Siddhartha Ahluwalia 1:08
Hi, this is Siddhartha Ahluwalia, your host at Neon Show and Managing Partner at Neon Fund, a fund that invests in the best of enterprise AI companies between US, India, corridor like AtomicWork, CloudSEK, SpotDraft. Today I have with me Jay Vijayan, Founder and CEO of Tekion. Jay, welcome again on the Neon Show.

So glad to have you back after five years.

Jay Vijayan 1:32
Excellent, Siddhartha. Pleasure. Good to see you again.

I’m excited to be here again. Five years, time flies, right? So I know we were talking very briefly before, you know, starting the podcast formally.

So it looks like your son was one year at a time and he’s six years. Wow. Yeah, time really flies.

And congrats on all your progress on your fund as well as your podcast, doing well because I keep hearing from different people about like, you know, how much valuable content you bring. And it’s been really great.

Siddhartha Ahluwalia 2:03
Thank you so much. It means a lot. If you’re hearing from Bay area, then we must be doing something good.

Jay Vijayan 2:07
Yeah, it’s been good. Again, I connect with a lot of, especially, you know, tech entrepreneurs. Some of these, they all, they get quite valuable information and content.

Siddhartha Ahluwalia 2:17
And, you know, a lot of our audiences from India and specifically, you know, people from Tamil Nadu loved your last episode on Neon Show and they were commenting in Tamil, right? So if you can say a few lines, you know, back home in Tamil to them.

Jay Vijayan 2:36
Vanakkam, Tamil makkalai. Niga Tamilla niga kelvi kettinguna, na Tamilla padhu sulruthu vandhu rombu easya aruku anaku.

Do you speak Tamil?

Siddhartha Ahluwalia 2:43
No, I don’t speak Tamil. I’m a Punjabi.

Jay Vijayan 2:47
It’s still good to learn.

Siddhartha Ahluwalia 2:50
Yeah. Yeah.

You know, last time we gave a recap of your journey. You are the largest automotive retail cloud today. And can you tell us, you know, in a summary, what value do your partners and customers derive from Tekion?

Jay Vijayan 3:03
See, mainly we’ll talk about customers, right? That’s the biggest thing. We do everything we do for our customers.

So first is from, think about three segments of our customers. So we have our dealers, which is, you know, the biggest. And then we have our manufacturers, the OEM partners.

And then we have the automotive ecosystem partners, be it software providers, vendors, other customers. It all comes together so well, because automotive is a big ecosystem. Second largest consumer industry in the world.

From a US GDP, it’s almost 4% of US GDP. So it is huge. So when I said that’s why I kind of even framed it as an ecosystem.

People have to, everything has to come together very well. So you have to connect all the dots to deliver what the true end consumers like. We all in our day-to-day life, we are consumers.

You know, you probably drive a car or buy a car. I do the same. So eventually when we, if we have to serve the consumer, which is eventually pays all of us, then we have to enable our customers who are delivering whatever vehicle and services to the consumer in the best possible way.

So we created the three clouds very thoughtfully bringing the automotive ecosystem together. So our dealers, they run their entire business on our cloud. Pretty much all the core business.

Siddhartha Ahluwalia 4:34
Is it ERP?

Jay Vijayan 4:36
It is fully like an ERP. In fact, I would say it’s ERP plus plus, because many times when people think about ERP, it’s mostly they think about the back office. This is back office and front office and everything else, because we do CRM, full-fledged CRM for an automotive retail.

We have DMS, which is like an ERP. We have payroll. So there’s so many things that come together.

The way we thought about is even though people may have different names for different functions, as a consumer, when you buy a car or service your car, you ideally shouldn’t care about whether your name or your workflow goes through a DMS or a CRM or like any other system. You shouldn’t care. Parts in a wholesale system, you just have to get the best experience, full transparency, and that way your engagement is very smooth.

So that’s what we try to deliver or we deliver to our customers. And we keep fine tuning with everything and now with more with AI. So that’s what we deliver for dealers, the complete end-to-end platform so that the dealer can deliver a seamless car buying or car servicing or engagement to their customer.

For our manufacturers, because from a consumer point of view, they always have to, the dots have to be connected. They go to a manufacturer website to shop for the car or they go to a dealer website, shop for the same brand. The dots should be connected because consumers shouldn’t care between different things that in between what is involved.

All they need is, okay, I need this particular car. I need more information about it so that I can make an informed decision. And then when I go through the buy experience of a car, I feel good about it because it’s a very good purchase.

They spend a lot of money to do it. So they should feel really good about it. And doesn’t matter how they shop, be it online to most part, and then go do a test drive and then buy in a dealership or they do a test drive in a dealership, but go back to their home and then just online, they finish the whole purchase.

The systems should be able to connect all the dots, give them the seamless experience. So that’s the value. So value for the dealer is running their entire operations to sell car, service car, engage with the customer.

For manufacturers, the whole digital retailing experience is if a consumer starts there, it seamlessly connects to the dealer or back to the manufacturer. And then for the partners, you really play a role in giving that experience to the customer. What I mean by that is if you’re buying a car, you’re taking a loan or you’re leasing a car, you need to connect to a lender.

Or if you’re having an old car that you want to trade in, you need to connect to a trade in software or solution to really value your car so that you can trade in easily. So all of those is part of the partner cloud. So anyway, that’s the value for each segment and collectively to the ecosystem.

Siddhartha Ahluwalia 7:40
Got it.
And what was the industry before Tekion?

Jay Vijayan 7:44
Industry before Tekion is quite fragmented, right? And massively, I would say people work together to hold it together. But the problem there is things fall through the cracks many times.

So basically what happens is some people will get good experience, some people will get poor experience, some people will get worse experience. Every place is very different. And then when the shopping starts somewhere, it doesn’t seamlessly close the loop, it’s broken experience.

So basically, sometimes we could do completely shop online. But if you walk into a retailer, they may tell you different things, different price, not consciously, but they just don’t know. The consumer shop already looked up for certain things.

And then when they go in person, they get a different experience. And then there are many things, capabilities don’t exist where they could shop it, they could go to their home, they can literally virtually work with the same dealer and their staff. But without going into a dealership to finish the deal, they can sit from their home or work wherever they feel comfortable and do the whole deal.

Desking is the term where they go through the discussion online. So basically, for a consumer, it’s many people it feels good, right? Yeah, sometimes they feel really comfortable talking to a person, but sometimes they feel I’ve already done the test drive, I know what to do.

I don’t want any pressure, I don’t want to talk to anyone, but I want to make the deal. So virtually, they feel comfortable, especially many times when people are younger, the generation is they want to do mostly online or mobile, right? So you need to give that flexibility to the type of any type of customer.

That’s kind of what we are delivering. That is what we are delivering through our platform, retail cloud, automotive retail cloud, enterprise cloud and partner cloud. So each, of course, independently functions by its own, but the power is exponential when it comes together.

Siddhartha Ahluwalia 9:43
Got it.
And during your journey, I remember, you know, talking to you last time that you started in 2016, right? Until 2020, you know, you were building the product, right? You launched the product publicly after 2020, right?

What is the complexity that you were mastering during that time?

Jay Vijayan 10:01
Yeah, great question. I think we launched the first one officially 2019, end of 2019. You’re right.

I think we also launched but we kept it very silent. 2018, we did a test product, a smaller scope version, like for vehicle service only. So it was a very conscious decision because how we want to solve it.

Because we want to solve, see, there are so many solutions at that time and today. Today, even more. And there are many very good companies, very good software that deliver, but they solve, you know, one or two of the problems.

Sometimes it’s a good problem. Sometimes it’s okay problem to solve. But very rarely companies solve the problems comprehensively.

It takes a lot to understand and go through, build, a lot to build. The reason we had to have such a big team, right? Close to 3,000 people is because amount of things we had to build.

Yes, now things are becoming so easy with the AI. We are going through this journey, but at the same time, our customer base is also growing, our product is growing, grown. It’s all great.

So it’s very, very good. It helps us to be even more efficient. But now, the reason we had to, you know, take that much time, it was not that we were sitting in an office and developing software.

The great news is we had dealers that we are working with. We are, we were working with dealers. We had offices in some dealerships.

They opened up their office and said like, okay, your product team can work from here. So we were in real customers, understanding their problems, iterating the software. And finally, 2018, we launched a scope, smaller scope.

We call it as digital service experience for vehicle service only. We learned a lot. We incorporated that back.

And then 2019, we launched the full version, first version. It’s a, you know, for pilot customers. And then from there, we just went kind of, you know, really full steam.

But all the effort that we put in that, you know, three to four years to fine tune, to understand the problem, to build it. And that’s what we ended up acquiring to automotive dealerships. And it was a very high risk, high stakes we had to do because Tekian is a small company.

We didn’t have a lot of money. It was a big risk. And a lot of people warned, including my direct reports, warned me saying that it’s a huge risk.

Because automotive dealership is a very capital intensive business, because you have to carry a lot of cars, cost money, and you have to take a line of credit from bank to host the cars. If you don’t sell the cars, you keep depreciating in value. So it’s a huge, already we are a startup, we have a lot of risk.

On top of it, we end up acquiring to one dealership and then the second dealership again. But I had to make a very, you know, conscious decision that this is a risk worth taking. Because if you don’t go through it, you don’t understand the problem, because it’s not a consumer product.

The end result is the consumer benefits. But if it’s a consumer product, you’re fairly intuitive. You download a software, you go through the processes.

This is a business problem to solve. So we had to really go through that by ourselves. So we bought those two dealerships, took that risk.

It was, early days was tough. But honestly, it was one of the best decisions we did. Not only, it’s more about, yeah, we did very well in the dealership business.

But the amount of value our product and platform got, and my team had unfitted access to the business, was invaluable. I’ll tell you one simple example. During COVID, when everything was shut down to most part, mainly, you know, the car dealerships and manufacturers also were going through tough time.

This is peak COVID, 2020. We brought out a product from that dealership. My team developed literally in like, you know, somewhere around like six weeks, six days.

So they developed a product from the platform. No other DMS had. From the platform, you can sell car remotely.

So you don’t need a digital front end. So to any customer, you could remotely sell. So we sell that today as part of our platform as a concierge feature.

So basically, you could really remotely sell car from your DMS to any customer. So that was, see, these are the benefits that we got through that journey.

Siddhartha Ahluwalia 14:26
So the goal of acquiring the dealership, which is very unique, was to end to end enable a dealership on their product, right? And see, does the product really can transform a dealership or not?

Jay Vijayan 14:40
Yeah, exactly. I think that was the goal. Because, see, dealership itself, while we, well, from a consumer side, it should be very simple.

From a business side, there is a lot of complexity. Because dealership itself, like you asked a good question about, is it a ERP? Yes, it’s a lot more than an ERP.

Because, as you know, they have, you know, obviously they have a sales department. They have a marketing department. They have, you know, parts department.

There is a big parts, some dealership have massive parts warehouse. So you need operations to run the parts department itself. And parts is very much related to service, which is big.

Because customers, there are dealerships, we run the world’s largest dealership in, you know, LA. You know, they service hundreds of cars a day. Think about how many parts and how many things they have to do.

It’s like a small village. They have, you know, Subway and Starbucks. So big, that big of an operations, it’s a lot of complexities you have to handle.

But again, fundamentally, that’s what I feel, that’s what systems are for. You have to take a lot of complexity in and deliver simplicity to your consumers. So understanding the complexity and delivering the best software helped us a lot owning those dealerships.

We understood the problems integrally. We were able to keep incorporating back. And then there were times we used to, any of our, you know, releases will go to that dealership first.

For the first, I think, we, you know, initially we had even two months, but then we reduced it to two weeks to four weeks. And then we’ll release it to all the other customers.

Siddhartha Ahluwalia 16:13
And those two dealerships that you acquired, was the first set of customers that went all in on Tekion?

Jay Vijayan 16:21
First one, yes, the first dealership we acquired was the first customer. We bought it from the first customer because he was working on selling the dealership for other business reasons. And I’m glad he brought it up to us.

And he’s still a customer. He owns a lot of other dealerships, bought it from him. And we felt, yeah, it’s great.

So yes, one of them was the first dealership.

Siddhartha Ahluwalia 16:44
Got it. And would you advise like other founders building in vertical software, let’s say founder building in construction tech, to acquire a construction site to go through that pain and build?

Jay Vijayan 16:55
Yeah, good question. Very good question. I would say, no, case by case, I would say.

It depends on, you know, two things. See, fairly, even though it’s big, honest chances, yes, it will be ideal. But at the same time, you also shouldn’t be taking extremely unreasonable risk, especially if it’s a massive scenario.

Because if you’re delivering manufacturing software, you can’t run a manufacturing plant. In those scenarios, the best is if a founder is convinced so much that this is a problem that you’re solving. Like, for example, a founder, say, manufacturing.

Usually that comes from maybe a smart founder, entrepreneur who used to work in manufacturing in some capacity. We’ll see, oh, wow, this is a great idea. I mean, why are people doing it so complex?

And that’s kind of how ideas came to me. And then say, I have a solution for this. I have a better idea where we could do this smoothly.

Maybe I am not in a position to implement my idea in my current company because I’m not at that level making decision. Then if you’re so convinced, it’s fine to get out and start the company. The best way is to first to start with, that’s what we did as well.

You know, sell your idea, concept, or a prototype. You build a prototype convincingly. That’s what we did.

I took it in the same, you know, most of how the founders would do a steps. Get some early customers excited so that they become your, you know, full open up their, like a construction site, you said. If you get excited or two or three good construction businesses, they feel, wow, okay, this is a real problem that I want to be solved.

And you guys seem to be smart people who can solve it. I want to be early part of it. So that happened to us.

Luckily, I should say thanks to those, you know, dealers, early dealers and partners and some manufacturing brands as well. When we showed them the early first vision, then we showed the prototype. We need to also show progress.

Not, you know, you can’t just build PowerPoints to show because people are very informed. They’ll see through it very quickly. Rarely you could fool people, but you shouldn’t.

So the idea is if you are getting, keep showing progressing from PowerPoint to you need to show prototype, you need to start showing early versions of the product. The great news is every time we do that, we saw the excitement going up and some of our dealers opened up their doors. We have a very big manufacturing partner who also, you know, trusted us very early.

So all of these happened where your foundation should be your product. So your idea going into your product and getting that, you know, good progress, show a level of excitement, then that’s the first. And then once you excite a few customers, ideally recruit them to be, you know, fully open up for your team.

And that’s what you need. I mean, of course, early days they would say, you know, they may need the software for free or they may need it in for a significant cost. They need something.

Maybe you have to give some little bit of equity to them so that they are part of the journey. They feel good about it. I think it’s all okay because instead of you, someone buying a big dealership.

So good news is the first four years, that’s what happened for us. We didn’t buy a dealership in the first three, four years. But when the software, the first version was ready in 2019, I feel, oh, it’s imminent to fine tune to make it really perfect.

So we ended up doing it. So my advice is, yes, it’s ideal. If you have a lot of money, if you come from a very rich family, your dad has a lot of money to give you, yes, you know, go acquire whatever construction.

Siddhartha Ahluwalia 20:36
How much money you had raised before you acquired your first dealership?

Jay Vijayan 20:41
Not a lot. I mean, today’s world, it’s not a lot. At that time, it was a lot.

Let me see. Acquired my first customer. So maybe first customer was in 2018.

So 2018, we did, we have done three rounds. So first round was 3 million, which was seed, friends and family and my money as well. And then second round was 10 million, I think.

And then B was, I’m forgetting. So it was not a lot of money. Collectively, we might have raised probably 30 million.

Siddhartha Ahluwalia 21:20
Not a lot of money.

Jay Vijayan 21:21
Yeah. 30 million for the first.

Siddhartha Ahluwalia 21:24
It’s not like OpenAI now buying XX

Jay Vijayan 21:26
Today’s things are very crazy. There is really no comparison.

Siddhartha Ahluwalia 21:31
Their own nuclear plant.

Jay Vijayan 21:33
Yeah. I, you know, while I definitely believe AI has future, you know, OpenAI is a great company, but all I could say is, you know, yes, there is OpenAI, yes, there is Claude, yes, there is Grok, there is many, right? The good news is there is only one Tekion.

And, you know, definitely I’m happy, proud about it. And I’m sure my investors are. And I believe in, you know, long term success.

That doesn’t mean you have to be fast. You need to show progress every day, no doubt about it. But making sure your bigger picture plan is focused on long term, but you keep building the blocks every day towards that long term goal.

Because if you don’t have the long term goal, very easy. I see, yes, some people are very successful, but some people can get distracted very quickly. If, you know, you don’t have a long term goal because people get swayed so much because trends happen a lot.

I’ll tell you a simple example of trend where this might be very valuable for founders. When, why it’s important to stay grounded, it’s hard, you have to keep it. Why it’s because the market today with social media, you’re connected, it’s very important to be networking.

But same time, when you network and be informed, you get tons of information. Social media comes in, of course, anxiety builds, this industry changes. So the example I would give is, so right around, you know, before COVID and then it kind of intensified a lot during COVID.

You know, I’ll tell our industry, our industry, a lot of talk about there is car ownership is going to go away. Maybe in India also it happened. People said like, oh, everyone is going to go through subscription economy.

Just people are going to only subscribe car, take Uber, Lyft, whatever, no one is going to buy cars. And then what happened was, a lot of our customers, including manufacturers, started reaching out to us saying like, oh, do you have a subscription software? Can you build subscription software for us?

And then there are many dealer groups also started investing and building their own subscription software.

Siddhartha Ahluwalia 23:51
They’ll give car on subscription.

Jay Vijayan 23:52
Yeah, they tried. Not even one succeeded, not even one. Every single company kind of didn’t, they kind of shut it down or didn’t do.

I’m not saying they’re, you know, 100% wrong. Yes, people have to react to what market is. You also cannot react too quickly to a short term, you know, hype.

When it becomes, you need to, you know, think through, step back and see a reality what happens. So we really, we stayed really, there are many startups that came up also. There were some big ones, made a lot of splash, raised a lot of money, who did try to do a lot of digital retailing, tried to do subscription software, all with good intention.

But the point there is, this is something you could get swayed very quickly. We could have gotten also, because there were a lot of advice for us to say, invest a lot, stop doing what we are doing and just build subscription software, because things will change. And where it paid off is, it was hard to hold ground and say, you know what, it’s fine, let’s stay grounded.

You know, we’ll see, you know, we’ll watch it closely, but I don’t foresee this is a trend change. It’s a short term hype. It may settle down to a small, you know, portion of the, you know, car subscription economy, but I clearly felt it’s not going to completely transform how people are going to.

So it ended up to be 100% hype. Everything died. Consumers ended up buying.

In fact, car industry had a big boom. Prices went up, margins went up, you know, inventory was low. So that’s a good example.

And like that, there are many, you know, trends come up. Like now, of course, AI is everywhere. I wouldn’t say AI is a hype, but there is a hype component built into it.

AI is real. It’s similar to, you know, internet and dot com. I’ve gone through, I know you probably, you know, audience, a lot of young people who didn’t go through.

I went through the dot com boom and bust. The big thing I would say is dot com is real because, you know, Amazon, Google, everyone came out of dot com. But there is also thousands of companies don’t exist today.

Siddhartha Ahluwalia 26:09
Nobody knows them.

Jay Vijayan 26:10
Yeah. Right.

So that’s why it is important to focus on few foundational elements when you build a product or build a company. So that if you get too reactive in doing it, then you may miss, you know, the bigger picture.

Siddhartha Ahluwalia 26:29
Continuing on this trend, right? So what are the elements in AI? Maybe you can talk about your industry, outside your industry also, which you think will stay on for long and which are the hype?

Jay Vijayan 26:41
So AI is, I mean, like I said, very real. And in fact, the progress is significant. Every day, you know, there’s significant amount of progress in evolution of AI.

So I would say, of course, one thing we see is the information that’s available publicly. AI is able to, you know, digest the information, come to inference very quickly. There’s a lot there and there’s huge value there.

Okay. So now the good news is these big companies, LLM companies provide the foundational infrastructure for many startups are starting, which is great. The good news is that’s a good part, like a lot of innovation.

Yes, exactly. A lot of innovation is happening. So many people are using, you know, OpenAI’s APIs, you know, Anthropic APIs.

There’s so many. It’s all great, which is very, very good. So the part where is, of course, this is where, you know, there is going to be five, maybe 10, maybe 20 companies doing the same thing.

So this is where I would say founders need to be careful. What are you solving? How valuable it is for your customer?

How sticky it is for your business? So something to be thinking about, because if you’re doing the same thing as 20 other people, it’s not bad, but how are you differentiating yourselves? So the next part, which I feel is, so that part will continue, evolve.

The good thing is how are you going to incorporate into different types of business? Robotics is one, which I see also evolving quite a bit. There is so much potential there.

Now coming to, you know, complex business workflows, I feel the way we are doing it, I feel that is going to stick for long term, is creating the AI agents, which very contextual. This is not public information. So anything, if you think of in a simple, you know, way, data information behind, I wouldn’t say a firewall, but behind an ERP, is not available for open AI or cloud or anyone to go crawl and get information.

It’s not. And it’s also quite contextual. So basically to how to run a manufacturing plant or what are the key elements involved.

So there are many, that’s an opportunity for many companies to solve the problem using AI. We have started doing already. The good news is because we are a fairly young company, our architecture and infrastructure is so totally cloud native.

So we’ve been doing machine learning for a long time, from the early days. So that evolved into AI. Now we are generative AI.

Of course, we’re not an LLM company, but we are using many of these LLMs to build business specific, as I said, contextual, you know, agents. So we launched our first agent, like similar to how we launched our first prototype product in service, we launched our first agent for vehicle service, which is a big business, because everyone need to maintain service their cars. And our customers are early customers are super excited.

We just started doing the GA of that product. So I feel that model will evolve and will stick how you create agents. So for every key function, you should have an agent.

The idea is in our platform for every function, almost every persona, they will have an agent for them. So for example, we have a service advisor who does the service, you know, deal with all this customer service. So we’ve created an agent that really increases the efficiency for the service advisor multifold.

So basically, and connects the dot with the technician, everyone in service, and with the consumer. So automatically, the service AI agent will start, you know, communicating with the latest updates. And so previously, say, for example, if you’re changing, if you need to change a tire, yeah, you can talk to a person.

And honest opinion today is that trust is very low, unless you know the person for a long time, you’re working with someone very low, because you don’t have any clue when did you change the tire last time. Most people forget. Wow, it seems to be soon. Why are you asking me to change the tire again? Why should I change it? And many times, they delay. They’re like, okay, I’ll do it next time. Because if it costs them like a few thousand dollars, they’re like, okay, I’ll do it next time, or a few hundred dollars next time.

Now, what we are doing is changing the entire paradigm to say AI is going to give the communication, it’s going to give a lot of transparent data, saying that, okay, last time you did, you know, you changed it this time, and from that time, you know, the last time the dealership asked you to change it, you didn’t change it, and then by the time you drove this many miles, and it gives a lot more information, saying like your tire tread is only this much, your risk profile goes up this much, and safety information on how much safety is involved here, and then what is the cost options. So it gives a lot of information.

It goes also very, closes the loop with the technician. Many times it’s more technical. It gives photos, videos, so, and payments, all of those.

So we close the loop very seamlessly, so everyone is a win, customer, you know, they still don’t have to make a decision, but at least they make an informed decision, right, and trust builds. So something like, I give a very small portion of the entire flow. It works, you know, much more seamlessly.

So the AI agent is going to continue, how you, you know, go take the contextual information, infer complex business decisions from all the data together, right? I think that is going to improve efficiency significantly, improve businesses, and I’m really excited about it will improve the entire economy, because the productivity will improve, everything, so everything will go up together. So I feel incorporating AI into all the complex businesses, of course, robotics is very visible to everyone, but there are so many other areas, like you said, ERP for different industries, and that’s kind of what we’ve been focusing on quite a bit.

Siddhartha Ahluwalia 33:04
At Tekion, you did a very unique thing, right? You brought in all the OEMs as investors. Tell about the process that you went ahead.

Jay Vijayan 33:12
Yeah, again, as I mentioned, in the early phase of the conversation, right, when we are working towards solving an industry problem, you need the key players actively involved, and they need to be also truly seeing the value, they need to be excited, and that’s how we came up with Retail Cloud, Enterprise Cloud, Partner Cloud. So when the manufacturers, that’s why we created the Enterprise Cloud for our manufacturers, when we were able to show them the early versions, they got really excited about the product, and that excitement, good news is, was able to convert into, hey, we want to invest, because they saw that we are solving a big industry problem, and that immediately converted into, okay, if you’re solving the problem, we want to be part of the solution, which is great, I love that, and very rarely you get that opportunity. Then I felt, wow, okay, we need that. So then their corp dev or whoever, the right, or some OEMs have their venture arms as well, so we got introduction to the venture arms, and honestly, for us also, it’s an even bigger validation, because if a manufacturer, they did their diligence, their thorough diligence, because they know the industry problem, and when they saw that we are solving it, and they feel good about, okay, this is a team that could solve that problem, and ready to put some money in it, that goes a long way, and we need that same, and honestly, we had many dealers or investors as well, because we had probably 25 different groups who are investors, yeah, investors, early days. Today we don’t take investments a lot, but we get asked, it’s a good thing, many of our customers, when they start using the product, they’ll come and ask, like, can we invest?

So honestly, I’m happy someday when we are a public company, we’ll have a lot of investors genuinely believe, believe in the product and the company. So yeah, that’s what, from a manufacturer perspective, we felt the entire ecosystem need to, so we had quite a few manufacturers through different channels, through their VC or corp dev arms invested, and they’ve been all, everything great. And then we had many dealers, early dealers who participated and invested, they’re all very happy, and we have some industry companies and partners who invested as well.

So I felt, because we are solving something for the entire automotive ecosystem, so I felt it’s important to bring them together, and giving a little bit of their money is the biggest commitment you could get, which is great.

Siddhartha Ahluwalia 35:50
Yeah, but it was also unique that you got all of them to, almost all of them to invest, right?

Jay Vijayan 35:57
Yeah, it was many, and it was a conscious decision, by the way. There was a round where we had term sheets from financial investors, and then we had term sheets from two institutional manufacturers, their venture arms. And the way it worked about, which is a good problem, we had two venture arms competing to lead the round, and early intuition from them was like, okay, we don’t need the other, we will lead it, which is good, they were excited.

And both said, we don’t need the other, we’ll lead it, which is good. And for me, it was in the best interest of the company was we need both. So we kind of worked with both of them saying, hey, we need both.

We don’t need a higher valuation, but we need both. We are ready to agree to whatever you guys think align well. So in fact, we slightly settled on, not too much, slightly, very small, in grand scheme of things, I felt it settled on a slightly lower valuation to make sure that we bring both of them.

And then it worked out really, really well. So yeah, many brands are our investors.

Siddhartha Ahluwalia 37:06
What are some unique stories from Tekion journey that you can share?

Jay Vijayan 37:11
Yeah, there are quite a few in the journey, which is all good.

Siddhartha Ahluwalia 37:15
Which is the most memorable one?

Jay Vijayan 37:18
Well, acquiring dealership was an important one. I’ll share that, and then there is one other, okay? Acquiring dealership was a tough decision because, so we went through this pilot with the first customer, right?

And then by the time we had a few more, not too many, but few pilot customers. And then there was a time that owner told me, I want to sell that because it’s a one-off, one dealership. I usually have groups of dealerships.

It’s easy to operate for me. Yes, and I know also, typically that’s how it is. So I felt like, wow, this will be very valuable.

And for us to truly understand the business, every department, every function, and I felt my product team. And then I discussed with my executive team, and there are a couple of people who came from the automotive industry. And they are the one, in fact, got really, really worried.

They’re like, oh my God, Jay, no, no, no, no, no. It’s a very bad decision.

Siddhartha Ahluwalia 38:18
Very different business, very complex business.

Jay Vijayan 38:20
Exactly, we are a software company, and we are still early, small. If we go, and they clearly listed out, very genuine, they clearly listed out how many things could go wrong. And the thing I talked about, they said we could go bankrupt completely because this is a heavily capital intensive business.

Siddhartha Ahluwalia 38:35
Maybe it would require to pour a couple of million dollars.

Jay Vijayan 38:37
Yes, and that’s another thing. We had, so many times they also said, there’s so many things. I had to take a loan to buy the land of the dealership because there was a risk involved as well.

So personally, me and my co-founder, Guru, we took a loan to go buy the land of the dealership because I felt Tekion didn’t have money to invest in the land. And then Tekion just invested in buying the dealership only because I felt if we buy the dealership, and then the land is owned by someone else, if they pull the rug underneath, we are in trouble. So we felt like we reduced the risk, we had to take a loan.

So we took a lot of risk in doing it. And the team was also initially worried. And then later I said, see, you know what, let’s weigh in the cost benefit.

We are building a software for dealers. They’re going to be our biggest customers. We need to know the business integrally.

We need to make sure we know the problems, but we also solve the problems in the best way. And our team should be in a position to really get firsthand information on everything we are delivering. Because the dealership, of course, was operated by real people, real staff, real parts managers, service advisors, sales managers.

So my product managers should be able to be in that dealership to talk to them and say, okay, how is the new release? How did it work? And in fact, there was a time where we had a QA lead sitting in the dealership, literally worked from there.

Every time release, he’ll run through a list of things and he’ll send a report. So that’s one. It was a very unique decision to acquire a business that we are delivering solution to.

So that’s first one. The second situation is there was a time where as a startup, today it’s slightly different. There is a massive capital.

We didn’t have enough capital. This was the same time when we had raised around 30 million. We are already burning a lot.

We are building a lot. So there was a situation where we had to, do we have enough money and time to build the entire, true ERP backend, which is the general ledger, AP, AR, which is the, usually has been perfected by companies like SAP and Oracle, not even Salesforce, right? SAP and Oracle for decades, NetSuite probably now.

And they took what? Two decade, two decade, three decades to build a perfect accounting system. And this thing was some of our board members, for the right reasons, they said, Jay, there’s a lot that could go wrong.

Accounting is, while it’s repeatable things, but it has to be perfect. There’s really no room for error. Dollars and cents have to be dollars and cents.

Tax calculation, everything has to be perfect. So we may not have enough time and runway money to build it. Why don’t you try to partner with someone?

So it was a good recommendation. So we consciously, I said, okay, who do we partner with? We can partner with the big guys because dealers can’t pay that much.

It’s huge. So we can go to an Oracle or an SAP to partner with for accounting. Second is, I also want to partner with someone where it’s truly aligned as a true next gen cloud native, seamless platform.

So we went and approached that there is a, we were as a growing startup, we were using a small accounting software. It was good, cloud native, but small accounting software. We are a small company.

And then we went to one of my board members, introduced to one of their board members. And I felt, okay, why not that company? We can day deliver.

So we went to that company and then I met the board member and I said, hey, this is what we do. We use your software, we love it, but it’s small. It needs a lot of functionality to be developed.

If you guys are open to it, we can open up a new industry for you. So we can take it with you. We’ll develop all the other functions.

So we’ll develop sales, service, everything else, but accounting, we can partner with you. So the good news, I mean, I guess now it’s good news. At that time, it was, so he clearly said, Jay, honestly, say for example, simple capabilities didn’t exist.

So that company was a small business accounting software. So you can’t even operate with more than one bank account. So you have to have only one bank account, but they don’t want, dealers would have like, say 10 dealership, they’ll have 10 different bank accounts.

So things like that. And the good news is he was very clear. He said, Jay, unfortunately, we can’t do that.

We are already advising the CEO not to digress anything. Small business, there is so much opportunity there. We want right reasons.

It’s a good reason. At least he gave a very clear answer that, it’s a no-go for us. Even though you could open up an industry for us, we already have so much opportunity in the small business, which we want to take advantage.

So it kind of forced us into a do or die decision, which I always felt the right decision. But if there is an other alternative, should we take the risk, was the question. But it looks like there was really no other alternative.

And we ended up to go build our own full accounting, suite function, everything like GL, AP, AR, we built in there. That was kind of a bit of a nerve wracking situation because we could either, would have gone out of, run out of money and gone out of business. Or would have gotten it completely wrong, and would have gotten a very bad reputation in the market, irrespective of it didn’t go well.

So again, I should say thankful to my team. I have an incredible team. They pulled it off extremely well.

We have one of the, or the best accounting function in the automotive industry. In fact, accounting software has even filed a few patents in that. So it worked out well.

So those are the two scenarios that.

Siddhartha Ahluwalia 44:29
So going full stack is what you learned as your time as CIO at Tesla?

Jay Vijayan 44:35
Yeah, yes. I was good. Yeah, exactly.

Tesla was a great learning. I agree with you. Full stack.

So the way, what I learned and which we, what we, I would say potentially applied. Core to your business, if you’re, don’t have control of what you are going to deliver to your customers, that I feel is a serious problem. Things that are non-core to the business, that’s okay.

You partner with anyone, but as long as they’re also aligned with everything, you need to deliver to your customers. But when it comes to core to your business and core to your customers, you need to have your destiny in your control. That way you can commit the right thing to the customers and deliver as per your commitment.

So that’s kind of, yes, it was a good learning.

Siddhartha Ahluwalia 45:23
Because I remember the story that, you know, you created the entire, as you were hired the CIO, you created in 2012?

Jay Vijayan 45:31
Started in 2012. Yes, we did that for the few years.

Siddhartha Ahluwalia 45:36
Four years.
You built the entire ERP system within four months?

Jay Vijayan 45:41
Yeah, that’s a little bit of overstatement, but yes, that’s how it started. We didn’t build the entire thing. Reality is in the four months, we built the basic necessary version.

It was definitely very scrappy. It was buggy, but we made it work. And then from there, we kept building.

Siddhartha Ahluwalia 45:58
And the last time on the podcast, you shared the story that you used to sleep on soft floor.

Jay Vijayan 46:03
Yes.

Siddhartha Ahluwalia 46:04
Do you still do that?

Jay Vijayan 46:07
Here at Tekion? Early days, yes. Early days, Tekion, we used to be quite a bit in the office if we needed to, you know, sleep overnight.

We had slept at dealerships if needed. We’ve done that. But yeah, Tesla was, yes.

Because if that is what is needed to deliver, it is what is needed. So, and as you may know well, as founders, entrepreneurs, you have to be in the forefront. I am fortunate.

I had a fantastic team, founding team, and today also I have a great team that is so excited to deliver. So when you have that, I think it’s important to be there and do what is necessary.

Siddhartha Ahluwalia 46:45
Jay, you told us about in the previous podcast, but there are new listeners this time, right? Want to hear about your background. You came from a very humble background in Tamil Nadu.

Tell us about your upbringing, right? You started a company back in India, right? That didn’t work out.

And finally you moved to the US. Would love to know the story.

Jay Vijayan 47:04
Yeah, absolutely. I can share. So I was born, brought up in Chennai.

That’s my hometown. And then I did my schooling there, did my bachelor’s, did my master’s. That is the time where I, in fact, I should say my dad started the business, but out of necessity, I had to run the business.

Siddhartha Ahluwalia 47:32
How old were you?

Jay Vijayan 47:32
I took loan. Let me see. This was in the final year of my college.

So this was 1993. So 21. Yeah.

And we had to take a loan to run the business. So the loan was, our house property document was collateralized for the loan.

Siddhartha Ahluwalia 47:58
Yeah.

Jay Vijayan 47:59
And then, it was early days. I didn’t know a lot. I was energetic, young.

I had a lot of dreams, aspirations, but I just didn’t know so many things I didn’t know. We had to, it was a software development and training center. That was the business.

So we did, early days, we had a operator. We tried to run with an operator. It failed miserably.

We learned it later. And they also did a few things, misrepresented, mishandled money and stuff. So now out of necessity, I had to jump in while I was doing in college.

I had to jump in and bring a few of my friends in my network to do whatever it takes to turn things around. So worked very hard. And that’s one thing, around the clock, we used to sleep in office that time.

The younger time, it’s much easier, right? Like I used to, around the clock, live in the office, spend time overnight, weekends. The nice thing was, collectively, I should say, thankful to some really good people, friends at that time.

We turned the business around. It took a year to 18 months. Turned around, we hit a ceiling in terms of capacity.

So we were developing software. We need to invest to buy more systems and upgrade all of our systems. We were doing software training.

Training center was out of capacity. At that time, we had like small 12 seats, 14 seats. It was running out of capacity.

Even if we do multiple sessions, we were running out of capacity. So we hit a ceiling where we need the money. So I went to the bank and until then, I was a little bit ignorant of what was happening because my dad was dealing, but he’s also busy.

He was not involved actively in the business. And he’s in politics, so he was very, he’s more like a social service. And then we, finally, I had to go to the bank and say, hey, thanks for doing the loan.

Business is doing well now. We had some trouble for two to one half, three years. Now, we got the results.

So we said, here is what it is. It’s doing really well. We have overflowing with capacity and we need additional money to invest to grow the business.

Otherwise, we’ll be in trouble to maintain and stuff. And that’s when they threw a big surprise because they were prepared when, because we are coming for the meeting. We scheduled a meeting.

So they came back and they threw their presentation saying that, by the way, the loan you got, the interest in India is very big, compound interest. It was pretty big at that time, like 19%, some very huge interest. So they, through their side of the presentation, saying, by the way, the money you borrowed is grown to what you owe us is this much.

So there is, and our property is already documented to them. So you can’t, there’s nothing else you could do. So unless you pay us back some money, we can’t look at anything else.

So you give us money back. So we were in a very tough position. And unfortunately we were cornered.

I couldn’t do anything. There is no other place you could borrow money. There is no VCs, private equity concept, just literally didn’t exist at that time.

Only place you could borrow is a bank or friends and family. So I didn’t have any friends and family who could give that much money. So we had to, I tried very, very hard, did so many things.

And unfortunately we ended up leasing the business to some, selling or leasing was the concept. So again, same thing. There was not a lot of M&A and I just didn’t know what to do.

So we ended up leasing the business to someone. And then after a couple of years, it ended up closing. So that was a very tough thing to go through.

But also it created, I would say, fire in me quite a bit. Saying like, why couldn’t I do this? Why, what did I miss?

So how did I do, how can I do better? So it kind of created something in me where I felt like someday I’m going to be doing this very successful. So this is a learning.

It was hard. It put me through so much because the loan was still growing. I went through really, really tough time.

And mentally also it was extremely stressful because the loan was growing. I didn’t have money to pay. Now then I had to end up taking a job.

The good news is at least I knew how to develop software. So that was a good part. So I ended up driving my energy in learning, learning more and more software development and in that process.

So long story short, I was paying the loan almost, I think we closed everything by 1997. Okay. Started in 1993, yeah, 1992, 93.

Closed up everything 1997. I took a job in 1997. And then from until 2006, I was paying the bank loan.

Siddhartha Ahluwalia 52:58
And when did you move to the US?

Jay Vijayan 53:00
1999.

Siddhartha Ahluwalia 53:01
And for a job?

Jay Vijayan 53:02
For the US, for the job, right? And first I worked in the Middle East for some time, then Singapore for some time, then in the US. So I was paying my loan until 2006.

So 2006, finally I got enough money to settle the loan. Fully settle the loan, get a document from the bank that it’s clear. So I still have the document.

I should frame it somewhere.

Siddhartha Ahluwalia 53:25
If you could please share the document with us.

Jay Vijayan 53:27
We want to share the picture with the audience, right? It is, I’ll try this. So the thing is, it is, that was honestly, I’ll tell you one of the biggest relief ever I had, and I could sleep peacefully.

And I should say thanks to my wife. And I got married in 2000, year 2000.

Siddhartha Ahluwalia 53:44
Oh, so she was with you for the whole six years.

Jay Vijayan 53:47
When we started the family, we only had debt. And I had a good job. I was working at Oracle, but I had a lot of debt, in my view.

And there are a lot of people who also said, in India, it’s, you bought the loan for the business. The business is done. You close shop.

You just file bankruptcy. Today, as you know, in the US, it seems to be fairly okay to file bankruptcy, when it really didn’t work. As you know, people don’t understand here, India tradition is, and it’s not in me as well.

I felt someone gave me money, trusting, we are going to do something, and I feel I have to return. And that’s, I never in a single moment thought bankruptcy is a way to say, I’m not paying you back. So the good thing is, I paid back, and it gave me a lot of satisfaction, and gave me a lot of relief, and a lot of learning.

From that time, I, you know, almost very, very, very rarely, it’s a last resort, I’ll take any loan.

Siddhartha Ahluwalia 54:44
No home loan, no car loan, never.

Jay Vijayan 54:46
I took it, but I will do everything to close it in the first possible. So, today, I say zero. I just don’t have, no loan.

Sometimes it doesn’t make financial sense. But it’s the emotional thing. But at the same time, in my emotion, exactly, what I’ve gone through, I don’t want to owe money to anyone, right?

And I’m at least happy, even from the company perspective, investors, it’s not a loan, but at the same time, I’m always inducted to deliver more value. So I’m happy so far, I’ve been delivering more value to my investors, so they’re all happy.

Siddhartha Ahluwalia 55:15
I think in India, it’s a very emotional thing with money. Once we take any investor’s money or a loan, we feel our reputation is on the line.

Jay Vijayan 55:26
Right, exactly. I don’t know if things have gotten any different, easier now. But the good thing is, at least that early days, I went through, I’m happy I went through this in the early days of my career, where I’ve learned so much, and I formed a few fundamentals that’s only serving me well.

It’s so far, it’s been serving me well.

Siddhartha Ahluwalia 55:44
What are the fundamentals?

Jay Vijayan 55:46
It’s just, if you don’t need to, don’t owe anyone money. If you don’t need to. But for a business, do it more, but the fundamental thing is, take accountability.

So today, even I feel, I tell this, even when an investor invests in Tekion, I don’t need anyone to tell me. I have that accountability to say, like, hey, someone invested in me, even though it’s not a loan. In my mind, it’s a little bit like that, saying that, invested in me, I need to deliver value.

The good thing is, my seed investors today are at 400x, which is good, right? They’re all happy investors, and still early stages. I feel we could..

Siddhartha Ahluwalia 56:28
How any of them taken exit?

Jay Vijayan 56:29
Portion of it. Yeah, yeah, they’re not full exit. The good thing is, I’m glad they didn’t, because I think company is still in the early stages of the growth.

I feel there is a huge opportunity to grow. So I think, as I said, it served me well. Yeah, yeah, yeah.

Siddhartha Ahluwalia 56:43
And it’s only been like five years since you have been started doing revenue, right? You started doing your first revenue in 2000.

Jay Vijayan 56:51
Real, yeah, 2018 was a sample test product anyway. So 2019 is when real revenue started coming in.

Siddhartha Ahluwalia 56:58
Your first million would have hit in 2020.

Jay Vijayan 57:00
The end of 2019, 2020, it’s, yeah.

Siddhartha Ahluwalia 57:02
And within four to five years, you took it to 200 million ARR.

Jay Vijayan 57:07
See, that’s the thing, right? Sometimes when you build a strong foundation, thoughtfully building a strong foundation, you get the flywheel effect happens very nicely when your foundation is strong. It’s like any fundamentals of building anything.

If you build a foundation, and if you build even building software, if you build a framework, if you build a platform, right, you can build the applications on top of it, right? So that’s where I feel our investment in building the foundation, building the platform helped us a lot. And you’re right, in early days, it looked like a daunting task to get to the first million.

Then it was a, felt like, wow, 10 million is a big deal. Then 100 million was, yeah, you know what? We are going to celebrate, that’s a big deal.

And the good news is just this year, we will be one year, we will be doing at least, you’re targeting to do 100 million net new. And I feel it will grow. Again, that’s why I’ll go back to building a strong foundation in everything, team, systems and process helps.

Siddhartha Ahluwalia 58:16
But what I really learned from your journey that you displayed like 10 out of 10 on grit everywhere.

Jay Vijayan 58:23
Oh, thank you. I appreciate it. I don’t measure it that way, but I feel while it was so tough to go through in the early stages, I feel when people are, my advice to be anyone, I meet a lot of people, especially young entrepreneurs is, go through anything you feel is tough early in your career.

It’ll make you better. Like you said, grit is, I don’t feel people are born with it. I feel people need to work and build it.

So earlier you, in your age and career, age is not a limit, but the earlier you go through, you get better every time. And then you learn and apply, learn and apply. It’s like anything in life, but learn and apply, go through, make tough decisions early in your career because you have enough runway to correct it if you’re wrong.

If you’re right, great. There are a lot of people who become billionaires and successful early, great if you do that.

Siddhartha Ahluwalia 59:24
But now I imagine you have seen so much in life, suffered early on. So that there must be a feeling that, come what may, nothing can defeat you personally because you have displayed, given it all.

Jay Vijayan 59:41
I don’t feel that way. I agree with you. I’ve gone through good amount of learning and I agree completely and I feel good that it helped me to be grounded when making decisions.

I don’t say I don’t make, but I rarely make spontaneous decision. I usually think about, at the same time, I don’t hesitate to make decisions. I will make decision quickly because I know sometimes it’s okay to make a decision and be wrong versus not making a decision.

So yeah, to most part, yes. And I always, and I feel it’s a good thing for everyone. Keep an open mind to learn.

Every time, every scenario, when we go through sometimes something’s tough, I feel, okay, there is an opportunity to learn. I try to tell my team because many times people get worked up very quickly about problems and I tell them again and again, I’m fortunate to be working at VMware at the right time, fortunate to be part of Tesla at the right time, fortunate at the right time starting Tekion. While going through that journey was so tough, companies like Tesla was grueling in terms of effort needed to be put in, but it was also other side, it is so satisfying.

So the way I tell people of, and everyone could relate to is, it’s like our own human brain and muscle. If you don’t work out, you can’t build the muscle. When you go through the workout, I’m just saying muscle building workout. It could be endurance building workout, right? It is grueling when you go through it, right? When you, because you have to work through the stress, you have to put your muscle under stress and tension for it to break down and grow. So, I think if you step back, the same concept works in career and profession as well.

Because if you don’t go through the tough times, you can’t see the good times. And if everything in life has to be easy, because I feel sometimes I run into people where they want everything to be entitled, everything to be easy. Not everyone, but many times, you know, when early in people’s career, I see they want everything to be given.

You know, why don’t I get this? Why don’t I get this? And, you know, sometimes people get asked about like, oh, you know, the food in the cafeteria is not enough.

I’m not saying people shouldn’t talk, but that shouldn’t be the biggest problem in the life. You know, you need to say, you know, how can I, you know, be more efficient? How can I learn more?

I mean, there are many people who ask me that, you know, how, what can I learn? What did, so today, in fact, there was one person who was leaving my company after four plus years. Great, I wished him well, and for good reasons, he’s leaving for a better, you know, different opportunity.

He asked a great question, and that’s what every young people should ask. He said, Jay, in my age, I’m just getting to 30, you know, what did you learn in your 30, so that I don’t have to repeat the same mistake? That’s the kind of learning people should have, and I try my best to constantly observe and learn from everyone, and I might have mentioned this last time.

I tell this to my team, and I tell this to my kids, that your lifetime will not be enough to learn from your own mistakes. So, learn from other people’s mistakes, observe, learn, so, I think it’s a constant thing, and I appreciate you saying that nicely, and I feel what I have, I was fortunate to go through some, you know, tough learning early in my career, I still feel there’s so much to learn.

Siddhartha Ahluwalia 1:03:33
Thank you so much, Jay. It’s been such a pleasure to host you again.

Jay Vijayan 1:03:37
Thank you, Siddhartha. Always a great, you know, pleasure having the conversation with you.