round, again, when we were second round angels, anyone, mostly people who had some form of the US connect or international connect. So that was one of the criterias and somebody who can help us on the buyer’s side. So more marketplace oriented the first round, we were clear that it’s going to be SaaS, and then now we’re clear that it’s going to be marketplace.

Siddhartha 1:06:45

And what are the some three to four key things if you have to summarize your learnings for a founder today, to build at least a couple of million ARR business which you have extreme clarity now, to do and to not to do?

Divyaanshu 1:07:04

I think first is that early customers are very, very important. So if you can find early partners in a large space, where that, they will at least help you get to a certain point, do that, and then listen to customer feedback very, very intently. Just do whatever it takes to enable them. So for example, one of the articles I wrote was like, before I can solve it, is BHAI can solve it. So for our customers, the biggest impediment was that, moving from a legacy system to a new system, the time it takes for them to ship all of their products to the platform was humongous. And we knew that we would lose those customers.

So we went all out. We said like retriggers, give us whatever you have, like, we would just send people to their factories, take a pendrive, bring all the products and then we were just figuring out how to onboard them. Now we have an onboarding setup. So second is that just go all out, like building the product, this is one part like, you need to understand every single roadblock that they will face in terms of using the product. And you need to solve for those, even if it’s a manual intervention. Like we have had interns and Turner’s tons of interns, like literally sitting in doing data entry, and then slowly we’ve automated them, so you can’t automate everything on day one. So do not be scared of operations. Like when it comes to even SaaS implementation.

It might not be required in a lot of services, but in some like ours, we realized that there are a bunch of operational things that we need to do. And when you’re especially defining a category,

you want to make it as seamless for them as possible, because they’ve lived without your system for a long time. And there’s not enough knowledge out there of needing a system or what kind of data it would drive in their business. So it means mostly coming to you for convenience, like thorough customers so make it as convenient for them.

And third is, I mean, I think for me, it was do not be scared of building field Sales like a lot of people in the beginning told me that don’t do field sales and a lot of SaaS founders by the way hate Field Sales Like they don’t like it. SaaS is usually thought of as a clean business to run in India running an FSO. I think as a founder, you should not create those boundaries for yourself. You should be flexible and just go with whatever it takes mentality if my customer wants to have a cup of tea, before he signs a contract. That’s the process you need to figure out. Like you can’t be choosy in terms of what is the right process to sell. Okay, I would love to sell it remotely, it doesn’t matter what you like, frankly.

So I think those are some important factors. And at least in micro communities, like, in our case, there are very micro communities and word spreads very fast. So, customer experience is going to drive most of your business, like there are customers of ours who will literally sit with us and say that, okay, these are 20 people I know, they’ll call those people in front of us and give us those meetings. And that’s because we have gone all out for them. We haven’t left any stone unturned to solve the problem. And we measure those things really, really intently, like time to value and time to customer problem resolution. I think those are two three learnings. I don’t know if I put them in well.

Siddhartha 1:10:42

I think one thing which stands out for me and I tell all of the founders to learn from you, somehow, if you can share those early nodes site, make them some version of them public, it will be a lot of help to founders, that how you documented the first 90-100 notion, conversation or notion. That also takes an example for your team, how to listen, and how to document your customer needs.

Divyaanshu 1:11:10

Yeah. And actually, it helps like it helped us in our early VC conversations. I had a slide where actually one of the VCs had given me this advice. We were pre product. So we had a slide where I literally had a snapshot of that notion with like all of the names of customers and this snapshot that we’ve spoken to 90 customers before we’re coming to you. So we’re not coming to you just with an idea that we think will work. So it’s like I’ll try and make it public.

Siddhartha 1:11:39

Thanks, Divyaanshu it has been wonderful to have this conversation to deep dive into your process of building Sourcewiz and the experience that has gone into the do’s and the don’ts to reach here.

Divyaanshu 1:11:53

That is a lot for me to also learn about. I hope I’m able to add some value to your listeners. Yeah, absolutely.

Siddhartha 1:12:00

I love this conversation. I hope my listeners love to.

Divyaanshu 1:12:04

Perfect. Thanks for that. Thank you so much.

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