Siddhartha Ahluwalia 0:32

Hi, this is Siddhartha Ahluwalia, your host at Neon Show and Managing Partner at Neon Fund, a fund that has invested in the pre-seed stages of some of the best enterprise AI companies between US and India corridor like AtomicWork, SpotDraft and CloudSEK. Today I have with me Nikhil Gupta, founder of ArmorCode. Nikhil, welcome on Neon Show.

Nikhil Gupta 0:54

Thanks for having me.

Siddhartha Ahluwalia 0:55

You’re a founder who has shown great persistence for a long period of time and you waited for almost 20 years to become a founder and you kept that company bootstrap without raising a single dollar.

Nikhil Gupta 1:08

Yeah, so one of the thing was that I knew I was not investable back then and I don’t blame if you look at somebody’s 42 and starting from QA to development to testing to marketing and telecom to data center to virtualization and doing a business development. I was not investable. So as a result, I had no choice because I went and asked, I made my first VC pitch in 2000 and I got my first institutional check for ArmorCode in 2020. I actually didn’t put any of my own money because that was one of the things which I was very clear but I was getting checks like $25,000 and things like that, smaller checks over there. And but I took that risk to start a company in a crowded space which was perceived resolved, the problem was perceived resolved at that time but with just as a customer. I was very clear, customers are obsessed and that is one piece of advice for anybody here is if you’re in enterprise space, you have to, have to, have to talk to customers and understand them very well.

Siddhartha Ahluwalia 2:11

And the value that you were providing in your first startup was, you were showing cloud security posture management.

Nikhil Gupta 2:16

Yes. So in fact, now this word is very there. We actually coined that word back in 2017, cloud security posture management and the whole idea was you’re getting that kind of visibility and then we are also helping them with taking an action and things like that and it was super easy. And so that was the fundamental.

Siddhartha Ahluwalia 2:35

And how did the acquisition happen of your first company?

Nikhil Gupta 2:38

So it was very interesting that we had a very big win against the number one security company in Canberra. So we had a very big win against them. So after that win, we got into the radar and we were kind of looking for partnerships and we are looking to do a series A because we are doing pretty good. So we started to get series way inbound offers and all. And around that time, what happened was there were two big acquisition happened in our space. So one was a company called RedLock, which was acquired by Palo Alto. And then the other company was Dome9 acquired by Checkpoint. And so when that happened, my experience was that if the market is consolidating and there was no more, we are doing really good visibility, we are selling. But then at that point, what would have happened here is these large companies could have come and given it for free. So and you have to think as an entrepreneur at any given time, especially in enterprise space, that what if your largest competitor, which is typically the market leader, if they give it for free, can you stand that? And in average, sure the answer was no. So that’s when I decided, because now the two top security companies did it, another four or five which came in because they all needed a solution. We had great customer, low, great, all of those things. So that was the time.

Siddhartha Ahluwalia 4:03

And the acquisition offer came inbound or?

Nikhil Gupta 4:05

Yeah. So again, great companies, it’s always inbound. Companies are built to build a business, not to be sold. That’s another piece of advice I’d say. A lot of times people will think, oh, I can make some quick money and I build something. And those were the lessons. So again, you can say I feel for 26 years I had a lot of scars and learned. One of the biggest learning was that if you’re building a good fundamental business, then the good things happen. But if you are thinking to build a company to sell, then companies are not bought and you’re not even building a good business. So that is a very important advice is to build a good healthy business and let the outcome depend.

Siddhartha Ahluwalia 4:49

But did you had a banker in between to negotiate the price or anything?

Nikhil Gupta 4:52

No. So again, see what happens here is that we figured it out in the sense and having done so many times and things like that. So we didn’t include any of those things. And what happens is whenever you have multiple offers, then you are in a negotiation position. So it’s again, depends upon like you typically hire bankers when you want to sell the company. We were not selling the company. And it is just so happened that these two things.

Siddhartha Ahluwalia 5:18

You were almost 45, 46 years old when you sold your first company.

Nikhil Gupta 5:22

Yeah.

Siddhartha Ahluwalia 5:24

So first of all, before we dive into the tech aspects of ArmorCode and what you do, I would love to know your journey. Where do you come from? Your journey growing up?

Nikhil Gupta 5:33

Absolutely. So I was born and raised in Delhi and grew up in a business family. So I always wanted to be an entrepreneur. There was no word called entrepreneur. It is all business. And so I started with a humble background. After engineering, I was jobless. So I took my first job in a computer manufacturing company there. And I learned some hard lessons over there. I realized that technology and also I moved from there to Chennai. And from Chennai in 97, I came to the US. I was fortunate to work at Bell Labs with the father of Unix and some of those.

Siddhartha Ahluwalia 6:13

How did you come to the US?

Nikhil Gupta 6:15

So I was working in a company in Chennai. And over there, basically, they needed some help for three months project. And so when I came in here, then I realized that, hey, it takes me 48 hours to go from Chennai to Delhi in the train. And here I can fly in the plane. In 44 hours, I can be here. And again, there was a language barriers in Chennai and things like that. So for me, I was like, this is a great idea. So I’m an accidental immigrant to the US. I never had an aspiration to come to the US. And when I came here, then I started working in Dallas. From Dallas, I went to New Jersey, Bell Labs, where I was fortunate to work with the father of Unix and some of those guys. And it was a Fortune 25 company. They always had aspirations to be an entrepreneur. So in that time, .com was happening. Boom was happening here, 99, 2000. So I came to the valley thinking, hey, it’s a mecca of all of those things. And less that I knew that within six months or nine months of coming in here, all that crash happened. But the good news was that everywhere I went, I built some great and lasting relationship and trust. So the father of Unix and all, they left Bell Labs to start a company in Delhi in 2000. And I got an opportunity to become a founding engineer over there. And that company, because of their pedigree, we raised $190 million from 2000 to 2006. And when the world was crashing and burning and everything else, and I was their software engineer, then I changed the path, became a customer success engineer, sales engineer, because in my mind, when I want to be an entrepreneur, I wanted to touch all of these things through my hands. And in 2006, we had a half a billion dollar offer. And at that time, unfortunately, both decided not to take that offer. And in 2007, it was sold for ridiculously low price. And for making some few seven digit, I couldn’t even make four digit numbers. So those were some wake up calls. But there were two things which I learned. Number one, that I’m still an entrepreneur, because after working 24 by seven for seven dog years, I still wanted to do a company. And second thing was the culture. And these two things really fast forward helped me and are more for today. And then I stuck around there. This company was acquired, hung around there in like 2012 or so. And then as soon as I got my green card and all joined Cisco, Cisco is running data center business over there. And I lost a big deal to an unknown company called AWS. And then what happened was, and Cisco, you know, knew the cloud and everything else, but I saw the trend going on. So I’m like, hey, I think so. I need to move on in from infrastructure need to go to the cloud side. So then I joined VMware. And at VMware, essentially, I was into virtualization software and things like that. But again, constant pressure was coming in there. And during the journey, as an entrepreneur, I always was having a day job and a night job. And every night I was doing a hustle and one or the other ideas and I kept on failing on my entrepreneurial endeavors. And so much so in 2015, I was kind of shown mirror by one of the venture capitalists with all due respect, where he’s like, hey, you know, you’re 42, you haven’t started a company yet. And you know, you don’t code and you are not from the prestigious Institute of Technology or Stanford, MIT or Harvard. And nobody wanted to work with me. And also I didn’t have like, you know, good bank balance to take that risk. And so at that point, I always like an entrepreneur, I kind of gave up, went back and told my wife for the third time, I’m not an entrepreneur, this is 2015, 2016 and 2016. And I just recently posted on a blog like, I was embarrassed and I was fired from the company.

Siddhartha Ahluwalia 10:14

You put it on the blog?

Nikhil Gupta 10:15

Yeah. And I had my rejection letter. I put my rejection letter, or sorry, firing letter on the blog, it just put it in a couple of weeks ago. Because the reason for that is I want to share with the world that, you know, rejection is the first piece of firing is the first step. And it was a good sign. I’m glad that I was fired.

Siddhartha Ahluwalia 10:35

From VMware?

Nikhil Gupta 10:36

Yeah, yes. I was fired over there. And that was a very humbling experience.

Siddhartha Ahluwalia 10:40

At the age of 42?

Nikhil Gupta 10:41

Yes. So again, yeah, so it was, you know, I needed money. I had, you know, 10 year old daughter, family pressures, things like that were there. And I was just humbled that I was an entrepreneur, not an entrepreneur. So it was a pretty interesting time to come back and do some meditation and things like that. And I thought, I’m not going to be an entrepreneur until my daughter goes to college and I’m done with the financial responsibilities. And I took a new job, I call it as a health and wealth framework. So during my meditation, I came with that framework. And I realized that, you know, health and happiness is more important than wealth. And so do what you’re passionate about. And I said, Oh, I like meeting with people and you know, the space. So I took a job as a channel manager, business development manager in a security company. And this was 2016.

Siddhartha Ahluwalia 11:36

And before that, your experience was all in virtualization.

Nikhil Gupta 11:39

So my experience was very vivid, right? So starting from doing marketing and, you know, computer manufacturing, then I went to telecom, I spent wireless, advanced intelligent network. And then I was doing multi-service access platform. So I had 15 years’ experience in telecom. Then I went to data center. And then from data center, I went to VMware virtualization. So I’ve been changing the field. And then I went into security 2016. I didn’t know S of security, or sea of cloud.

Siddhartha Ahluwalia 12:10

And you’re changing complete process age of 42 again, people don’t change their directions.

Nikhil Gupta 12:15

And NC for me, I call it as a not star. So for me all along, and the way I drive here is that if you think about it, I call it as a, if there’s an x and y axis, right? And I call it as a x axis as a health and happiness. And y axis is wealth. And you know, as an individual, you need to have a north star, right? Some people say I just want money. Some people will say I just want happiness. And you know, I was a greedy bastard. So I want to talk right over there. But if I had to choose one amongst the other, I wanted to be happy. So I tilted towards that. And when I was at my lowest, I thought that you know what, it makes sense to go towards happiness. And I looked at it and happiness was talking to people doing business development. And as a career, it was not a great choice. I could not have ever, you know, achieved my dream of being a serial entrepreneur and a CEO. And that has been my dream since 1993 in my second year of college. So now what happens is if you go all along, the life journey is never straight line. So my north star was here. And every time I’m going there, you will go up, down, up and down. But as long as you are clear of your north star, and I am a great example that you can get it. And I tell people I’m not the smartest, it took me 26 years to get there. And I know one of the things you want to talk about is like any advice for entrepreneurs and all I’m like, you need to have your north star very clear why you want to do that. Because this journey is very painful. And it’s very difficult and with all distractions. And also if you do not have clear and thanks for sharing your story, very inspiring story as well, that if you don’t have that clarity, you know, you cannot make it. So that’s where it was there. That, you know, in 2016, 2017, I was working there, then I was working in a network access control company, and just got nothing to do with cloud security. When I was talking to the customers, I realized there was a big pain. Now what happened was, there was almost a half a billion dollar investment happened, there were companies were doing hundreds of millions of dollar for cloud security, and people thought their problem is solved. And when I was looking at that problem, I realized that customers were still crying. And they still had the big pain.

Siddhartha Ahluwalia 14:37

What are the pain that customers are seeing?

Nikhil Gupta 14:39

So pain was basically, I didn’t have a visibility of what’s happening out there. You cannot secure what you can’t see. And people were solving the solution one way or the other. But at the end of the day, how you get it is a very different way. And I spoke to a lot of customers. That was a common theme. And so that’s when again, you know, I woke up again, I said like, even though I had promised my wife and everything, I’m never going to be an entrepreneur till my daughter goes to college and I’m done with financial things. Maybe I could have been 55 or 60. And 2017, I one fine day on my anniversary, I went back to my wife, I’m like, company had filed for S1, the company I was working for, first time I was going to make money. And I decided to quit. And so that has been my journey. And I did that. And I got lucky. And year and a half, like, you know, I would secure my previous company became one of the most successful company in Silicon Valley, which is not heard of. And I did pretty much everything unconventional right from, you know, starting a company with a founder I’d never met physically, ever in my life. And those kind of things, you have to take those, you have to take those crazy decisions.

Siddhartha Ahluwalia 15:51

Now you have sold a company in 2019. Right?

Nikhil Gupta 15:55

Yeah.

Siddhartha Ahluwalia 15:56

So why did after one year, you started another company?

Nikhil Gupta 15:59

So it was very interesting. So whole life I was chasing a dream, which I thought…

Siddhartha Ahluwalia 16:06

The dream was accomplished.

Nikhil Gupta 16:07

Yes. And so I had a kind of a vacuum and 0.01% kind of entrepreneurs get the kind of exit and like their dream come true. So yes, in two, three months, once I sold the company, I was kind of looking inside. I’m like, what do I want to do next? Right? And person like me cannot retire. So I looked at various options. I’m like, I want to be build another company. Do I want to go into big, large company? Do I want to be a venture capital? Do I want to retire? All those things I was thinking through that and went back into meditation and stuff like that. And I realized that I’m young and I like building. So I realized that I want to build something. And then, and I was helping a lot of companies because once I was acquired, I had a golden handcuff. I couldn’t. And I started helping. I was doing a lot of advice and things like that. And during that, I had some ideas. And then when COVID happened, again, most people go the other way around. They were saving their own families and individuals. And I was doing that, but I wanted to save the world. So that’s when I decided to start ArmorCode.

Siddhartha Ahluwalia 17:21

Because you don’t come from a security background. So your problem discovery process is very unique. Can you tell about that process and how can entrepreneurs learn and replicate that process?

Nikhil Gupta 17:36

So there are two types of entrepreneurs. 90% of the entrepreneurs are, I want to build and solve a problem, which I’m going through as a painful, right? Most of the companies, whether you look at Intuit and other companies. 10% on the other side, and I know Elon Musk, but if you look at Elon Musk, he started, first was payment and then was Tesla, then was SpaceX. Solve first principles. So you go back, you look at an existing problem. And in those 26 years, I probably wetted out maybe a thousand ideas, may have pitched hundreds of ideas, and they were all over, right? So as I was telling you, I was looking into electronic health records. I was looking into Zoom before it was Zoom. I had an idea, a half-written patent on Uber in 2008. And going through a lot of research, for each time I would get an idea, I’m like, oh, it’s very painful and all those things. And when I was going deeper, then I realized that, oh, somebody else is already looking at it. So that was one of the things which is there. Now with Avid Secure, because once I got the success, I had multiple ideas. But what got me triggered into ArmorCode was out of all those ideas, I’m like, okay, what do I do? And things like that. And COVID happened. When I was literally standing in the line for getting the toilet paper and all those things, and by the time my number came, actually the toilet paper was over. And there was an aha moment for me that, you know what, it’s the worst pandemic. I wasn’t sure in five years we’ll be sitting like this. And in that particular environment, whole digital transformation will happen. The inventory will change, the payment will change, the delivery will change. So all digital transformation is happening. And because it was COVID, good news was bad guys were at home. And bad news was they were at home. Because that means you will do much more hacking, because you cannot go and physically do those things. So that was an interesting intersection of digital transformation in here. So that is when I kind of narrowed it down to this. Now, the other piece which is there, which I always tell is customer thing, right? So even in Avid Secure, I didn’t have any idea of cloud. And I didn’t have any idea of security. All I did was it’s a problem statement hearing from the customers. So again, same thing in ArmorCode, I spoke to almost 300 prospects.

Siddhartha Ahluwalia 20:06

In matter of how many months?

Nikhil Gupta 20:07

I would say three, six months. And because in general, like see, I realized that security is a huge market. And I think so there’s nothing which is future proof in the world of AI. But I think so security for next 20 years is going to be huge. And the importance is going to increase more and more. And so as a result, I chose that as a market, as a security as a market, because when you’re starting COVID, and you didn’t know like people will be coming out of their home for next 10 years. So then you have to have a very fundamental sound business, which is going to grow. Security was one. Second thing was, by the time I had experience with those buyers, if I’m going to sell somebody remotely, I would rather send to somebody buyer persona that I’m aware of. And then what is the enterprise sales looks like. So all of those things were there. And that’s when I talked and you know, of course, in normal code, I had a little bit advantage of having the credibility.

Siddhartha Ahluwalia 21:06

Yeah, for second-time founder.

Nikhil Gupta 21:07

Yeah, exactly. Second time founder, we had like fortune 50 100 companies in my first startup. And those you know, I was closing half a million dollar deal sitting in pajamas in three COVID days. So all those credibility and that confidence, right, because what happened was, in July, like we started, we founded the company over Zoom, we build the whole team over Zoom, and year and a half, we are just, you know, starting customer contracts and all of those things. All of that was possible, because, you know, I was building a lot of those experience from the past.

Siddhartha Ahluwalia 21:40

And you mentioned that, you know, now you have the luxury of calling two to 300 potential customers. Were there CISOs?

Nikhil Gupta 21:49

A lot of them were CISOs. But what I do is typically don’t call just to that CISO level. Again, as I said, you have to talk to the CISO, CISO minus one, CISO minus two. And even over there, what I do is, I don’t call to the people typically that I know very well in the beginning. But what happens is, is a blessing and a curse for a second time founder.

Siddhartha Ahluwalia 22:10

Your idea gets biased.

Nikhil Gupta 22:12

Exactly. See, first time when you’re starting a company, people will tell you the truth, and they will say, no, no, no, no, no. And that’s what happened last time, right, in Avid Secure. So this time, a lot of people, I went back to the same people who had said no, and they must be feeling like, oh, I said no, he still proved me wrong, and things like that. And if Nikhil is thinking about the problem, probably has done the research, he’s more knowledgeable than me. So indirectly, a lot of those things happen. So what I did was, I kind of a mix. So I spoke to a few people to figure out the problem statement. And once the problem statement was there, then I found out a whole bunch of people that I didn’t know, with whom I didn’t have relationship and credibility. And it’s an art to go back and make people comfortable, tell you the truth.

Siddhartha Ahluwalia 23:02

So, if you can share about some, you know, and it’ll help other entrepreneurs prepare when they’re doing customer discovery. What are the five questions that you asked, if you remember?

Nikhil Gupta 23:14

So again, general things, what happens here is, I’ll ask the customers like, how big is the problem?

Siddhartha Ahluwalia 23:21

So that’s in this case, you know, in case of ArmorCode, what were you asking?

Nikhil Gupta 23:25

So basically, first of all thing was that, okay, so ArmorCode, so I’ll take a step back, and I’ll describe ArmorCode, so that I come in. So we are agentic AI platform for exposure management. Now, essentially, what’s happening here is…

Siddhartha Ahluwalia 23:39

And can you also explain in layman terms?

Nikhil Gupta 23:41

Yeah, in the layman terms is a vulnerability management. So what happens is anytime when you are doing the security, whether it is physical security or software security, infrastructure security, there’s a whole bunch of scanning you do, right? I may have a scanner or a print testing and things like that. And I’ll do and I’ll have, let’s say 1000, 10,000, a million vulnerabilities are there. For every AppSec engineer, there is 200, 300, 400 developers. So that ratio is very skewed. So you cannot fix all the million vulnerabilities or 100,000 vulnerabilities. So first thing first is you triage. It’s okay, am I going to fix this or not going to fix things like that. So you bring it down. And then to secure any product, it’s not just one tool, you know, you have 10 tools, 20 tools, depending upon the size of the organization. So that problem becomes very big. So how does people do it? Okay, I go to this console. And I’m going to triage all of them. I’m going to download into an Excel sheet, I’m going to get from the other ones, right? And out of all of them, then I’m going to fix it. And my internal customer is a developer. So I go to developer, developer is very busy, you know, solving the cool and sexy problem. They don’t want to do a security bug. So they have zero interest in solving these problems. And one of the reasons why I picked this problem was that I used to be a developer back in 99. Then I did a lot of operations, and then I came from security. So I had a very good understanding of the personas, internal customer, external customer. So even though we sell to security people, but their job is to make developers like him. So how do you do that? Because I have been on the developer side, I exactly know developer doesn’t want to go out of Slack, developer doesn’t want to go out of Jira, right? And they hate the tools that security people tell. So world’s largest entertainment company, I was walking the floor there in Southern California. And they have a lot of theme parks and everything else. So I was walking there. And the director of product security called a developer. And this is, do you know who this guy is? Oh, I don’t know. Oh, you don’t know Nikhil Gupta, founder and CEO of ArmorCode. And the developer said, found ArmorCode.

Siddhartha Ahluwalia 26:02

Why do I care?

Nikhil Gupta 26:04

And that was the biggest win for me because 5000 developer in that company were using it, but they didn’t know about ArmorCode. So what happened here is we held security team, and everything was transparent, the developer didn’t even know about it. So here, not only understanding the buyer persona, buyer persona’s internal customers we are aware of. So those things are very important to understand all of that. And so that is, we are stitching it together here. So the questions I understood the process. So the fundamental thing which I use is the five Ys. I’ll say, okay, you know, why are you doing this show? I’ll say, oh, I wanted to, as you said, I wanted to start a company, I want to understand, I want to learn from others. Why do you want to do that? Oh, I want to. So when you ask five times, why the fundamental pain problem will come? Yeah. Because again, as you heard, in Navid CQ, I didn’t know about C of cloud and all here, I didn’t know we have vulnerability management, but I go with the first principles. And with first principles, in fact, that is, I see as an advantage. But what happens here is, if you look at it, and I studied a lot of companies, there’s 7,000 security companies. And when you are starting a company in COVID, when you don’t have to, like I was kind of ready to retire and just building my dream home. And I had to convince me and more importantly, my family, why I want to do this here is that you have to very conviction. And there are 7,000 security companies. How do you do that? And there is a 7,001 security company and why it will be successful and why when these are $100 billion companies are there, like we have today, some of the biggest brands of whether it’s the AI company, whether it is the largest manufacturing, credit cards and all of those companies, right? Why would they go to a no-name company when there are so many of them are there? So for me, I actually had that conviction. So for that conviction, I went back and I got into those details and I understand the overall process. I asked them five ways. And sometimes I said like, there’s a difference between first time and second finder. I said, okay, is this a pain problem? It was based on my research and all that.

Siddhartha Ahluwalia 28:16

You were asking, is vulnerability management? It’s a pain, right?

Nikhil Gupta 28:21

And people were like, oh, this company tried to solve it. That company tried to solve this. This is not solvable and all those. I’m like, forget about companies. You as a customer or a buyer, CISO or a director of vulnerability management, do you see the pain? Answer was yes. Then this is the advantage, coming outside in. Coming outside in, I don’t know what I don’t know. And I’m coming with first principles of trying to solve your problem. Now, there are two types of founders, as I said. It’s very important because my strength can become my weakness. So I do not encourage everybody to do this today. Because what happens here is, if I am in healthcare and I know this pain for 20 years, nobody better understands. It’s a great way to start it, right? But in this particular case, in the first principle ones, the challenge is that there’s a lot of unknowns and all. But knowing yourself, knowing yourself is very important. And that’s one of the important things about an entrepreneur here is that you should know who you are, what your strengths are, what your weaknesses are. These things are super important for you to do your player strengths. And there’s a whole thing, I can write a book about that, but how do you choose a founder, things like that. And it should be complimentary skills, buying technology and all. Because a lot of times people will say, okay, oh, I can write a course or I know the problem. But I take a business first view and as a result with a founder first. So again, the idea here is, there are no magical formula. There are two methods here, knowing your strengths you can go this way.

Siddhartha Ahluwalia 30:03

So, one question you were asking the CSO and the team was, is vulnerability management a problem? Why is this a problem? What was the other set of questions? And how do you do the business today, right?

Nikhil Gupta 30:17

So, when they walk through the whole pain point to me, so that is understanding customer mindset, right? And while explaining this, oh, it’s a much bigger problem than I thought. And then the last piece is, how much are you going to pay?

Siddhartha Ahluwalia 30:32

So, you ask them.

Nikhil Gupta 30:33

Of course, yeah, because at the end of the day, in enterprises, ultimately, you’re solving a business problem, right? And you decide. So, from my case, because I’m going to sell to mid to large, is it like, so we sell seven-digit deals, we sell six-digit deals and all those things, we are very clear. So, I don’t want to solve a problem which is going to be $500 worth problem. And there’s nothing wrong. There are companies who will make 5 million or 50 million customers with 500 or 50 bucks. That’s a different segment. In enterprises, depending upon who you are building an enterprise company, that’s what you charge. And I’ll ask them and they’ll say, why should I tell you, right? Those things will come in. But when I walk through that, I will reverse engineer. I’m like, oh, okay, this much, how much will it be paying?

Siddhartha Ahluwalia 31:18

So, can you also share your 3, 30, 300, and 3000 formula here?

Nikhil Gupta 31:22

Okay. Yeah. So, it’s again, interesting thing is a lot of times, founders will come in and this is my experience. So, I call it as 3, 30, 300, and 3000 rule. Three is like if you have three customers, right? If you know you’ll have three customers, I call it as a case of depth. Because anybody like who’s 42, 45, who has an industry experience of 20 years, you’ll be able to get three customers.

Siddhartha Ahluwalia 31:48

Your friends will write you a check.

Nikhil Gupta 31:50

Exactly. But what happens here is friends will write you a check and there’s a good chance a VC will write you a check. But what will happen is they will get a million, 2 million, 3 million, depending upon how you are. Now, I call it as a case of death. You’re not drawing any salary. You’re starting, there’s a huge opportunity cost. And at the end of the day, a lot of those companies fail. Majority of them. Now, if you get 30 enterprise customers, that’s pretty successful. You should be able to make a $30 million business, maybe $50 million business.

Siddhartha Ahluwalia 32:22

If you are assuming each enterprise will pay a million dollars each.

Nikhil Gupta 32:25

No, I’m talking about the exit. I’m talking about the exit multipliers and all industries there. But if 30 enterprises are ready to say, because what will happen is when I spoke to 300 people, so probably 200 were saying the idea is good, which gave me the conviction. All of them, maybe 50 said, okay, I’ll be ready to do that. But that number decreases. So, I can have three friends to write a check. I can’t have 30 friends to write a check. So, now when you’re selling it to 30 enterprises, that means the problem is real and people are paying you. And in my case, my bar was like, okay, you should be able to pay me 50, but eventually to seven digit, 50K to seven digit. So, that means it’s a good enough validation and then some large company will acquire you at that point. Then if you have 300 enterprises, so then you can make a $300 million company, right? Again, I’m talking more conservatively.

Siddhartha Ahluwalia 33:17

Exit value you’re talking.

Nikhil Gupta 33:18

Exactly. Exit value. And again, there are companies with 1 million revenue sold for $500 million. I am very conservative.

Siddhartha Ahluwalia 33:25

Those are exceptions.

Nikhil Gupta 33:26

Exactly.

Siddhartha Ahluwalia 33:27

Virat Kohli and Sachin Tendulkar.

Nikhil Gupta 33:28

Exactly. So, they are like natural bond. So, you don’t want to do that. I’m Dhoni.

Then Virat Kohli and Sachin Tendulkar will use a brute force, if you will. So, from that perspective, so if you have 300 customers, there’s a good chance you will get a good $300 million exit. And if you get 3,000 customers, guess what? You have a public company.

Siddhartha Ahluwalia 33:45

You have seen this? Once you have 3,000 enterprise customers.

Nikhil Gupta 33:49

See, this is the research I did, right? So, what I did was when I, see, there is a reason why I studied 7,000 companies. I looked at all of them. I did all the maths and I figured it out, like there are not that many. There are probably 15, 20 public companies in security space. So, you have to look at your space. So, in your space, you go down and dig deeper. Devils are in the details here, right? Of course, as a second time founder, you know, your dream and aspiration is to make a public company and all. And you begin with the end in mind. I’m like, okay, if you have to go there, what would it take? And then you look at so many security companies are there. They have 3,000 plus customers and things like that.

Siddhartha Ahluwalia 34:26

Was somebody else arranging this meeting for you, like an EA secretary or an agency?

Nikhil Gupta 34:30

No. See, I think so there are certain things, as a founder, you cannot, what do you call it, as an outsource. And now, fast forward, maybe you can have it..

Siddhartha Ahluwalia 34:41

AISDR.

Nikhil Gupta 34:42

Not AISDR, you could have AISDR, but see, from my perspective, because LinkedIn and other things, and I’ve been building a network and I would go, as I said, I’ll just reach out to people who are not in my network. Because as I said, like if I know you for seven years as a CISO, there’s a good chance that, you know, you can write a 50K check and then you will be biased. And it’s like, well, I know Nikhil, I don’t want to disappoint him and all. But when I go to LinkedIn and say, okay, I don’t need ABC person. And I’m like, here, they took a meeting. I’m like, give me your honest feedback. We may not talk ever in life again. These are the five questions. Does it make sense? Those kinds of things. So, you are having, getting those difficult questions answered before. And a lot of people think entrepreneurship is risk taking, which is wrong. Entrepreneurs are risk mitigators. And again, all my advice here and suggestion and experience is on the enterprise side, right? So, take it with a pinch of salt. And I tell that if you’re young in twenties, then probably ignore a lot of my advice because my experience is for more experience. There are certain things which is common, but certain advice I would say, you can take bigger risk, right? You can go with a different perspective. And my learning here is because I did the same thing here. I listened to a lot of podcasts like Neon Show. So, thanks for having this. It makes a lot of life easier for the entrepreneurs. And then you think globally, act locally, listen to different people, right? Get all of that. And so, that is where it is there. And I heavily rely on LinkedIn, especially again, because of enterprise type of business. And maybe if I have to do again, I will definitely look at how AI can help. I’m sure AI can help me pass this information, record this information. I’m the old school guy. Literally, I had this big piece of paper. I was just writing down.

Siddhartha Ahluwalia 36:40

You had this much bundle, almost like a diary.

Nikhil Gupta 36:43

Yes.

Siddhartha Ahluwalia 36:43

And today, if you can share roughly in ArmorCode, how much you have raised, rough, what scale, whatever you can share the company that.

Nikhil Gupta 36:51

Absolutely. So, we have $81 million. We have some of the top investors like Sierra Ventures, Irwin Ventures, Highland Capital and most prominent is Ballistic Ventures. So, these Ballistic Ventures is the number one VC firm for security specific thing. We have partners like Techsline, Barma, Knafta, Kevin Manley and all. We are almost 200 people company. We have some of the top brands you can think of. One of the things, one of the vision I had when I started was COVID will change the way we live, work and play. And ArmorCode vision was we want to secure the way we live, work and play. Now, I was in Singapore. The number one building in Singapore is a customer of ours. I go and make a payment. The payment company is ArmorCode. You go to any hospital, I hope you don’t have to go to hospital, but the hospital beds and all are there. Now, the world’s fastest growing company, you’re talking about AI, they are our customer here. You’re talking about security companies, the largest of the largest security companies. We have companies who are managing 3 trillion, 5 trillion asset under management. So, we have those best of the best customers like you look at the cars, you go to UK and all those things. So, we have been fortunate and blessed. We have customers, the top insurance company, the top financial companies, top technology companies, top security companies, top healthcare companies, top entertainment company, media companies and top manufacturing companies. So, these are the six or seven top IT outsourcing companies, our customers. So, we are growing fast. We are hiring aggressively. If you have any audience, you have your friends or somebody else, love to have them there. And yeah, so those are the metrics that we’ve been growing 100% year over year. And it’s a great journey, very exciting. We created a community called the Purple Book community, which I was telling you earlier, it’s a community of security people by the security people for the security people. So, talking about AI and also we are actually helping a lot of these companies adopt AI faster and securely. So, there’s only one hindrance in today’s world for AI is security. If there was not a security concern, security would be AI will be 10x. And that is what ArmorCode is playing a role in helping companies. So, either you’re building a product or you’re doing a productivity. So, we can help you build your product. Every company is a software company. So, we can help you build your product securely or even in shadow AI, right? Or how do you get in productivity? So, that’s one.

Siddhartha Ahluwalia 39:36

So, Nikhil, you have a framework and this is probably the last question that I have, but this is the most action packed. You discourage people from starting their own venture or becoming entrepreneurs. Why is that?

Nikhil Gupta 39:49

So, basically, the main thing here is you should do entrepreneurship for the right reasons. A lot of people want to be an entrepreneur because they see it’s glorified. You see Mark Zuckerberg, Elon Musk and all, but it takes a lot behind the scene there. And again, in my journey, as I said, that it took me 26 years to realize that’s more of a normal one. So, if you look at most successful entrepreneurs, they have their own pain parts and journey. A lot of them share or don’t share. And a lot of entrepreneurs do entrepreneurship for just making money. And my experience says, and when I look around in 30 years, there are many, many more easier ways to make money. So, if you have to endure and could be lucky that you may be successful in 10 years or 20 years or 25 years, if you are very clear how you want to go about it, and then you can live with that. And it’s more of a family thing. It’s not your individual because in your journey, if you are doing it for the wrong reason, you’re sacrificing family time and all of those things. And then you realize and you take financial risk. So, that’s my whole reason here is that make sure that you’re very clear why you want to do it. You’re knowingly entering in there, even after that, it’s a challenging journey. And when you discover yourself, and as I shared earlier for other answers, one of the most important thing I feel for entrepreneurship is knowing yourself and what is there.

Siddhartha Ahluwalia 41:22

And you spent 20 years discovering your why. What came through that journey?

Nikhil Gupta 41:31

So, I think so. I’ll not lie. Back in 2000, one of the first startup in Silicon Valley I joined was to make money, quick money. It was a great team, great investors and everything else. And Silicon Valley is where the magic happens there. And then after seven years of blood, sweat and tears and very close to making seven-digit outcome, which is a dream, American dream, unfortunate situations happened and I ended up making $1,500. $1,500 where I could have made a $1.5 million maybe a year before for reasons and outcomes outside of my control. So, that was a wakeup call for me. And it was very hard in 2007 once that acquisition happened. Again, I went back for self-discovery, actually lost confidence and everything else. I found out two important things. The seven dog years working 24 by seven for seven years that I still wanted to do an entrepreneurship. And then the second thing was the culture and everything else. And my clarity was very clear that there’s no guaranteed money, there’s no quick money. And if that team, so if you go back and look at the company which I was there with Nobel kind of lawyer, Julian award winners, starting a company with $190 million, those companies can fail. Any company can fail. So, if I have to look at technology wise, that was the dream team. I have never seen any technology, more technology company like that. So, those are the reason that’s where kind of I learned over the period of time and like, hey, why am I doing this and things like that. Yeah.

Siddhartha Ahluwalia 43:20

And people come to Silicon Valley or from all over the world, like a lot of people, even from India, that you get success in Silicon Valley, but nobody tells you the hard part of it. It took you 20 years in Silicon Valley. You’re right. So, there was no shortcut.

Nikhil Gupta 43:34

Yeah. So, there’s absolutely no shortcut here. Silicon Valley is a dream. And again, I know people are looking at all over the world. So, in Bangalore and now the advantage with AI and cloud, you can start anywhere else. Most important aspect is there’s no shortcut for sure. You may get lucky. And I tell that the odds of winning a jackpot in Vegas is much higher than being an entrepreneur. And without knowing a lot of those things, you get lucky. And so, again, my only advice here to the people is that really, really know why you want to do it. And if you really believe in and to your point, like many entrepreneurs or people who want to be an entrepreneur come to me, I discourage them. And when they come after three, four times, then I know that they really want to do it. And then once you know your why, then you’ll figure out a way. So, for example, with me, where I started, in Delhi, in the first job with nothing to do with the technology and things like that, I always look forward. I said, okay, my dream was to become a serial entrepreneur and CEO. I didn’t know what space, what city, nothing. And I was working backwards from that. So, that way, the advantage here is if your north star is clear, your why is clear, you work backwards over there, and then you can continue to fill the gap. And there’s only one Silicon Valley in this whole world because you require capital, you require people, you require universities for that, and you require people. Now, things are changing, I see in Bangalore and everywhere else. But almost 25 years ago, when I started, in Silicon Valley, failure was not considered failure. But anywhere else you go, and you lose a job, and then we’ll say, oh, all kinds of stigma is attached and all of those things here. Whereas in Silicon Valley, you lose your job, you are fired, and nobody will challenge you for that. You can go back and you can moonlight and things like that. So, in general, people kind of embrace. And then also, for enterprise space, if you look at Google, Facebook, Intel, all of these were startup at some in the valley. So, the risk-taking capacity of the enterprises or the customers, early adopter customers is also high. So, that’s where it’s a combination of things, why Silicon Valley get more success than anywhere else. But yeah.

Siddhartha Ahluwalia 46:02

My last question to you is, what did you learn about enterprises? You shared an anecdote where, and I’m talking about the psychology part of it, right? Where you shared, sometimes you will not meet a customer who is paying million dollars, but you will meet a customer paying $50,000 annually.

Nikhil Gupta 46:22

So, it again depends upon the what the value and so, how do you pick an enterprise? So, typically, you start, begin with the end in mind, like in ArmorCode, I was very clear that, you know, I used to call one-to-one as like Fortune 1 to 1% company eventually will become ArmorCode customer. But on day one, Fortune 1 will not become your customer because they will want little smaller company, they don’t want to be the guinea pig. So, that kind of trickles down over there. So, understanding that what is the path and the journey is a part of it is also product strategy. So, this time, I was very clear that these are the customer base I want to build, but in order to support Fortune 5, Fortune 50 companies, the platform needs to be at a different scale. And so, as a result, we put in a fundamental in the architecture space, but you have to have a delicate balance because you cannot be building a product for five years. So, you have to sell it. And again, from the customer perspective, even one of the largest entertainment company, which I said earlier in the day, that it all plays that if I come to you and, you know, like you are a Fortune 50 company, it’s like, hey, if the CEO is coming around and you want to talk, are you really a big company and things like that. So, that’s where you make a difference. Now, if places where there’s even a smaller company is there and they are kind of concerned about how big you are and all and then you go back and ultimately, like we just signed a very large deal and large insurance company and I’m going to meet with their CISO, all of those guys, but if the team was able to handle it and all of those things. So, so that is where the balance form was founded and a CEO becomes here is that what time you meet and things like that.

Siddhartha Ahluwalia 48:09

The power dynamics you’re saying.

Nikhil Gupta 48:10

So, power also plays a big role. So, what happens here is that and it’s just not one size fits all. So, it’s like about the capability, they will have a request for proposal, RFP process is there and sometimes, you know, some companies they will see, they will want to see you. So, there is a technology adoption life cycle, right? So, in Jeffrey Moore’s book, it is a innovator, early adopter, early majority, late majority and all. So, it depends upon where the customer is there. So, in the early days, yes, of course, you know, hey, I didn’t have a big sales force or anything like that. So, I’m going there. Now, at our stage, we are growing rapidly. So, then you want to make sure that you’re looking at a system, you’re looking like a big company there. And again, you also build a system. So, I trust my sales team and sales team comes back and they will themselves, it’s like, hey, Nikhil, I don’t want you to come into this meeting because we look too small. So, power dynamics only part of it. And that is where it is there. And it depends again, and full disclosure, like, any of the advice here is no one size fits all. So, you listen to it, you talk to a few people, and I’m hoping you are getting some good nuggets out of here, which will help you in your entrepreneurial journey. But again, I’ll encourage people here and I like to say that, you know, dream big and dream often. Dreams do come true if you never give up. And I’m a very good example of that.

Siddhartha Ahluwalia 49:34

Thank you so much, Nikhil. Really appreciate and I learned a lot from your journey. And I’ve taken a lot of nuggets, you know, or even our portfolio to apply, you know, how you built it, how I think you think from backwards, you think from a point of view, if you have to take a company IPO, you want 3000 customers, from that point of view, how do you build the entire product, entire machinery backward from it? Really appreciate you sharing very candidly.

Nikhil Gupta 50:03

And thanks for having me again, and great to enjoy and thanks for sharing your journey.