Anand has worked with some top companies in SaaS & Product roles – Yahoo, Airtel, Snapdeal, Freecharge, Facebook & currently at Five9. Since 2014 he has been an Angel Investor in over 50+ companies, some of the popular one’s being – Yulu, Khatabook, and MoEngage among others.

In this podcast, Anand shares his experience of building consumer-friendly products & becoming a successful Angel Investor.

Notes –

01:10 – Journey of one of the best product thinkers in the country – Entrepreneur in SaaS (2001-2008), Multiple Product Leadership Roles across few of the best companies in the world 2008 – Present (Airtel, Snapdeal, Facebook, Five9) and now an investor in startups 2016-Present (Rupeek, Khatabook and 48 other companies)

03:16 – Joining Five9 after Facebook

04:09 – Leading acquisition of Whendu and Virtual Observer

06:55 – Five9’s future plans with over $400 million ARR and becoming a Decacorn soon

09:42 – Working in India with Airtel, Snapdeal & Freecharge (from 2013-16)

13:12 – 50+ portfolio companies as an Angel Investor – Khatabook, MoEngage, Innov8 etc.

16:56 – Investing in Rupeek – Building a customer-friendly product in a market with very low NPS

19:32 – Investing in Nobroker – Solving rental issues on consumers 21:16 – Investing in MoEngage – Solving the user engagement marketing needs with SaaS

23:00 – Exits from Fynd & Innov8 – More of a founder & team bet, than a market bet!

28:37 – Failures Startups face – Cash burn without Product-market fit & Lack of team chemistry

36:50 – Covid-19 crisis – Not just conserving cash but creating solutions to tackle it

38:16 – Working & learning with Marissa Mayer (Yahoo), Mark Zuckerberg & Sheryl Sandberg (Facebook), Gopal Vittal (Bharti Airtel)

44:15 – “The tools that people continue to pay for during a crisis are the ones which grow in the long run.”

51:02 – His first principle of being an Investor -“You are not the Hero of the story, the founder is!” – Just be founder friendly

53:01 – His second principle of being an Investor – ”You make your money with the success, but you make your reputation with the failures.” – Being with founders during their bad times

54:30 – His third principle of being an Investor – Not to exit from a company, as soon as it breaks-out

56:10 – In India would it make sense for Angel investors to Exit-early at a good valuation?

 

Read the full transcript here:

Siddhartha 0:00

This is Siddhartha Ahluwalia, welcome to the 100x Entrepreneur podcast. Today, we have with us Anand Chandrasekaran. Anand is the Executive Vice President of Product Management at Five9. He has 17 years of experience building successful products and leading product organizations. Most recently, he was director focused on the messenger platform at Facebook, leading the growth of the platform to over 250,000 developers, including a customer care focus, and 8 billion messages between businesses and consumers. He was previously Chief Product Officer at Snapdeal and Airtel. Welcome on to the podcast, Anand.

 

Anand 1:07

Hey, Siddhartha, thank you for having me.

 

Siddhartha 1:10

Anand beyond a brief intro, which I provided to our listeners, we would love to know more about your journey.

 

Anand 1:17

Yeah, I’m happy to introduce myself a little bit more, and my journey to Five9. So I’ve been at Five9 for about a year. And before that, as you mentioned, I was at Facebook. As you probably know, I was leading the messenger for business platform while I was there, since inception, and worked to grow the platform from about I think we were about a couple of hundred million messages between people and businesses when I started, and we grew that to about 8 billion messages between people and businesses. And so I actually knew Five9 as a partner in those days and I don’t know if you know this, but like very much earlier in my career, I’d actually co-founded an enterprise software startup called Aeroprise straight out of Stanford. When I graduated, before that I was living in India and I moved to go to Stanford for grad school, and have been in the state since. And as you probably also know, I was in India for a few years in between 2014 and 2017, working at Airtel and Snapdeal. So that’s sort of a little bit of my story. You know, so it almost feels like a full circle, starting in sort of SaaS, and then coming all the way back to the SaaS world. But also, I think there is an interesting trend going on, and slack and zoom, etc. part of that trend where there is an increasing movement of a consumer DNA into SaaS products, where the cycles are becoming shorter. There’s more iterative product development. More integration of kind of what AI can do into product development. So, you know, kind of interesting timing for me to join Five9. So that’s just a brief introduction of you know how I came to Five9 after my time at Facebook.

 

Siddhartha 3:16

And why did you join Five9 from Facebook?

 

Anand 3:19

Yeah, so Five9 was actually a partner when I was at Facebook. And what I saw was there was a huge demand for interaction between people and businesses. And of all the use cases that we started working on, ranging from content to commerce to customer care, the customer care focus had the most traction, and we are able to grow the platform significantly on that basis. And so for me, there was sort of this clear opportunity where someone could build a SaaS model for delivering these tools to customers. And so it was kind of that perfect timing for me to go finish what I started in the Facebook journey as part of Five9.

 

Siddhartha 4:04

And can you talk about the two acquisitions since you joined Whendu and Virtual Observer?

 

Anand 4:10

Yeah. So, as you rightly mentioned, Siddhartha. Let me just introduce the business a little bit. As I mentioned, we’re a cloud SaaS platform that does customer care, right. So a lot of the other categories like sales or finance or HR have largely moved to the cloud. And customer care is really one of the final categories that is in the process of moving to the cloud. And Five9 is a public company about 400 million or so ARR this year where we build a SaaS platform that gets you up and running really quickly. We largely kind of take out companies that were previously using Cisco or Avaya gear and move them to Five9. And so we’re still in these very, very early days, if you remember, you know, about a decade ago, we had this transformation in the consumer space from PC to mobile. And similarly, we’re seeing this transformation from sort of on-prem software to cloud software. And as I mentioned, customer care is probably one of the final categories to kind of tip over and move to the cloud. So we have about 2000 customers or so. And as they migrate, you know, what we’re seeing is a demand for products that are adjacent to this customer care space. So one company that we acquired is in the workforce management software space. It’s called Virtual observer. And so this is if you’re running a contact center platform, you also want to know how best to keep your workforce productive within the contact center. And so this is a market-leading company that does that. So we acquired Virtual Observer in January, going a little bit behind, Siddhartha we also acquired a no-code platform called Whendu. This is allowing developers within our customers and within our partners to actually build really elegant integrations into 50 other systems and bring together sort of solutions for contact centers with 50 other systems. And so these are the two acquisitions that we’ve done. And you know, one thing that you probably heard is the SaaS industry is a high retention industry. So largely, you know, you’re successful as a company by having low churn and having a high sort of LTV over CAC. And so that sort of, so Five9 LTV over CAC is about six over a period of time. And so having these additional kind of adjacent products allows us to deliver a more complete solution to our customers, both, you know, large and small.

 

Siddhartha 6:54

So Five9 is already at a $400 million ARR as you mentioned, and it’s so on the path of being a Decacorn in the next few years. It’s one of the 20 SaaS companies, you know, or I would say only 20 SaaS companies have been in the history that have crossed a decade, one milestone. How do you perceive it?

 

Anand 7:21

Yeah, so this has actually been an incredible year, the company has grown in terms of its market cap over 100%. And we’ve added about $3 billion to the market cap in the last year or so. And the company has been at a 30% odd enterprise growth for the last few years. And we intend, what we’ve said publicly is that we intend to have that growth for the foreseeable future. And so that means we’re essentially doubling every three years in terms of revenue. And so like I said, we are in very, very early innings of the space in terms of the percentage of this industry that has penetrated and move to the cloud, it’s about 10 to 15%. So they’re still over 80-90%. That is yet to move to the cloud. So can I excited to be here? You know, one thing that coming from the consumer world is, there is a huge sort of element of cloud operations. And so cloud operations and reliability, that’s a huge part of growing. And so that is an area that we’re investing significant efforts both in the past as well as going forward in the future. And as the number of customers grows, and as you know, kind of reliance on the solution grows. Also, the expectation of higher reliability increases significantly. And so that’s been an area that we’ve been focused on. And also, as I mentioned, the two acquisitions have helped us. Can I expand out the total addressable market and provide a more complete solution to customers and so as I mentioned, we’ve added about three odd billion dollars to the market cap last year, we’re now around six and a half billion or so. And so kind of excited about the trajectory forward and being in kind of pretty elite company with companies like Salesforce and Twilio and Adobe and so on and so forth.

 

Siddhartha 9:23

So for listeners in India, who are thinking a parallel to it, it would be a parallel to Freshworks?

 

Anand 9:32

Yeah, so that’s a great example of a completely B2B focused company that has all its revenue coming from enterprises. Yes.

 

Siddhartha 9:42

How have you India journey been? Why did you return to India for such a short period of time?

 

Anand 9:48

Yeah, so India was kind of incredible. And, for me, there wasn’t like a huge plan to move at that point. That time I was at Yahoo. I had been there for about a little under five years. And I got to talk to the CEO of Bharti Airtel, Gopal Vittal who is a fantastic leader, got to work with Gopal pretty closely and the charter was if you see today what reliance Jio is doing, Siddhartha, so Airtel had sort of seen the coming of Jio in a few years. And so in 2014 started to kind of preempt that and started to build out products and bring someone on board who had probably never been at a telco but had built a lot of products. And so I was sort of having a fantastic time over there moved to India in 2014. We actually had our kid in India, in 2014, as well, and it was sort of a prolific time that I had working with some incredible management team members over there. I don’t know if you’ve used to Wynk music, which is a subscription music app. So my team led the development of Wynk music. We revamped the MyAirtel commerce experience, we worked on Airtel money, etc. And actually, I was having a pretty amazing time. And as you might imagine, when someone moves back from Silicon Valley and comes back to India, that’s not an easy cultural transition. Right. So, we went through a lot of the what could have been big challenges, and actually, I was having a great time. And the opportunity to join Snapdeal sort of came out of the blue for me, right. So wasn’t sort of looking to move wasn’t sort of looking to do something else. But the question for me was, finally in 2014 2015, the internet was actually happening in India. And, for me, it was a chance to either be a part of that journey or be on the sidelines, right? So I decided to sort of jump in and help build Snapdeal. And again, you know, it was kind of this incredible journey that we had at Snapdeal. At that time, you know, when I was there, we not only build Snapdeal and the e-commerce site but also Freecharge. And we did acquisition, we sort of revamped the platform, we built a payments layer on top of it. In 2016, we relaunched it as a payments platform a little bit ahead of its time, I would say. So today, if you look at what PhonePe is doing inside of Flipkart, definitely that model has proven to be true, but we were also a little bit early. We tried to do it in 2016-2017, that timeframe, a few years before sort of maybe we were adequately funded and so on. And I was in like you said in India for about three and a half years and moved back to California when the opportunity to join messenger Facebook came along.

 

Siddhartha 13:04

So coming on to your angel investing part how many companies you have Angel invested in till now?

 

Anand 13:11

Yeah, so I have been very lucky. So when I was in India, you know, I got a chance to start doing this sort of on the side. And the, the way I sort of look back at that is when I started in working in India Siddhartha, I don’t know if you remember in 2014, there was no concept of a product head in an Indian technology company, right there was the engineering team and they were business leaders. And there was really no well documented well-known product or design leadership in Indian startups. And so the time that I was there in India was sort of the start of that transition, to have product leaders. And so as you might imagine, a lot of founders who are starting companies, they were tech first product first companies, they didn’t have a lot of mentors around to help them build these companies, right? So I used to get a lot of unsolicited incoming requests for help. Basically saying, Look, I’m intending to build a product-first company. And I’d love to get some feedback on my product or, you know, just kind of how should I think about succeeding in this space? You know, some design inputs, etc. So that’s really what I started doing. I started sort of rolling up my sleeves and helping founders in India because my belief was look, It was definitely the start of the internet really, truly taking off in India. And I had moved to the valley in the early days of the internet around 99 and saw the ecosystem take off. And one of the things that really struck me about Silicon Valley, Siddhartha, is that there is this kind of paid forward mentality like when I was starting out with that Price, I would ping people out of the blue, and surprise, surprise, they would all respond back, right. And these are the most accomplished people in their world. And so I sort of saw an opportunity both to play a role in the growth of the ecosystem, but also truly to, you know, do my part in paying back or paying forward as you will, and doing my part in return for all the people that helped me out. In particular, I had one professor at Stanford called Rajeev Motwani, who would sort of be very generous with his time and help early young entrepreneurs like us out. So that became a role model for me when it came to sort of my giving back and my investing. And so that’s how it started. I did a few deals in India. While I was there and have been doing a bunch of investments since then, at this point, there are about 50 investments. Mostly, I would say across the marketplace and FinTech space, as well as now, a number of SaaS companies, as well as practical applications of artificial intelligence. So kind of lucky to be in a few companies that are breaking out and starting to be successful like Rupeek and NoBroker, Khatabook, GamesZop, MoEngage, and so on and so forth.

 

Siddhartha 16:21

Can you talk about some of these companies where you were an early investor and at what valuation you invested and what’s the current valuation of these companies and how they have grown like Rupeek, NoBroker, KhataBook, GameZop?

 

Anand 16:37

Yeah, so I would say, in general, being an individual investor, I tend to be in the very early days like the pre-seed round or even earlier than that, and sometimes the seed rounds. And so Rupeek is actually a great example of sort of the thesis where It’s a very India first company. And it was co-founded by Sumit Maniyar and his team. And it’s a great example of someone who is coming into a space that sounds like it’s very crowded, but actually, the consumer in the space is not being well served. And if you asked the consumers in the gold loan space in India, the NPS would probably be incredibly low. And it’s also really fragmented, right? There isn’t a single vendor who’s used technology to scale effectively across the country. And so it’s a great example of someone coming in from outside, not having, you know, a lot of insight experience in the industry, but being real, a true sort of friend of the customer, right, and comes into a space where the NPS is super low for the consumer and build a really strong consumer experience. And if you sort of used the Rupeek product, you know it step of the way, the consumer stands to benefit from using the product. And also, it’s a great example of the thesis I have where it’s usually really large markets, like for instance, the gold loan market again, only 6% of India’s gold is leveraged in some way right about over 95% is not leveraged. And meanwhile, you know, folks don’t realize they have a higher network to maybe start a company or take a vacation or get an MBA or what have you. And so there’s a great example of a fantastic entrepreneur who’s building a great consumer experience, but also a large market. And so they’ve done very well since I participated in the seed round in 2016. I think most recently, they have raised from GGV capital here in Silicon Valley, who’s a firm that I’m very friendly with, and in the past, they’ve raised money from Sequoia and Accel and others in India. And that’s been, you know, one of the more successful investments for me, it’s really honored lucky to have been in the company since 2016. And there I would say about 90 to 100x return for the angel investors at this point. I think that thesis applies to a lot of the other companies as well. No Broker is C2C marketplace, where buyers and sellers can talk to each other directly and avoid the kind of inefficiency that the middlemen bring to the process in India. While I was in India, I would looked for homes to rent two times and Siddhartha, what an inefficient process that can be. And so they use technology and artificial intelligence to connect the consumers, the buyer, and the seller directly. And so that’s another example of the marketplace model being used to bring a great consumer experience in a otherwise crowded market right like housing. The tech market in India has been a pretty crowded market. But NoBroker has emerged as a breakout winner in the space. Same with KhataBook, you know, they’ve emerged as an operating system for the merchant. As Jio brings a lot of people new internet users into the ecosystem. There have been a lot of consumer successes, but they’re also bringing a lot of merchants online. And so KhataBook is sort of the first step that a merchant would download and use for business purposes. And as the prices of connectivity are coming down, a lot of merchants are able to keep a reliable connection on and use apps like KhataBook for their business. And similarly, you know, especially in a period of COVID, and a lot of e-commerce apps being unusable because they’re not doing deliveries. GamesZop is tying up with a lot of these companies to actually allow consumers to play games and introduce a new revenue stream as their existing revenue streams all but died down. So a lot of these marketplace companies and FinTech companies have been the core. But also, as I mentioned, MoEngage is a great example of consumer companies are driving SaaS demand because all these consumer brands that are growing like crazy, have the same need, but they don’t have either the bandwidth or the priority to focus on the solution. And so enter, you know, company like MoEngage, that builds this as a central SaaS platform and sells it to all of them and grows on the back of consumers app success. And you know, Siddhartha the other thing that I’m kind of excited about is a lot of these companies like MoEngage like Lucideus, where I was the first seed investor as well. They are having their ambitions grow past the Indian subcontinent. So they have really good success initially in India and they get a lot of traction initially. But then, like, you know, you mentioned Freshworks. So Freshworks has got its ambitions way outside the Indian subcontinent. And similarly, a lot of companies are moving to the US and growing as global software companies. And so being based in California, I sort of am able to spend some time while they’re here as well.

 

Siddhartha 22:27

And how do you find these companies and the founders?

 

Anand 22:31

Yeah, so, most of the new companies that come my way, I mean, obviously, as you can tell, I’m not on the ground. And most of it is coming from just really good word of mouth, in helping the current companies as well as through referrals from existing founders that I worked with.

 

Siddhartha 22:53

And can you talk about like you have five exits till now, from your angel portfolio. Right? and Fynd and innov8 being the notable ones, Fynd got exited to reliance Jio, innov8 got exited to OYO. How big was the exit for you personally, and what were the learnings there?

 

Anand 23:16

Yeah. You know as you might guess, to start the stage at which, I tend to come in and in work with founders, I tend to be super early. And at the very, very early stages, it’s usually a founder bet. So obviously a bet on the market as well. But largely, you’re betting on the founders and the early team. And so Fynd and innov8 were absolutely founder bets. You know the team Harsh and Farooq, and the team at Fynd is absolutely one of the most incredible founding teams that I’ve ever met and you know, lucky to have worked with them and seen their journey. One of the things that really struck me about the Fynd team was despite the fact that they were in a very difficult space, eCommerce is a very low margin, hard to break through kind of space. But despite that, they were so focused on being generous with their knowledge. And one of the reasons I do these podcasts is you know, sort of giving back and sharing knowledge with other folks. The ecosystem grows when people give back, people share knowledge. And the Fynd team is a huge role model to the Indian startup community, in terms of how generous they were and sharing code, sharing knowledge, sharing best practices, etc. I absolutely feel like they sold early. They were absolutely on a very interesting company, but they couldn’t have become a part of a bigger, ambitious company. They are now part of Reliance’s e-commerce platform, and so couldn’t be more happy for them. And I think it was like, around like a $50-$60 million exit. And so you know, all the investors did pretty well. And similarly innov8 is run by Ritesh, who’s a fantastic founder and also now seed investor giving back to the community and did a great job sort of bringing space for small companies. You know, in India, it’s hard as a small company startup, to find a space that feels like a place that you belong to. And Ritesh created this fantastic space in very central locations in Bangalore and Delhi and so on as a co-working space and is now part of another really ambitious company OYO rooms. And so for both of these entrepreneurs, I couldn’t be more happy that they are in an extremely entrepreneurial environment, whether it’s Reliance or OYO. So both of those were good exits. And you know, I do think that both of them sold early, but couldn’t be more happy for them. The one thing I’ll say is that this is again, like, you know, if you’re long gone a market like India, you know, you have to call out the things that could be better so that they can be improved. The amount of paperwork that we have to do an acquisition is just insane. And so, you know, literally, we were like doing the acquisition. And it was like about three or four months of paperwork before the acquisitions close. So I think there’s definitely probably a startup opportunity for someone to come in and make the paperwork and the process more efficient for corporate transactions.

 

Siddhartha 26:37

And you have talked about your success as an angel investor, let’s talk about your failures as an angel investor, which other companies that didn’t do well?

 

Anand 26:48

Yeah, I don’t think like one particular company comes to mind but I’ve definitely had a few companies that have failed and myself how I’ve had like, several failures. And actually, like I would look back and say, even my experience at Snapdeal is mixed, right. Like, while we pioneered some incredible things, you know, it was a difficult environment for the economy. You know, I don’t think the macro environment made it easy to navigate a complex company, we had raised a lot of money became really hard to kind of right-size the company and the company’s taken, you know, drastic steps, reducing like 70-80% of people over 12 to 18 month period before getting to a place where the company is now doing incredibly well. And so, I would say that’s one kind of failure. The other kind of failure is honestly until these companies succeed, and now some of them are breaking out. But sometimes, you know, when you hear these success stories, it feels like they were successful all along, but having been on a lot of these journeys myself as well as, you know, following the journeys of these founders, it’s rarely a straight line, right? Like, it sounds like sometimes it’s an overnight success that’s been years in the making, right? So it takes like, like, for instance, some of these companies that are breaking out now in 2019-2020 as we went through 16,17,18,19, sometimes being incredibly patient and working hard through challenges. I think largely, I would say, the failures that happened or I would put them into categories. So, one is companies that grew too fast and had like complex cost structures and started burning money before they truly had a product-market fit, right. So that’s, I think, the biggest feedback I would, I would give us like if you’re starting a company, take the time to just ensure that you get to product-market fit, before scaling and bringing on a lot of people and starting to increase the burn and stuff like that, right, and especially when capital is easy to get, sometimes it’s easy to look past some of those challenges. And I think like, ironically, now we’re in an environment where it’s actually a great time to build companies that offer true solutions to real problems, right. So that’s probably the first lesson I would call out is just do make sure that there is product-market fit before scaling. And then the second is, I would say, just like team chemistry, right, like I’ve seen our founding teams where either it was a solo founder, but like looking back, I would say, maybe this founder should have gotten another co-founder because they didn’t have all of the skills to start the company and having someone who is a great partner in crime would have been fantastic. And the flip side, right, like sometimes, two or three founders did get together, but they were not the right chemistry with each other. They hadn’t sort of talked about the journey ahead of time. And so they had very different views of what the journey would look like, and kind of didn’t work out from a founding team perspective. So those are probably the two big things that I’ve seen as recurring themes. When I’ve seen companies fail, and obviously, you know, when you are in an early-stage investor, you expect a bunch of companies to fail. So, that part is not a surprise, but when it happens, these are largely the two teams that I’ve seen to result in the failure.

 

Siddhartha 30:32

Also, you have seen failures in the companies because they’re not able to raise capital especially in during these times because capital becomes scarce during downtime?

 

Anand 30:44

Yeah, it’s interesting Siddhartha. So I actually, I’ve not found a lot of examples where truly the company was doing well and deserved to raise capital and couldn’t raise capital. Right? Like it largely could be traced to, like either the cost structures or sort of getting ahead of where they are as a company, and so on. But I think that you are right that even if you are a company that’s doing well, we are in incredibly unprecedented times like you’ve had probably guests on your podcast talk about what a unprecedented time it is on every level whether it is the healthcare crisis that we have, and the need for founders, to take care of the team and the customers and just employee safety to sort of economic reality like, I don’t think a lot of companies are able to just operate as going concerns given that people are in many countries are sheltered in place. And used to be that you know, especially if you are a global company, and I’m not talking about very tiny startups, I’m talking about somewhat scale companies, you would say look like one part of my customer base is not doing well from an economic perspective, because there’s a macroeconomic problem in that part of the world. But maybe another part of the world is doing well. But this is an unprecedented time where all the countries in the world and all the parts of the world are actually going through this kind of what we call pandemic. And so there’s really kind of, you know, once in a lifetime kind of occurrence, and there’s a lot of things where we don’t have a precedent for it. One thing I’d like to call out is at Five9, we actually did something that I’m incredibly proud of, which is we actually gave a sum of money to all the employees in the company below director level for whom that sum of money would make a huge difference. We did no layoffs or reductions in force, but we also kind of took this additional step to take care of our employees. It’s driven, you know, a huge amount of kind of positive response from employees. So I would say from a founder’s perspective, you know, this is an incredibly challenging time. And so, while I haven’t seen this in sort of past patterns, I do think that this is an unprecedented time. And you know, there’s a lot that we will learn about kind of managing through a complex crisis as a result of the past couple of months

 

Siddhartha 33:24

So the common lessons which other investors have shared on the podcast have been for COVID 19. And it’s been, I think, fourth or fifth month, where the economy has been continuously tanking. The lessons are cut cost at all levels, conserve runway at least for 24 months, be very frugal in your spends and look for survival first. Any other personal lessons that you have observed or learned in the last two, three months?

 

Anand 34:03

Yeah, I completely agree with all of that. I think one experience that I’ve had is that I think any crisis like this doesn’t change people. It actually reveals people. And I found that crisis is a great time where people’s true personality comes out, right, it sort of reveals character, reveals personality traits, as opposed to changes people or changes character. And so I’ve actually been kind of incredibly impressed and kind of inspired by the level of resilience that I’m seeing out there. I think it’s a blow to the system, right, like both their personal well being their family well being their company’s well being. But you know, By the same token, the level of resilience that I’ve had a chance to see, you know, everything from simple things like how resilient kids have been, despite the fact that their schools are closed and their patterns have been interrupted. And they’re now home the entire day. They can’t go play with their friends, and the resilience that they’re demonstrating through this all the way to companies are demonstrating resilience. The two examples that I would call out that I’ve been very impressed by and inspired by our one. I really love how Airbnb has been navigating this crisis. This has been kind of really bad for them as you can tell the level of business that’s declined for their product. But the way they’ve navigated this crisis is kind of has been kind of incredible, and the principles that they’ve followed through it. And then the other story, which is probably less known, is a US company called Panera Bread. So I’ve been following the story. The CEO is of Indian origin called Niren Chowdhry and Niren has been talking about Panera bread’s incredible way they’ve navigated this crisis. And they’ve opened up completely new product offerings of delivering fresh grocery, because if you sort of follows their business, they have a lot of fresh ingredients in their business. And rather than selling it just as cooked items, they now sell bread and milk and fresh produce and so on to customers and that business is has been doing very well. And they launched this entire new business in maybe like a couple of weeks. So, whether it’s Panera Bread, which is a very kind of old school business that has been digitized and transformed digitally, or an Airbnb like a business, which is digital. It’s a native internet business. I think several companies have been inspiring and sort of managing this and one thing that I was very taken by which Niren talked about in the Panera Bread story is this concept of building windmills, not bunkers. So, obviously, you need to conserve cash you need to sort of getting into survival mode. But also you don’t want to like go in a bunker and hide out until everything clears, right? You want to sort of build windmills, that actually start leveraging what is going on in the crisis, and start to kind of turn the business around to add value, whether it’s supporting people, or so many factories have turned around and started making personal protective equipment (PPE) and so on. So I think like this whole idea of building windmills rather than bunkers, has been one of the most inspiring things that I’ve got a chance to read and take away during this time.

 

Siddhartha 37:44

That’s fantastic. This very unique approach during times of crisis to build some something which is truly leveraging and adding value rather than just hiding out and wait for crisis to get over.

 

Anand 38:02

Right.

 

Siddhartha 38:04

You have the good fortune of working with Marissa Mayer at Yahoo, Mark Zuckerberg and Sheryl Sandberg at Facebook and Sunil and Gopal Bharti at Airtel. So, what have been the common things you have learned from these people?

 

Anand 38:25

Yeah, you know, Siddhartha as you mentioned, like in the last 10 to 12 years, I’ve been kind of lucky to work with some well-known leaders fairly closely whether it’s Marissa at Yahoo, leaders like Mark and Sheryl and so many incredible folks at Facebook, Gopal, as I mentioned, and Sunil Mittal at Bharti and most recently I worked for an incredible leader Rowan Trollope, who led a big turnaround at Cisco when he was there over a six-year period. So I would probably look back on few lessons with Marissa, the big thing that I learned was this notion of happy people make happy paintings, which is if your employees are in a good place and they’re happy, then they are going to deliver work that delights consumers, right. So I kind of this direct connection between like the morale and the health of the team impacts the health of the product. So she had this quote that she used to use. I also kind of really liked her product review process, sort of this formality around rigorously reviewing products every six weeks or so having a cadence, having a plan of record for everyone to follow. And also knowing where you have a top-down plan of record and where you have an experimentation approach. This is something that she brought from her days at Google. So learned that from my time at Yahoo working with Marissa. I think with Mark and Sheryl, it’s really this one thing that, you know, everyone has known is Facebook is truly the pioneer of growth hacking and a culture of growth, right, like product-driven growth, as opposed to purely acquiring users through marketing and spending money, right. So, I’m not going to touch on that, because there’s like, so much documentation around that. And Facebook is truly a pioneer in that. But the one thing that I’ll touch on is this notion of two things. Actually. One is this notion of, you know, when you are in a difficult crisis, as Facebook was in 2016, you actually get out of it by building right and so Facebook really continued to build its way out of a crisis, rather than becoming stagnant and stopping building, especially for a company at that size greater than 500 billion valuation. And the other thing is, you know, I learned a lot about kind of how you determine values for a company, right? So Facebook got into almost a little bit of trouble for the moving fast and breaking things value that the company had. Right. And one thing that I learned was how values have to be trade-offs, right? So if you have a value, like, Oh, you got to be honest, and you shouldn’t cheat people or something like that, everyone will agree with that, right? There is no other side of that. That is equally likely to be true. But you’re picking one side over the other and truly a trade-off right. So by saying you want to move fast, what you’re saying is that there is another side where you move slowly. And you know, there is pros and cons of both and you as a company stand for moving fast right? And that does come with its benefits and its pros and cons. And so you know, your values have to be true trade-offs, right. It can’t be just trivialities. And that’s probably one of the big things that came up again and again, during my time at Facebook. I would say with Gopal, the thing that I learned was that he was truly one of the best leaders I’d seen, who could go from being incredibly long term oriented and incredibly strategic, like, you know, doing war games to like prep for the arrival of Reliance Jio two years from now to actually going to one region and talking to consumers in that region. And tying together that region’s growth plan to those users and figuring out if the plan was going to fly or not. Right. So just going from incredibly strategic to incredibly tactical, and then going back to something incredibly strategic, like protecting the brand over the next 10 years or something like that. And then I’ve usually seen leaders be good at one or the other and Gopal was a great example of someone who could quickly multitask and go from one time the other. I think through a lot of these companies, the one other thing that I learned, and I’ll probably share this, for a lot of the folks listening. One thing that I’ve been doing for the last three or four years is literally the first thing every Monday that I do is to send out my top three priorities to my team. And I’ve been doing that for the last three or four years, very regularly. And the number of times that I’ve avoided major miscommunications misalignments just by doing that simple thing on Mondays. I’ve lost track, right. And so that’s probably one thing that I learned a few years ago from the leaders that I worked with that I think would be very simple, very small but a goes a long way in aligning teams is that what are you doing this Monday to this Friday, and it’s only three right so it shares the top three. And so by doing that and imagine everybody shares the top three that they are working on. A is it really aligns everyone and creates a sense of transparency that everybody knows what everybody else was working on, regardless of their seniority. And then the other piece is there is sort of this immediacy to things right if you’re distracted. You know what is a distraction, versus what is critically important for you to get done in a five-day workweek or a seven day week, seven day period. So I probably shared that as something I learned a few years ago. that’s a great way to get teams to be incredibly productive.

 

Siddhartha 44:34

And can you talk about your product principles and about building great products that you have learned working with these leaders? I suppose, which would be valid during these times?

 

Anand 44:46

Yeah, I mean, I would say, like I said, the biggest thing that an entrepreneur can fool themselves .This is true of even larger companies when they get into new products or new features is truly like, are they creating value, and are they solving a problem that is here and now when is critical, and people will pay money for. Right? And ironically, a bad economy or a crisis is a great time because it’s a great equalizer, right? Like it, it really sort of gets rid of a lot of the fluff that people probably were willing to engage with in the past. And it really brings it down to the essentials, right. And the tools that people continue to pay for during a crisis are probably the best tools to survive through the crisis because they are truly adding value. And sometimes they even grow during a crisis, because companies double down on those tools or those products. I think one thing that we’re all seeing is truly how critical it is to stay in touch during these times. And you know, the number one app in the world is a partner of Five9 zoom, which has seen over 200 million daily participants and reaching 300 million daily participants. And we work really closely with both, zoom as well as Microsoft Teams are two companies that have been very, very successful two products that have been very successful during this time. And that’s actually a very interesting area, where I think increasingly, some things that are one time behaviors right now are likely to become longer-term behaviors, right? So, the number one thing I would say from a product principals perspective is kind of constantly figure out by talking to customers, if what you’re building is critically important, right? Like a must-have versus nice to have, and how elegantly are you solving the problem, right? Again, like sticking with a zoom metaphor, because it’s really the company of the moment. It’s not like Zoom was the first company to solve this problem. But the way they did, it simply worked, right. You click on the URL, you open up a meeting and it just simply works. So sometimes, even though the problem statement may have existed, just providing elegant solutions to the problem is a huge differentiator, right? Like just working every single time can be a differentiator, especially during a time like this. So that’s probably like one kind of evergreen product principle. The other thing I would say is, I think it’s critically important that product leaders, product managers, especially during this time, are able to exhibit judgment, right? Like, what I mean by that is, they’re able to sort of listen to business conversations, business problems, are challenges that are out there that is like being expressed as a pain point or as a business challenge, and translate that into what the computer science problem is and what is a differentiated solution. And that I think, is becoming an increasing skill to build great products. And also one thing that I found to be supercritical is there are times in the product cycle and there are times in a company lifecycle where speed is a differentiator like Zoom went through some huge security blowbacks. And they just responded incredibly fast, which is, I’m sure fresh on so many people’s minds. And they’ve largely made those problems go away, because they responded so fast. And so there are times when, you know, speed is critically important. And there are times when, you know, if you want to go really far, you want to go as a team, right? So alignment is super important. And so again, like, you know, one other principle is when do you orient towards speed? And when do you orient towards sort of deep alignment? And sort of this notion that I talk about with a lot of the founders that I connect with, as well as my own team is, you know, making decisions when you have 70% conviction, right? With just Keith Rabois principle, and a lot of times, there are teams that are looking for additional data and struggling to make decisions because they’re looking for that 80% 90% 95% conviction. And essentially, if you’re making decisions based on 70% conviction time, after time you’re going to be one of the most sought more successful companies, because that is a pretty high batting average, to be right 70% of the time, over a long period of time. And then last but not least, I would probably say, once you found a huge problem that is worthy of your life’s work and whether you have solutioning. And you have provided an elegant solution, then it’s okay to add a little bit of your own craftsmanship if you want to call it that or a personality or a differentiator that is sort of your own twist to the product, right? Whether it’s irreverent language, or kind of humor, or whatever you want to call it. So those are probably the Three things like find a huge problem statement, that’s a pain point for your consumers or your business users, you know, come up with an elegant solution. And then once you’ve done one and two, you earn the right to introduce a twist or a personality of your own.

 

Siddhartha 50:15

Thank you for sharing, you know, these timeless product principles. And concluding the podcast with some learnings from your being an angel investor. So there are many folks in the ecosystem who have been there, done that and now want to give back as an angel investor. So what’s your advice on building a portfolio like you have built right now a portfolio of 50 plus companies, five of six of them around to be unicorns and around 52-100x exit because it has to be sustainable. It cannot be done without an expectation of a return which doesn’t build a cycle to invest in new companies.

 

Anand 50:57

Yeah. So, again, I will give you my top three takeaways. I guess it’s the curse of being a product manager is that you always like talk in threes. Now, I’ve been lucky to have done this for five, six odd years. The number one thing I would say is, just keep in mind that you are not the hero of the story. The hero of the story is the founder. And you are just lucky to play a role in their journey. And largely like if that is your first principle is that you are here to support the hero of the journey, which is entrepreneur, right. And there are founders now that I’ve known for five-plus years, sometimes even more than five years. And I’ve supported them over a long period of time. And sometimes I you know, supported them without even being on the cap table or involved in any way formally. And so I would say the number one principle I’ve learned is just being founder-friendly is a differentiator, right. And I’m not saying founder-friendly, just as a checkbox, right? I mean, like, truly, how deeply can you take it. And there have been some times where founders have like crashed in my place, because they are coming to visit California and they decided last minute to extend the trip or something, and they couldn’t get a hotel room or something like that. So truly, like how, how friendly are you to the founder? And how much are you willing to support their success and their journey? And this is especially true as the company scales, right? Like, especially as the company scales, the investors, the board members, etc. There are not a lot of people that the founder can just call and just bounce something off, right, especially if it’s a difficult situation. And so being one of those people that founders just like to talk to and like to call is something that I think is super important for me. The second thing, I would say is, I think that, as they say, you make your money with your successes, but you make your reputation with the failures, right? So honestly, I would say, the question I would ask is, if you went through an experience where the founder didn’t do well, would that founder work with you again? And would you work with that founder again, and hopefully you are there for them even during their bad times, right? So that’s really where, you know, you make a reputation as like someone founders can rely on and you’d asked earlier, like how I get most of my deal flow, most of it is through positive word of mouth and, you know, founder saying, hey, x founder told me that they’ve had a great experience working with you, that kind of thing. And then the other thing I would say is that you know, truly like, Yeah, I know, this is like a cliched thing. That this is truly long term. But it’s true. You know, like none of the decisions that you make today. You’re gonna know if you’re ready Right or wrong in any reasonable short term timeframe, right? Like you’re gonna know if you’re right or wrong, maybe three years, you know, you have a sense of it, but truly, it’s going to be five years plus others, you know, if it’s going to be incredibly successful like I’m starting to see maybe half a dozen, maybe 10 companies, from the 2016 2017 vintage now start to break out. And it’s clear, they’re going to be incredibly successful. But it takes a while to figure that out. So I would say, just being in for the long term, and like committing to give to the founder, over this long term is probably like the other thing. And then the true third thing I would say is that if you’re an angel investor, you have to understand the power law. And you have to understand compounding, right? So I’ve heard a lot of angel investors who are patient for 2,3,4 years and then like exit soon as the company breaks out. And I would say this is probably one of the worst things you can do for yourself. And you know, if you sort of look at the power law, like you’re gonna make most of your returns from the small number of companies that break out. And so exiting those at that time is probably not a great service that you can do for yourself. And so just kind of, from a portfolio management perspective, like spending the time holding on to the companies that are doing really well, right, that’s probably, especially as an individual investor, the temptation to take the returns off the table is pretty high. But again, being truly aligned for the long term means that you sort of believe in power-law and compounding, so those are probably the top three I would share.

 

Siddhartha 55:39

But how do you know when to exit? I’ll share with you an example. One of the angel investors in Giphy which was acquired recently for $400 million called out on Twitter that he only is receiving 5x exit, whereas today the valuation is 30 X and why is that because the 400 million the Facebook is offering is most of being taken by the late-stage VCs. So, are angel investors getting screwed because when the exit happens, a large chunk first given to the VCs. So is it better to exit before when a VC is offering you at let’s say 30x 40x valuation? Or is it good to wait till the final acquisition happens because most of the companies as we know in India especially wouldn’t go for IPO? They would be M&A, which you saw with Fynd and innov8 in your portfolio. Or they would be a secondary buyout by a large VC for 7500 million.

 

Anand 56:48

That’s a good point, Siddharth. And I would say, you’re right. I mean, there’s a lot of horror stories over the years, etc. But I would say, look, If you’re looking for a smaller sort of 1x, 2X, 3x kind of return, there are actually tons of public market opportunities that deliver those kinds of returns today as I mentioned, like the SaaS space that Five9 is in, there are so many companies that have grown 3to 5x in the last 12 to 18 months, right? So it’s possible to get that kind of return even from the public markets without a lot of risks. I think when you’re getting into early-stage companies, the risk-reward equation is a little bit different like early on it used to be this 10x plus return being sort of we all end all and now people look for a unicorn-like exit so it’s called changes based on the timing, but people are looking for bigger exits and that’s where the compounding and the power-law come into play. So you’re right, what you’re saying is sort of the exception that proves the rule. But in general, like when you’re managing your portfolios, it’s going to be clear that, like, 80 90% of your returns are going to come from less than 10% of your portfolio, right? Like, this is just like clearly the case. It’s not gonna be equally distributed. And so managing, how you sort of get the yield out of the companies that do really well. While not also, you know, potentially inconveniencing the founder in doing so. It’s definitely an art rather than a science, right? But you’re right, like if you sort of feel like the company may not be, an incredibly large successful company, then taking an exit, especially if it’s an organic exit for the entire company. those are obviously smart things to do. And those singles and doubles sort of keep you going on route to you know, sort of the huge winners right which as you know, like in India over the last five to 10 years, there have been probably 20 to 30 companies that have hit a billion-dollar valuation. And globally there is like just around 300 to 350 companies. I don’t know what the number is with the last few weeks probably it’s a smaller number but like there’s not a lot of companies that have that kind of exit right? So we’re not talking about a lot of examples where you have that level of exit and so if there are opportunities along the way absolutely worth considering them as well.

 

Siddhartha 59:32

How would you do it personally let’s say, for example, many of your companies have crossed 200-300 valuation mark? So why would you wait a very long time or would you seek whenever the next series E or F round is happening?

 

Anand 59:49

Yeah, I think it’s definitely a case by case Siddhartha, but one thing I would say is, for me it absolutely do I still believe in the story right like If I were coming into the company now, would I be buying or selling, right? And if I feel like, Hey, you know, this is a fragmented market, and this company is at the most gonna get, you know, let’s say 10% market share 15% market share, and they are almost there already, and there isn’t a whole lot of upside, then you’re not leaving a lot of upside on the table. Whereas I feel like in some cases, they could be like $300, $400, $500 million valuations. But this could be easily, let’s say, a $5 billion company, you’re actually leaving like a 10x multiple if you exit at a $500 million valuation or, or even less, right, so I think it’s definitely different from company to company. And I think it’s also different for the kind of investor you are right, like, there are a lot of individual funds versus an individual Angel versus a early-stage firm. And so it’s also like, you know, what, economics are critical for that particular investor. In my case, I sort of go back to being incredibly long term on long on India, long on entrepreneurs. And so, as a principle, like I try to keep my life simple and not do a lot of portfolio construction, thinking, I’d really reserved a lot of the time and helping founders and in finding other great founders to work with. So to keep my own life simple, like I spend far less time than probably some others on this kind of portfolio construction.

 

Siddhartha 1:01:36

And do you also see VCs forcing out early angels to consolidate their ownership?

 

Anand 1:01:42

Um, I think that definitely is a lot more opportunities now, especially in really successful companies that are breaking out in competitive spaces. But I think there’s always the opportunity to choose whether you want to Part of the exit or not? And particularly, Siddhartha that comes down to, is that a mutual belief that you are a positive force for the company, and you are helping the founder, right? I think ultimately, what every new investor asks Is, who’s going to help this founder the most? And are they aligned and incentivized to help this company be successful. And so you’re seen as like a very early investor, who still continues to help the founder, who still continues to be positive, who still continues to make introductions, who still continues to help hire great executives into the company. I mean, those are the big challenges that every company faces at different stages. And so if someone’s a positive force, and is seen as helpful in those areas, then there is a tendency to want to continue to keep them. I think if the investor is sort of seen as not believing in the story and maybe making it a little bit difficult for the company to execute, then there is maybe a bit more pressure to you know, maybe give the give that investor an exit because that’s probably what they were looking for anyway.

 

Siddhartha 1:03:08

Thank you so much, Anand and it’s been wonderful to have you on the podcast. And thank you so much for sharing your learnings and experiences.

 

Anand 1:03:16

Yeah, thank you so much, Siddhartha. Great pleasure for me. Hope you are staying safe and staying healthy and hope everyone listening is staying safe and staying healthy as well.

 

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