Siddhartha Ahluwalia 0:56
Hi, this is Siddhartha Ahluwalia, your host at Neon Show and Managing Partner at Neon Fund, a fund that invests at the earliest stages in the best of enterprise AI companies like Atomicwork, CloudSEK, SpotDraft. Today I have with me a repeat guest on the show, Karthik Chakkarapani, a very dear friend and CIO of Zuora. Karthik, welcome for the second time on the Neon Show.

So excited to have you back.

Karthik Chakkarapani 01:21
Thank you, Sid. Looking forward. Last time I was in Bangalore, now it is in the Bay Area.

Siddhartha Ahluwalia 01:25
Yeah, yeah. So quite a difference in locations, but you know, amazing to record this in the Bay Area, your city.

Karthik Chakkarapani 01:32
Awesome.
Just looking forward.

Siddhartha Ahluwalia 01:34
This time I want to focus specifically on the entire buying process a startup goes through, specifically an AI startup that goes through, you know, and what role does a CIO play to introduce them, to manage the process? Right.

So maybe if you can describe, you know, from Zuora’s perspective, from the first point of contact of a startup to an end to end contracting.

Karthik Chakkarapani 02:01
Got it. Got it. No, great question.

I think even beyond AI companies that we are taking through this process, we have a foundation process for any SaaS company as well, whether it’s a new vendor that we take it through the process or even an existing vendor that we have to renew at the time. So we do have a process that we have established like two years ago where we look at what is the problem that we’re trying to solve? What is the business need and outcome and what capabilities do we need?

And then when we talk to the vendor, we have a process for any typical SaaS company. But with AI, we have to add a couple more items on top of it. Right.

Because the wave of AI tech is going so fast, there are so many solutions out there in the market, which was not the case in the SaaS like two years ago, even one year ago. So we had some time and flexibility and all those things. Now, in order to leverage this AI to meet our needs, we need to think differently.

So at Zuora, what we have instituted is an AI governance process where it’s a three step. The first step is experimentation. So we have a very simple and nimble process and to, hey, what is this?

What is the problem that we’re trying to solve? What capabilities do we need to do? And let’s explore what solutions are out there.

Either it’s an outbound or inbound, either the vendor reaches out to us or we go scan the market like what is on there. We have done both the cases and our goal is, can we bring someone on board in less than two weeks for the experimentation? And so we have a set of criteria from security, compliance and obviously we have some other checkpoints which I can double click more.

And then once we do the experimentation and we see some initial proof of value and then we take the second step where we do more like a double click on the business value, ROI, architecture, integration, security to the next level, right, like LLM, what type of model. So we have like a couple of things that we go in depth on it. And third step is, OK, if if all looks good, let’s push it through the legal and procurement review and and initiate the actual implementation itself.

So that is a process we have established like actually three months ago. And because we were struggling because the wave of tech was coming so fast and the existing SaaS process didn’t work, it did not help us, right. And because appetite from a business team, from my own team was very high, right.

And I would say like in the past three months, we have almost put in almost like 50 plus applications for this process and 12 of them have already gone into production. So so we we took some time to make sure like what really matters and how do we can how we can leverage the best of AI in a much more faster way. And that is what we have been doing.

And and because we need to move fast as well.

Siddhartha Ahluwalia 05:10
So maybe first, if you can describe in detail as much as possible, how was the SaaS world, you know, when you onboarded any SaaS application?

Karthik Chakkarapani 05:19
Yeah, yeah. So in the SaaS world, when I joined Zuora a couple of years ago, one of the top item that we want to go after is rationalization of our SaaS portfolio. And also and also see whether are we are we having the right apps and what is the cost we are spending and are there opportunities to optimize the cost and reinvest in some modern and robust technologies, right.

And we started that two years ago and we have a portfolio of almost 200 plus apps that supports our enterprise and we have a long tail of other apps as well. So when we looked at it, we want to make sure that we want to have a scalable and more often robust architecture set of apps and also see like we had like almost like 30 plus variables that we looked at every app. It was almost like a two month, three month exercise that my team did.

We looked at everything. What is this app does, what are the capabilities, what is the value, what is our option, what is the usage, what is the customer support, how many tickets are we getting and product roadmap, is there innovation going on and how is it integrating with other things. When we started this two years, we didn’t look at from an AI lens.

We had some light version of it because AI was just starting at the time. So when we looked at it, we found almost like 30 to 35 percent of the apps we can consolidate and rationalize it better. So we had a dollar target and my focus was not only on the dollar, but also can the architecture be more simple and modern and easy to use.

Right. So we decommissioned almost like 40 plus apps in the last two years and we consolidated with existing apps and we moved into new apps. So now we have a very healthy set of apps and the machine is not running.

The engine is running now. See, when I’m not part of the day to day, week to week, which like how I was doing a year ago, because now the mindset has changed. The process is fully established.

And now whenever a renewal goes into the place, we know exactly what needs to be looked at and what questions to ask and then get there. So even we are only halfway through the year, we have already met 90 percent of our target for this year because the process is well established. This is what we shared with our existing vendors and new vendors as well.

So that was an existing process that we do and we apply the same process for when we bring in a new vendor, we take them through this process as well. Hey, I don’t want to learn about the solution yet. I want to learn about your vision, your roadmap, your plan.

What problems are you trying to solve? The same things that what we would typically ask and put them through the POC process. The POC would take like two months or three months.

Siddhartha Ahluwalia 08:08
Free or paid?

Karthik Chakkarapani 08:09
I would never pay because we need some skin in the game from the vendor who’s supporting us. I’m not a big proponent. If some vendor comes and tell, hey, you need to do a four week POC, then the first thing I’ll think is, OK, they don’t trust the product.

Siddhartha Ahluwalia 08:22
Yeah.

Karthik Chakkarapani 08:22
Right. They don’t trust on the value prop. If you really want to win a customer on thing, you need to be like double, you need to have double the confidence that I can win over this customer with an agreed upon POC criteria and all those things.

And that’s how we do it. So we take them through the same process. But it was taking it’s an expanded view because we are putting in SaaS application for this process.

Like that, as I said, we brought in almost like 30 plus solutions, many solutions into the ecosystem.

Siddhartha Ahluwalia 08:51
OK. And let’s describe, you know, once the vendor reaches out to you, you reach out to the vendor. What’s what’s the step by step now?

Let’s break it down.

Karthik Chakkarapani 09:02
Yeah. The thing is, I’m a big, I’m focused more on outbound because I do get a lot of emails like LinkedIn and messages. I pay attention to some of the things when somebody else has commented on it in LinkedIn or somebody has reposted on it.

Right. So I follow a set of like 20, 30 people that I, it shows up on now that the LinkedIn feed is very powerful. Now, the more you engage with or engage with a person or a post, it keeps coming up a lot.

Like now my LinkedIn feed, every day I see some things, for example, like Vijay writes, OK, Vijay has commented on something that must be interesting or if Aravind or some other people come, OK, that must be interesting. That’s how I come to know about new vendors and I go double click on it. Then if it is very interesting, I share it with my team.

Is this something interesting? I know it was a problem that we were trying to solve or it may be an unknown problem that we did not know that that is existing. Right.

So then I have the team reach out and I may also reach out, hey, I want to learn more. So we do that way as well. So inbound is very less.

I would say maybe 10 to 20 percent that we pay attention, but 80 percent is outbound because it makes it easy for us. We have a need that we’re trying to solve.

Siddhartha Ahluwalia 10:16
Yeah.

Karthik Chakkarapani 10:16
And vendors, if they get an inbound request from one of these customers and take it seriously. So that means we have already done the research.

Siddhartha Ahluwalia 10:25
Yes. So you do the outbound. You ask a bunch of questions on your product vision, on the problems they solve and because you already have a very clear need, that’s why the outbound happened in the first place.

What’s the next step? Like the POC is the next step or making them?

Karthik Chakkarapani 10:43
No, it depends. I take two routes. If I’m super interested, I’ll have the first call because I don’t want to inundate my team because sometimes my team tells me, Karthik, you’re sending a lot of things my way.

But if there is a need or a problem that my team has shared with me in the past, then I give it to the team, take a look at it. But sometimes I come across solutions that we may not even be thinking. Like Featurely is an example.

I don’t even have thought about synthetic human and rapid prototyping and all those things. But so I took the first step to learning more about it. But if there is an existing need, then I pass it on to the team.

So I kind of divide and conquer based upon people’s capacity. As a matter of fact, we have like 12 or 14 solutions in experimentation stage that is going through. So then I put a pause.

You know, I cannot put too many things on the grid unless there is something interesting. So when I reach out, I have my first call, I just get to know, get to know the product, get to know the team. And then if it sounds interesting, then I will ask for a demo.

And then then I’ll pass it on to the team, meet with my team. I think this one is same. Even when I reach out to my team, I don’t just blindly forward it.

This is a type of capabilities, what it can do for us and all those things. I do some internal selling to my own leadership team, my own managers and also to my business partners. I have to do some internal selling.

I don’t I don’t I don’t typically like to just pass it on. Right. So it doesn’t help.

So and then then we take the next steps after that, if they find it interesting, then we take the next steps.

Siddhartha Ahluwalia 12:14
That’s a POC.

Karthik Chakkarapani 12:16
It’s an experimentation stage.

Siddhartha Ahluwalia 12:18
What is the difference between experimentation and POC?

Karthik Chakkarapani 12:20
POC is a subset. Experimentation is. Let’s see whether this works or not.

And then come with an agreed upon criteria, come with like five things. Can we do this? And then we do a POC as a working prototype or a working demo.

Right. Experimentation doesn’t have to be because the reason I’m splitting experimentation and demo is experimentation is an overall problem. Right.

And we want to experiment whether this problem will be solved or whether the pains can be met, addressed. Then POC is an is a way to validate whether that experiment is doing or not. It’s almost like a science experiment.

You come with the thesis like this is what I want to test. And I mean, I may run a couple of actual things. That’s how I see it.

Siddhartha Ahluwalia 13:08
Yeah. So. So, for example, let’s take Featurely’s example since you mentioned about it.

So. So what are the steps during the experimental stage that the Featurely is going through?

Karthik Chakkarapani 13:20
Yeah. Internally first, we have to onboard it into our environment. Like so we go through an NDA terms and conditions and we’re trying to make it.

We have our own process re-engineering on that front as well. Today, it may take like three to four weeks even to cross that experimentation because there is a lot of things when it put AI that is legal and compliance in NDA. So we’re trying to come with a standard set of things because we have some vendors like coming from Y Combinator kind of thing.

They may not have all the right terms and conditions. This may be very basic. So what we are thinking, can we just hand our own templates to them and let it go through rather than going back?

So that is that we are actively working on it right now. But once the terms and conditions are met, then we come with a four week plan. I don’t go beyond four weeks because there’s no point in it.

In that four weeks, we get to know how is the team working on, how is the relationship, how is the rapport between the teams? Are they listening in? Are they communicating the value clearly?

Are they helping us through the POC? It’s not like, hey, I’ll give you the environment, do whatever you want right now. So we want to make sure I don’t even during the process, I also ask my team to test not just the product viability, but how is the overall team itself end to end, like all the way from the founders to the technology leaders.

If there is a sales team or someone who are the teams is engaged with, how is it working with them? If you go with them, will it be OK or will you have a good rapport? Because if it is an established company, we don’t have much of a say.

We just test the value of the product. But if it is a startup, this is almost like I treat them, I want to treat them as an extension of my team, like a thought partner. How do you get in that comfort?

Right. So that is what we all look for in especially like zero to three years kind of startup.

Siddhartha Ahluwalia 15:11
So during this four weeks of courtship period, since you mentioned about it, you would do seven to eight meetings for that company?

Karthik Chakkarapani 15:19
It depends. Most likely, if I say like two meetings per week. I may have like only two meetings for the entire duration.

I come in the start, maybe I’ll do a midpoint. And then when it comes to, as I said, like stage two, reviewing the business case, and then I come again. If I have to step into negotiation, I’ll do it at that time as well.

But my team, I would say like six to eight times, like 30 minute check-ins and some of them get involved very deeply. So we have done it many times. And now we have a well-oiled machine, like how we take AI startups to the process.

Siddhartha Ahluwalia 15:52
And then at what time does procurement and legal get involved?

Karthik Chakkarapani 15:56
After a clear stage three, once we align on the business values there.

Siddhartha Ahluwalia 16:02
POC is done.

Karthik Chakkarapani 16:02
POC is done. POC is part of step one, as I said, like step two is all about the overall business case value analysis, ROI, architecture, integration, security. And we look for some basic things to the next level.

Right. Third one is all about approval from a management perspective, where myself and my co-sponsor sponsor it, and then we take it to the, we take it to the procurement and legal and we close it off on step three. That’s it.

Siddhartha Ahluwalia 16:30
So just for the audience, right, the first step, which is experimentation, which includes POC, usually take four weeks. That’s right. The second step, which is, you know, discussion of roadmap and going deep into architecture and evaluating whether it can be a long term partnership or not, takes four weeks again.

Karthik Chakkarapani 16:51
No, I would say we typically try to do that in two weeks.

Siddhartha Ahluwalia 16:55
Two weeks, right. And the third step is where the value is established. Now, one of the people in the team become a sponsor and there’s a co-sponsor.

Karthik Chakkarapani 17:03
Yeah, that’s right. Yes.

Siddhartha Ahluwalia 17:05
And then you take it to the legal and the procurement.

Karthik Chakkarapani 17:09
Yeah. When we close on step three, that means everything is done, but not the implementation itself. We are closing.

OK, the contract is signed and everything. That third step can take anywhere from two weeks to six weeks, depending upon the maturity of the terms and conditions and all those things. And we are trying to simplify the process more better because not all the startups have the right set of documents and all those things.

Right. So sometimes we have done it in less than two weeks. Sometimes it has taken four weeks.

It depends upon the company itself. Ideally, I would say two to three months is average. For entire three?

Siddhartha Ahluwalia 17:44
For entire thing.

Karthik Chakkarapani 17:46
And then the implementation begins.

Siddhartha Ahluwalia 17:49
OK.

Karthik Chakkarapani 17:50
And ideally, I want to see the value in the first three months, not like six months or nine months. So if I have to see like end to end, when the first call happens, ideally I like to see some value happening, kickstarting in the fourth month or fifth month.

Siddhartha Ahluwalia 18:03
OK.

Karthik Chakkarapani 18:04
Or even sooner than that.

Siddhartha Ahluwalia 18:05
And how do you like, who do you check for value? Is there like a parameter to measure value?

Karthik Chakkarapani 18:11
So when we, in the step two process, when we do the business case analysis, we are very, very clear on it. How are we measuring success of when we launch this product and how are we measuring, how are we monitoring and what is the feedback channel and how are we going to communicate within our teams and back to the vendor? So after ideally, after we start going live, three month mark.

OK, let’s see. Let’s see how this is worked out. Sometimes we even do it one month mark, it depends upon the product.

Right. So recently we got in a product called Trupeer. Right.

So it’s a video content generation. We didn’t have to wait for three months to see the value. We were able to start monitoring the value in the first week or the second week.

Siddhartha Ahluwalia 18:55
OK.

Karthik Chakkarapani 18:56
So now over the quarter, I can select how many videos did we create, how many, what was the productivity saving so we can actually measure it.

Siddhartha Ahluwalia 19:02
And are you measuring how many people viewed?

Karthik Chakkarapani 19:05
Yes, everything. So it depends on the product. Ideally, for every use case, we’ll have more like qualitative and quantifiable metrics because our two key things is driving growth and driving efficiency.

And then we have some sub metrics that will relate to each of those products and applications.

Siddhartha Ahluwalia 19:25
So driving growth is increase of revenue.

Karthik Chakkarapani 19:26
That’s right.

Siddhartha Ahluwalia 19:27
And driving efficiencies reduction of cost…

Karthik Chakkarapani 19:30
EBITDA and all those things and workplace experience and everything. So.

Siddhartha Ahluwalia 19:34
And what weightage would you place, let’s say, for startup also give only two value, right? Either drive growth or drive efficiency.

Karthik Chakkarapani 19:43
What weightage would you put? It depends upon the use case again. So, for example, companies follow rule of 40, rule of 50, like I was reading this news called Palantir, if you have heard about it, they follow the rule of 80.

Siddhartha Ahluwalia 19:56
What is that?

Karthik Chakkarapani 19:57
Rule of 80 is a combination of growth and efficiency. So depending upon the company, you know what? If I have to meet a rule of 40, I need to get maybe 10 percent out of that rule of 40, 10 is for growth and 30 is for productivity and EBITDA.

So and some companies will have high on growth, low on efficiency, like Palantir is like almost rule of 80 where they’re getting like 35 percent to 40 percent growth and they’re able to be more efficient. Right.

Siddhartha Ahluwalia 20:27
I didn’t understand it.

Karthik Chakkarapani 20:29
Yeah, so that is a general principle, like rule of 30, rule of 40, it goes all, nobody has rule of 100, right? So rule of 40, when we’ll have a target for a rule of 40 is, in that the CFO decides, right? In this rule of 40, I want 10 to come from growth and 30 to come from efficiency.

So there is an equalable dollar value behind the scenes, right? If it is rule of 30, you know what? I need 6 from growth and the remaining from efficiency.

So we’ll all have a dollar number to go after. So as we are bringing those new solutions in place, obviously, I can only be an enabler of the growth. I cannot be a direct one.

I can be an indirect contributor because there are other factors that is contributing to the growth. Likewise, in efficiency, I may have more direct variables on efficiency and less on indirect variables because I’m giving you AI tools. If they’re taking, let’s say, I’ll go back to the Trupeer example.

It takes four and a half hours to take one video end to end for one language. And with Trupeer here, I can take, I can do one video in four minutes across 10 languages. So if I create 100 videos, it comes with a total time saved.

And we have an approximation of dollar per hour and we calculate the value. So we’re not stopping over there. OK, now let’s say we save like 1000 dollars for this team this quarter.

OK, what did we do about it? Right. It’s not that, hey, OK, great, productivity is great.

But where did we reinverse the time savings to something else that is contributing to more productivity or they’re able to spend time with customers that is helping us to grow more. So that is the equation we are currently working on and to make sure that there is a downstream impact in value and how we are using that back on in the organization.

Siddhartha Ahluwalia 22:18
So any company can have any rule.

Karthik Chakkarapani 22:21
Yes.

Siddhartha Ahluwalia 22:22
Yes. Yeah. Rule of 30, 40.

Karthik Chakkarapani 22:24
Exactly. Yeah. Yeah.

Like fast paced, established companies, they’re almost operating at rule of 80, rule of 90. So you want to check it out. You just do a simple GPT prompt, like show me the companies, what they’re doing from rule of 30 to rule of 90, you’ll see some companies.

Yeah.

Siddhartha Ahluwalia 22:41
And today in your organization on tools, what were the top five tools by spend, like largest spend?

Karthik Chakkarapani 22:49
I would say without naming the companies, I would say the biggest spend is on go-to marketing…

Siddhartha Ahluwalia 22:54
Which is sales enablement

Karthik Chakkarapani 22:55
Sales and marketing are the biggest spend. I would say it almost like 30, 35 percent in that I don’t have the numbers top of my head. The second spend is on infra and security.

Siddhartha Ahluwalia 23:07
Cloud.

Karthik Chakkarapani 23:08
No, infra and security, like all things on network security solutions and the things like identity management, DLP and all those things, like zero trust. I would say that will be the second largest spend.

The third spend, the largest spend is more on workplace experience, things like collaboration tools..

Siddhartha Ahluwalia 23:31
Or ITSM or employee service management…

Karthik Chakkarapani 23:33
Anything that is helping the employees to make their work life better.

Siddhartha Ahluwalia 23:39
So between us, we know three companies, right? Trupeer, Atomicwork, Featurely, where would you place all the three?

Karthik Chakkarapani 23:46
I would say Atomicwork is more on the third category and Trupeer is also on the third category. And Featurely, most likely in the go-to marketing place, the reason is it will help to develop, design and develop products quickly. When you do that, it can also drive growth.

Right. And it can also drive productivity, which falls into three. So it’s between one and three, right?

So because it helps both the sides, it helps on the team productivity, which is a good experience. It also helps you to sell and market better and get feedback quickly.

Siddhartha Ahluwalia 24:22
So for you, that when you are doing anything, the time to market, if any tool helps you reduce it, you can drive your revenue faster.

Karthik Chakkarapani 24:32
Even I’ll go beyond, I’ll go time to value. All right. I don’t want to just take a tool and implement.

How soon can I get that value? Right. So how soon can I realize the value?

Something that I measure very closely. Because and also one thing that it matters in the SaaS, typical SaaS landscape, usually sign contracts for two years, three years and all those things. Sometimes even sign for five years.

But we made a rule within Zuora, any new AI startup like zero to three years, one year. Because the tech is changing so fast and we want to see the value. So we signed with a vendor last year, if you’re not planning to review, because there is a better tech out there.

So why pay like $100 when there is a new product which has more capabilities, which is half the cost. So this one is putting a lot of pressure on the AI companies, the startup companies, then they have to keep up because it’s very crowded, it’s becoming very crowded, especially in the go-to marketing space and cybersecurity, it’s super crowded. And so the vendors have a tough job to outpace the competition.

So and as customers, we want to look at what is the solution that brings more value to us.

Siddhartha Ahluwalia 25:46
So we discussed the three major steps till the final confirmation is assured by the legal and the procurement. But many startups complain that the legal and the procurement teams are not able to understand their pain point. And that’s the hardest step.

Why is that? And can you describe more from their perspective?

Karthik Chakkarapani 26:10
I think risk, right? What are the risks? This is a new territory for all of them.

Even when we take a typical SaaS application, it takes anywhere from two to four weeks for legal companies. And we were okay with that because we don’t roll out a new SaaS application every month. Maybe every quarter we may roll out like two or three.

But AI, it feels like we need to roll out like eight to ten per quarter and that puts a lot of pressure. And I have a very good rapport with our own legal team and procurement team. And we all we all acknowledge that this needs to be fixed.

This needs to be reviewed. So we’re actually having an active kind of thread on how to make this process better. And we explored some AI solutions on it.

Is there any terms and conditions when we get a new document? Can we redline it quickly and use the terms and conditions? That is one idea.

The second idea is more around, can we just give our own templates? Okay, if there is a new startup, they don’t have that. We had recently a vendor who’s going through the experimentation stage.

They didn’t have any. Even when they cross step two, their terms and conditions didn’t meet all of our needs. So then we realized, you know what, rather than going back and forth for two or four weeks.

And at the end of the cycle, they accepted 95 percent of our needs anyway. So I said, why are we why are we doing this convoluted way? Why don’t we just give them our document like NDA or terms and conditions?

Or what is the SOC kind of things that they have to do? Because a legal document almost like a 30 parameter, right? Just give it to them.

Let them review it.

Siddhartha Ahluwalia 27:40
Are these public docs?

Karthik Chakkarapani 27:42
No, these are not public because this may be specific for my company.

you should host my legal leader in your Neon. I’m telling you seriously, right? We are very fortunate to have him as part of a legal team.

His name is David and he’s a techno legal. He understands the legal. He understands the technology very, very well as well.

So with his support, we are able to move a little bit faster and he knows it very clearly. And we made a decision. Okay, next time when we bring in a startup, just give the documents to them, let them review it and at least it will make it faster.

Siddhartha Ahluwalia 28:15
It is very forward looking.

Karthik Chakkarapani 28:17
Yes, yes. You should definitely.

I’ll connect you to David and he has great ideas and he has shared some very good feedback to us. And he’s also given advice to the startups itself. He recently took a couple of companies through it.

We were chatting in Slack. Karthik, they don’t even have this basic thing, like they don’t have this, they don’t have that. And I said, hey, these these templates are looking more like Y Combinator templates.

So why don’t why don’t we help them?

Siddhartha Ahluwalia 28:45
Y Combinator did a great service to the world by putting out …

Karthik Chakkarapani 28:49
very basic..

Siddhartha Ahluwalia 28:50
Face notes so everybody can follow the same structure.

Karthik Chakkarapani 28:53
If this is a key struggle that the startup founders are facing, then more than me, you’ll get better advice from the legal team.

Siddhartha Ahluwalia 29:01
Yeah, I think if you know, please connect with David and would love to share any templates that you can share, remove the proprietary stuff, 70 percent. I think it will be a great service.

Karthik Chakkarapani 29:11
No, we see it as a pain point. I know the vendors see this as a pain point. It’s just especially the early startup companies right now because they don’t have the bandwidth or the capacity to do this.

Siddhartha Ahluwalia 29:20
So today, you would have 200 apps, I assume, today?

Karthik Chakkarapani 29:24
Yeah, yeah, yeah.

Siddhartha Ahluwalia 29:25
And what is the portfolio among how many companies are early stage versus late stage, like, you know, Cursor, Windsurf, so on?

Karthik Chakkarapani 29:34
I would say when I started, the early startups were very less because it was more like medium to established. Right now, I would say, I would say almost like one fifth of our portfolio or like like zero to five years kind of in the startup ecosystem.

Siddhartha Ahluwalia 29:53
So one fifth of the portfolio, roughly.

Karthik Chakkarapani 29:57
That’s an approximate number, like 30 to 40 companies.

Siddhartha Ahluwalia 30:00
And they are early stage, I assume.

Karthik Chakkarapani 30:03
I don’t have that level of detail, but I know that I’m doing it from the number of years I’ve been in the business.

So we have some, we have some companies like Trupeer is less than a year old. Like, Atomicwork is less than 3 years old, right? So, we have, we have a good range between this 0 to 5 years.

Siddhartha Ahluwalia 30:17
Yeah, Featurely is like year.

Karthik Chakkarapani 30:19
Exactly, exactly.

Siddhartha Ahluwalia 30:21
So, many start-ups also do not get contracts or get rejected by enterprises, because they say, hey, we do not know whether you survive tomorrow or not.

Karthik Chakkarapani 30:30
Yeah, oh, absolutely. Actually, that is one of our criteria that we look at, right? Actually, our procurement team, I talked about legal team, but procurement team, yeah, procurement team, when we go to step 3, they look at all these variables, right?

So, when we brought in Atomicwork a year ago, obviously, we were looking who are the VC backers, how many customers do they have? Do they have enough funding in the bank that can sustain them for the next 2 years? And also, what happens if they get acquired?

Are we in limbo or will they support us? So, we ask all these things as part of the procurement process and we also do, we have some tools that we run against and then we will come with the risk profile. If the risk profile is in an acceptable range, then we go for it.

Let us say, again, this is just my personal perspective, if I come across a start-up which is not backed by VCs, typically for me, it is a red flag. Typically, it is a red flag for me. I do not know, I do not have a quantifiable answer for that, because I believe that if a start-up, let us say the start-up companies are for 2-3 years and they are primarily through other types of funding like angel investment and all those other things, they may be, I feel like they may be risk averse.

They are not taking money from others and okay. Then I ask them questions. If it is a valid answer, then I still entertain.

But if not, the reason is, if it is backed by like 2 or 3 VCs, then you have the support of the VC ecosystem, right? And there will be an access to capital. And the VCs will also be a governing body for the leadership team and help them to keep moving.

If it is only like non-VC, okay, who is governing you? Like who is pushing the buttons on you, right? So, I feel that that is, I am learning this as well in the past year.

So, I literally stay away from companies unless it is super good, right? I always prefer companies who are backed by VCs, whether it is established VCs or well-known VCs in the circle, right?

Siddhartha Ahluwalia 32:34
So, how do you answer this question whether this company will exist tomorrow or not?

Karthik Chakkarapani 32:39
It is just like taking the trust, right? Like let us say that if the company has only a few customers and also we also do a risk profile, what happens if this company does not do well in a year from now? Does it going to impact my business a lot, right?

So, I am very cautious about that as well. Which part of the process that this product is going to help me? Is it a nice to have or must have?

Obviously, whenever we pick security solutions, the core security, usually I stay away from startups. The core zero trust foundation and identity management and the data loss prevention and all those things, I stick with the core established companies. But anything a layer on top of it that is going to help us with better productivity and experience, I am okay with the startup companies because it is enhancing what we have.

Even if they get acquired or if they do not do well one year from now, it is not going to break what we are doing. Same thing with the go-to marketing as well. We need the core CRM platform, the core marketing platform.

And let us say if you want to have a new way of generating pipeline or driving more campaigns, I am okay to experiment it with the startup companies. So, you need to differentiate which one is your core processes and which one is the things that you can put on top of it, that you can still run your core processes without impacting the business. So, we need to take a cautious approach where to invest established versus startups.

Siddhartha Ahluwalia 34:02
And what is the process for allocating budget? Let us say a greenfield budget versus replacement budget.

Karthik Chakkarapani 34:08
How much? I do not have anything like that. It is purely on value because at the end of the day, IT is an enabler of business goals and outcomes.

So, at the start of the fiscal year, when we do the financial planning, we all agree upon what are the company objectives. We follow the OKR framework and we come across as a leadership team, we align on the priorities. And then based upon the budget, we call out, hey, this is a number that we need to manage and invest to run the house and also continue to upgrade the house as well.

And so, we come through that. And then it is up to the leaders. Like in my case, I make sure we have a healthy balance of splitting between run the business, operate the business and change business.

So, my goal is to invest more in the change of business and reduce the cost for run the business and operate the business. That is how we can grow and innovate on it. If you are continuing to spend more on run and operate the business and something is not, you are investing on the core, continuing to invest more on the foundation, maybe there are many problems.

If you are not investing in the new processes and new tools that can help the business grow forward, then the balance is not there. So, I would say like ideally 60 percent in change the business and 40 percent in run and operate the business.

Siddhartha Ahluwalia 35:24
And on things like cloud, do you take the decision or the CTO takes the decision?

Karthik Chakkarapani 35:30
No, in my case, we have a CTO on the product side, but on enterprise, it is all under my role. And we are a cloud first company. I would say like 98 percent of our things are on cloud.

We do have a cloud operations team for enterprise. And we have some common like data center relevant things or security that is in-house. Other than that, other than things, we are almost.

Siddhartha Ahluwalia 35:58
So, you would take the decision as CIO?

Karthik Chakkarapani 36:00
Yes.

Siddhartha Ahluwalia 36:01
Today, do you want to be on AWS, Azure or GCP?

Karthik Chakkarapani 36:03
Yeah.

Siddhartha Ahluwalia 36:04
These are the usual.

Karthik Chakkarapani 36:05
That is right. We are not a big customer of AWS from enterprise, but our product industry.

So, they have their own product engineering technology leadership and cloud operations. So, we have a division of labor between what is within the product engineering. Anything that is non-product engineering comes under my team.

Siddhartha Ahluwalia 36:21
And on the enterprise side, you usually would then depend either Azure or GCP, I would say.

Karthik Chakkarapani 36:28
That is right. Yes. Yes.

Siddhartha Ahluwalia 36:29
And how do you choose between which cloud to deploy for which customer?

Karthik Chakkarapani 36:33
I think since our world is more on SaaS apps portfolio, we do not heavily have a big focus on it. It is only for our corporate data and engineering. We rely on AWS services.

Other than that, I would say like other than corporate data and engineering, rest all is SaaS based. So, when it is SaaS based, ideally, we just ask those questions. Okay, where are you hosting?

Is it GCP or Azure?

Siddhartha Ahluwalia 36:59
You host it on the customer’s cloud?

Karthik Chakkarapani 37:02
That is right.
Yeah.

Siddhartha Ahluwalia 37:03
Got it.

Karthik Chakkarapani 37:04
No, for our customer, when we sell our products, it is all hosted in our environment.

Siddhartha Ahluwalia 37:07
Okay. Yeah. Got it.

Karthik Chakkarapani 37:08
And that is managed by the product engineering team.

Siddhartha Ahluwalia 37:11
And they take the decision on AWS, Azure?

Karthik Chakkarapani 37:13
That is right. It does not come under my team.

Siddhartha Ahluwalia 37:15
So, usually when you talk to your peers in the industry, what are your learnings? Where is the industry behind or industry ahead?

Karthik Chakkarapani 37:28
I think one thing is do not be a risk averse, right? It is fail fast and learn fast. Have a proper, if you are talking more about how to leverage the best of AI, have a proper governance and enable a faster iterative experimentation culture, not only with your team, but also bring along the business teams, right?

So, that is, I would combine all those things into one category. The second category is just do not do alone, right? Because since you are in the tech space, you get to know all the things, but you cannot expect your business teams to keep in pace with everything that is happening, right?

So, you need to bring them along as well on your vision journey and be part of it. Bring them along when there is a problem, when we bring a solution, when we talk to the vendor. In the first meeting, we have the business teams in front of us.

It is not like IT goes first and business comes. So, we have a cross-functional team that represents an AI, at least in the AI focus. And we keep them updated.

We keep them informed, right? And when we even have the first session with the vendor, I will have my team and the cross-functional business team all in one so that we all get educated right from the first step. And it is not that we need to bring them only in the last.

So, they are part of the experimentation, they are part of the business value. And when we build the solution and enable it, it should not come across, okay, this is an IT driven solution. It is more of an IT and business combined solution that will help with faster enablement and value realization.

Siddhartha Ahluwalia 39:02
Understood. And right now, like you would go to many CIO conference, right? Do CIO also compare notes with other tools, other CIOs are using?

Karthik Chakkarapani 39:13
It depends.
Only in social conversations or something like that.

Siddhartha Ahluwalia 39:17
Not in business?

Karthik Chakkarapani 39:18
No, not in business.

And when we meet, we just have a casual chat. Hey, what are you guys doing? Because I am hitting a brain quantum problem, right?

So, and then when I go to some CIO events and forums or dinners, we pick on like two or three topics or sometimes it is a casual conversation and we exchange notes in the sense that, hey, I came across this company, you may want to take a look, right? It is not like a formal thing.

Siddhartha Ahluwalia 39:41
But how often is referral important?

Karthik Chakkarapani 39:45
Referral is super important.
If one of my CIO friends refer a product to me, I will pay attention to it.

Siddhartha Ahluwalia 39:51
But usually that is not part of the discussion, right, as you said.

Karthik Chakkarapani 39:55
Yeah, it depends.

It depends who it is. For example, we recently had a combined leadership meeting with Asana. Saket and his leadership team came to Zuora’s office a month ago.

We had a good couple of hours working session. We shared our goals and priorities and some tools, what we have experimented and brought it to life. Same thing Saket and his team also shared.

And we got some very good information, some exchange of notes and tools, and we went and checked on those tools as well.

Siddhartha Ahluwalia 40:23
Got it. And for you, the reference, as you said, you would at least talk to the reference, right? So for listeners, the reference is very important.

Karthik Chakkarapani 40:36
Exactly, yes.
And also customer references as well. Who did they implement with, can I talk to them as well? Once you go to the later part of the stages.

Siddhartha Ahluwalia 40:46
Got it.

Karthik Chakkarapani 40:49
So I would recommend the vendors and founders to have some very good solid customer stories, like problem, pain point, what value did they deliver? That is what I will be looking for.

And how has it been working with the vendor, right?

Siddhartha Ahluwalia 41:03
Sure. So because we have talked about three startups, so I want to discuss all the three on the same evaluation metric, so that listeners can at least do the example. So we start with Featurely, and then to Atomicwork, and then Trupeer on these value metrics.

Karthik Chakkarapani 41:18
So Featurely, you are still in the experimentation once we clear the legal thing. I think the metrics that will be focused on is, again, it goes back to the growth and efficiency. And there is a set of metrics that we look at, like a value, time to value realization, cost.

And then the ROI, because our common denominator is ROI, at the end of the day is dollar, whether it is productivity, savings, or growth, how is it coming together, right? So that is, I have to keep it simple.

Siddhartha Ahluwalia 41:48
What is the pain point they are solving?

Karthik Chakkarapani 41:50
The Featurely is more about how do we accelerate on research, user research, and discovery, and empathy, and all those things. And now it can take anywhere from 8 to 10 weeks. You have to talk to people, gather notes, and analyze it.

And based upon our capacity, let us say we can only talk to like 8 or 10 people. With Featurely, we can simulate like 100 digital humans, or they call it a synthetic humans. And that will automatically provide feedback, okay, what is working, what is not working, and provide recommendations.

And again, we are still in the early stage. So we are also learning. This is a new space for me as well.

Siddhartha Ahluwalia 42:30
And why is it important for you? Because people have been building products.

Karthik Chakkarapani 42:35
It is time to value, because we also sell products to customers. We want to sell the products, or even when I say products, either it is an external facing customer product or internal apps as well, because we do provide solutions and all those other things to internal customers. So, how do we drive value quickly for them, when they give us, when we identify a pain point or a business need.

So instead of spending a couple of months doing that, now I can reduce the time. And once we know what exactly we need, that is what it takes time, like what is the experience we need to do, what capabilities we need to do. So it cuts down the time by like 80%.

That is my initial hypothesis, because we have not tested it fully yet. And then that will help us to focus on, get to the design stage quicker, get to the implementation stage quicker, and get it into the hands of users. When it goes to the hands of users, they may find it, okay, this is for me.

Otherwise, it depends on how much work you are doing on the research side to get to the users. Right now, my understanding is if this works in our POC, then end users will see what they want to see. And this can not only for application, this can also be your website content, your website layout.

It can also be your campaign, email campaign, are you sending the right message for click through rates. So there are multiple use cases. Only in the coming weeks, we will know like how much of this is adding and actually creating true value for us.

Siddhartha Ahluwalia 44:05
But I assume for Zuora, you might not be launching new products because the company has been in existence and the new product development is done.

Karthik Chakkarapani 44:15
No, it is there. So we are also launching new products and solutions. We need to innovate as well.

So we want to, we are going after this total monetization where we want to help our customers in the age of AI to sell their products in a much more efficient way and have the billing and revenue in a much more efficient way. And we need to add new capabilities as well. We upgrade, we have new modules, sub-modules and everything else.

And we also add new verticals. All that, we will have product designs and all those things. That is why even the product team is looking into this product, into future.

Siddhartha Ahluwalia 44:48
And let us talk about Atomicwork. The same framework.

Karthik Chakkarapani 44:51
Same framework. It was a replacement of an existing solution. So the goal is how do we get digital workplace experience?

How can I help my employees across the company to find information quickly, get help and automate many of the requests that employees have, whether it is an incident or a request. Now, as a matter of fact, we just saw the latest data, almost like 55% of our incidents of request are being solved by the AI agent that Atomicwork provides. It has also helped the productivity of our support agents as well.

So we look very closely in that. And not only this one is not really for IT. We have enabled it for multiple shared services functions.

So it is going in a very good direction. And obviously Atomicwork, as we reviewed it a year ago, hey, how fast are they going to innovate? How are they catching up?

And you see new capabilities are launching almost every two weeks and every month. And that is keeping up. We are on pace.

We are keeping in pace with what is happening in the service management world.

Siddhartha Ahluwalia 45:56
But don’t you say that, hey, you have built enough product now. You don’t want new features.

Karthik Chakkarapani 46:00
No, we have also told because at the end of the day, it’s how much can we consume. So we pace it out. My team will get into the sandbox and test it out and we pace it out as well.

Because we have to be very cognizant about how many implicit features we send in behind the scenes, which people may not pay attention. It’s part of the flow of work. But if you’re adding in more and more new models or new processes, we need to space it out.

Otherwise, because we want to check it out. So it all depends on my team’s capacity as well. How much change can you push and consume?

Siddhartha Ahluwalia 46:30
What about Trupeer?

Karthik Chakkarapani 46:32
Trupeer is only we are only in month one. And so far, it has been promising.

We have seen productivity impact. And some of my business teams are very excited to share the feedback because they’ve been creating videos for most of their careers.

Siddhartha Ahluwalia 46:48
For customers?

Karthik Chakkarapani 46:49
Our videos or even for customer-facing videos, training videos. But the teams who have been producing those videos, it takes a lot of time in the existing world. They’ve been doing it for many years.

So I’ve connected them to the product teams. You don’t have to come through IT. You directly meet with the vendor and we will establish that platform for you guys and share the feedback.

Because the more the feedback we share, in return, they are very fast. They will release a feature in the next week. And then we get to use it.

And at the end of the day, the more feedback we share, and if the vendors are receptive to the feedback, it helps us in turn. So that will also encourage people to share more feedback.

Siddhartha Ahluwalia 47:26
Understood. So we discussed these three examples. But are you also using tools like paid version of ChatGPT and Trupeer?

Karthik Chakkarapani 47:33
Yes, yes. We already have cloud that comes as part of our AWS service. We recently signed with OpenAI Enterprise as well, because we wanted to, we are looking at AI in three different lengths.

The traditional data science, right? People will still build proprietary models to support our internal needs and product needs. That is done by our data science team.

The second one is AI. We have a core AI LLM platform, where we can build our own agents and solutions on top of it. That is where the OpenAI, the cloud and all fits in very clearly.

And so that is why we went with that. And the third one is more around like off the shelf AI solutions, where we quickly enable it and get going. So we want to do all the three.

It is not like one is going away. We will need all three. So that is why we went there and we debated a lot.

So obviously, we want to have our own control on the solutions that we create.

Siddhartha Ahluwalia 48:31
And how much data do you share with them?

Karthik Chakkarapani 48:33
With who?

Siddhartha Ahluwalia 48:34
OpenAI, cloud?

Karthik Chakkarapani 48:35
It is all secure environment. So it is part of our secure layer and they have a zero day retention and all those other things.

Siddhartha Ahluwalia 48:43
So they delete the data?

Karthik Chakkarapani 48:45
I think they have some good criteria. And as part of our legal terms and conditions, even tomorrow, if we do not renew, the goal is they will not retain our data.

Siddhartha Ahluwalia 48:57
And they will not train their?

Karthik Chakkarapani 48:59
No, Because this is all within our environment.

Siddhartha Ahluwalia 49:01
So you have asked them to put?

Karthik Chakkarapani 49:03
It is a private kind of a private wall.

And I believe it is more like a zero day retention. They do not train on our data. So it is only the context.

Siddhartha Ahluwalia 49:12
Understood. And where do you think is the future of AI tools going? There is a lot of discussion on autonomous agents.

Karthik Chakkarapani 49:20
Yeah, it is already there. It took a rapid pace a year ago. And I see that autonomous agents, like who does not want a smart assistant or a smart?

Siddhartha Ahluwalia 49:34
But who will take accountability for it?

Karthik Chakkarapani 49:36
I think now we are all looking at individual. Can I have an agent for this? Can I have an agent for this?

And I am seeing a world where we will be using less of UI, then we will be using more of agents.

Siddhartha Ahluwalia 49:51
Please give example.

Karthik Chakkarapani 49:53
For example, now with Comet browser.

So I was experimenting this.

Siddhartha Ahluwalia 49:58
At work or personally?

Karthik Chakkarapani 49:59
Personally.

So I was experimenting because we do not have Perplexity at work. So it was very fascinating what that browser does. It is an AI browser.

Obviously, ChatGPT already had an operator kind of a mode where it can do some things. Here, I was able to save like 6 plus hours on a weekend.

Siddhartha Ahluwalia 50:19
What did you do?

Karthik Chakkarapani 50:20
I did 10 things.

Like I uploaded my telephone bill or an internet bill and say, okay, what are my savings on that? Can I reduce my cost? And I put my daughter’s school summer schedule in that.

Okay, go make, go create events and reminders for me in my Google calendar. And there was one more use case that I had a solar bill that came in. Okay, how is it going?

Do I have any follow ups on that? So I uploaded all these things and also did a reservation. I am looking for this.

Can you go make it? You go see what works, when it is open and all those sort of things. So it is almost like all of these things were autonomous and that made my personal productivity better.

And I thought, okay, I think this is where the world is going. So it is almost like the common browser is like my personal smart assistant, which we do not have in personal. Okay, if I get an email, I will just take a reply to this email or you can do a lot of amazing things there.

I even had a use case, go look at my email and unsubscribe from all the spams. And I did it in a couple of minutes. So in the past, I used to go one by one and hit unsubscribe and everything else.

It automatically did. And it also summarized. Okay, give me a summarization of the emails that I got.

It is almost like what you would expect an admin assistant. Now just imagine in the future of work, everyone will have a smart assistant. Everyone will have an assistant that will go into almost like an aggregator, like a concierge assistant, where you just ask this, you go to one place and that assistant will determine which agents to go execute the actions.

I think that is where we are heading towards. And now we have to be ready. Okay, how do we manage and govern them?

Because we do not want any assistant or agent to go rogue. That is where the world is going. Now the key thing for IT organizations is, how do we manage and govern them?

There may be a world where you will just have a senior engineer, let us say software engineer. That software engineer will have five agent engineers. Because software engineers, let us say the senior level or mid-level, they get a task.

Okay, you need to do this project. Now that person can divvy up with these five agents. Okay, you go do this and all those things.

I think it is slowly getting there. But if you think about it, we scale this more and more, more and more. You can manage 20 agents, 50 agents to some extent.

Let us imagine, there will be a world, there will be like 1000 agents floating around the company. So how do you manage it? Okay, how do you give performance management?

How do you give feedback to the agents? It is like how you give to your employees. Okay, is it something part of workforce management?

If I am managing this agent who is helping me, like how you do in a real world, like a team of manager with a team of five people or 10 people, give you feedback, give you performance. So how do you do in this world? You are blindly going to take everything what the agent does.

So how do you rate it? How do you drive the sentiment? So I do not think we have figured that out.

I think we are focused more on…

Siddhartha Ahluwalia 53:21
Evolving as we are using.

Karthik Chakkarapani 53:23
We are enabling agents to solve a particular pain point and make it better. But if you look at the life cycle of an employee, right, so okay, they are helping to meet the needs, they are working on a problem, they are working on a project.

But they also have performance management, evaluation, feedback. Okay, the word of agents, what do you do? Yeah, I do not have an answer for that.

Siddhartha Ahluwalia 53:44
And that is why, you know, we as a fund, we want to be more useful to any founders, not just our portfolio. That is an attempt, right?

Karthik Chakkarapani 53:54
Yeah, if you come across any new startup that is, okay, how do you govern the agents and performance management, evaluation, if not soon, we will definitely hit that brick wall soon.

Siddhartha Ahluwalia 54:05
Yeah, like once the number of agents crosses a threshold where you are not able to manage.

Karthik Chakkarapani 54:09
Manage, okay, how do you do it? I need one more. Or at least you have some human in the loop.

We will soon hit that brick wall. Okay, what do we do?

Siddhartha Ahluwalia 54:21
And I definitely think a human will not be able to manage agents, because they will scale like very quickly.

Karthik Chakkarapani 54:25
Because the number of SaaS apps will go down, the number of agents will go up. When I said like, we are going more and more into the non-UI, I talked about the comment, I did not even have to log into any app. I did not have to log into my Gmail.

Siddhartha Ahluwalia 54:39
You gave permissions?

Karthik Chakkarapani 54:40
I gave permissions. I did not have to log into my other apps, right?

You can connect it, right? As Perplexity enables more and more connectors, just imagine, I only go to the GPT kind of interface or the NLS interface, do this, do this, do this. Unless I need more details, I will go check in somewhere else, right?

So, imagine in the corporate world, as more and more we do this NLS based conversational agents, you may use less and less of your SaaS apps. So, okay, is UI really the, will UI even make sense in the future? Unless you want to have click through details, okay, now show me in the app, right?

So, the whole UI UX of apps and interaction of humans in the apps, that is going through a major disruption now. It will happen, it will happen soon.

Siddhartha Ahluwalia 55:28
And this is a very interesting point, because I can almost imagine a new mission impossible getting made by Tom Cruise. Hackers are able to hack the agents. They are able to get all calendar information of any hotshot CEO and plant a new calendar invite where they want him to be.

Karthik Chakkarapani 55:48
That is why we are, as I said, like one of the first things that we did a year ago, we know that we are going to be going through this AI journey much more faster. So, last year, we invested a lot in having the right security foundation for agentic layer, the AI layer. And we want to make sure that we have some good monitoring capabilities, and we do not want to inadvertently upload any confidential information.

So, those are all the things that everybody has to do right now.

Siddhartha Ahluwalia 56:14
So, one last question is more for the startups, right? The three startups that we discussed Featurely is Bay Area based, Atomicworks is Bay Area based, Trupeer is India based. So, the solutions that you are seeing, how many versus your pipeline that you see as a CIO? How many are US based versus how many are?

Karthik Chakkarapani 56:31
I see majority of them, the companies, even though they are based in US, 80% of their employees is not in US.

Siddhartha Ahluwalia 56:38
But let us say, we can classify, where is the founder based?

Karthik Chakkarapani 56:43
I see a mix of both. In some cases, I see the founders moving from India or other regions to US to be closer to the customer, closer to the Bay Area ecosystem. And sometimes I see the founders are in other regions, but they do come very often.

They do come very often. If the founder is more technical and CTO driven, there I see them based outside. But if the founder is more product management, the vision behind the company and customer English, they are based in the Bay Area.

So, I see a mix of both. And I think it is a division of labor between the founder and the co-founders. And they have a very good, I see a very good healthy balance, regardless where they are located.

If nobody is here, then I would be cautious

Siddhartha Ahluwalia 57:34
But do you have any solutions that you are using, both AI and non AI on the SaaS side and AI side, where none of the founders are here and maybe in India?

Karthik Chakkarapani 57:46
I think for established customers, I do not closely look into that, because they have a proper ecosystem. But for starters, we definitely look into that.

Siddhartha Ahluwalia 57:52
Somebody should be here.

Karthik Chakkarapani 57:54
It is not that somebody who is easy to access to. And because I am not looking at, I am looking from a customer’s perspective in a different angle. Because today in this modern world, you can reach out to anybody, anytime.

But where is the founder spending the time to innovate on the product and innovate on the vision? Are they closer to the innovation circle, which is there as an example, or they are sitting somewhere else in the world that are completely cut off from what is going on. I look at from that perspective.

Siddhartha Ahluwalia 58:23
So, this is very important, because you are saying CIOs inherently or like subconsciously or consciously, this evaluation is also going on within the teams.

Karthik Chakkarapani 58:37
It is not like we put it on paper. It is just an observance. If this person is this founder or one of the co-founders spending a lot of time where the action is happening, they are keeping in pace.

So, the assumption is they will go back to the team and share, hey, this is something I have heard about it. If the founders or none of, if the founder or the co-founder is not even close to the innovation circle, innovation area, I feel like they may be cut off from what is going on.

Siddhartha Ahluwalia 59:04
And what about, we discussed, let us say this was Bay Area versus Bangalore. But what about Bay Area versus Austin, Bay Area versus Washington DC, the founders are based in Washington DC.

Karthik Chakkarapani 59:14
As long as they are from, there are two things, as long as they are accessible, virtual or in person, that is fine. But if the founder is, let us say if they are in Bay Area, sorry, if they are not in East, if they are in East Coast or if they are in Midwest, how often do they come here? There may be other reasons why they may not be living in Bay Area due to family constraints and other things.

And as long as they have a periodic exposure and visit, and we get to know them, because if we see them in LinkedIn, we see them coming to our offices, I am here, hey, do you want to meet? So, we get kind of an idea, okay, this person is very serious about it. And if I see some people only coming once in six months or 12 months, okay, that is a yellow flag, what is going on?

Siddhartha Ahluwalia 01:00:05
Any other important considerations that you have, which are like the location? Is it first time or second time founders?

Karthik Chakkarapani 01:00:14
No, it doesn’t, I didn’t, I’m not because I’m new to the Bay Area as well, I’ve been here only for two plus years now and I feel there is a big difference because I used to be in Chicago for 20 plus years. I see that there’s a lot more innovation, energy, whether you meet a friend or you go to an event, you get to learn more in any given time and I assume that will be the same case for founders, right? There may be some events and forums and all those other things, you come across some new people and you get to learn more, right?

Siddhartha Ahluwalia 01:00:47
And what about, you know, vertical solutions that are built, let’s say some solution is built for fintech space, payment space, right? Do CIOs also have, you know, are CIOs looking at more horizontal solutions?

Karthik Chakkarapani 01:01:02
Yeah, both, we have to do both. You have to look at horizontal like from a workplace experience or shared service assumptions, but vertical is based upon what the need is at a company level, okay? Do I need to focus more on go-to marketing or post sales or other things, right?

So it depends, you have to look, we have to optimally balance between these two.

Siddhartha Ahluwalia 01:01:25
Got it. Thank you so much, Karthik, it’s been a very insightful conversation, new for me also like how, you know, extreme details of the working of an organization, especially the buying process, I believe very useful for the founders also, right? To know about how the other party thinks, right?

You can’t blame that, hey, they don’t understand us.

Karthik Chakkarapani 01:01:48
Yeah, no, thank you. Thank you for the discussion, happy to share.

Siddhartha Ahluwalia 01:01:51
Yeah. Thank you.

Karthik Chakkarapani 01:01:52
Thank you.