Chakra’s advice Nov 2, 2025

• in the long run, soft skills matter more than hard skills. a large outcome will only be possible with the help of your team.

• build a stellar reputation for yourself with every single stakeholder you interact with

• people give money, power, and responsibility to people they trust

• trust is built slowly and steadily, with repeated interactions and consistency in action and behaviour

• for a career in sales, go beyond your duties and care about the customers outcomes. check in with them after the sale if they achieved what they hoped to achieve. you need customers to speak good things about you behind your back. a few strong customer testimonials can go a long way for your career

• the path to leadership is going to be filled with thousands of cuts and plenty of blows to your ego. take them with grace, control your emotions and ask “will this matter in the long run”

• make it your responsibility to support to your peers, especially those at the same level as you. it is not correct to look at them as competitors and try to “win” against them. share your knowledge openly and freely, support them and keep them in your good side. always remember to play the long term game, decades out
  

Yeah, yeah I know the title is a meme now. I’m being cheeky on purpose. You’re reading it now so it worked okay? Also, spoiler alert.

The movie’s portrayal of what makes for a great F1 driver (Sonny Hayes) versus an amateur driver (Joshua Pearce) and the role of an individual contributor in a team sport is fantastic. I think there are many parallels that can be drawn to those working less glamorous jobs (in my case, in B2B SaaS).

tinkering is everything: in between races, Sonny would spend hours in the car simulator trying different tire pressures and observing its impact on speed, and controllability. This is exactly how an AE or a marketer should think about her job - tinkering with messaging, positioning, signals, account scoring and varying a hundred other variables that could influence sales. The best salespeople maniacally review their activities and conversion metrics and try to find patterns.

describe reality in high fidelity: when Sonny first tries out for the lead driver role, his times aren’t as good as the incumbent. But it becomes very clear that he has high potential through his ability to describe his challenges with great precision. For example, when the movie shows how the two drivers give feedback on what they feel is wrong with the car to the designer, the amateur says “it understeers and oversteers sometimes”. Sonny says “it’s snappy in the high speed corners but unpredictable in the lows. Had trouble with rears in turns 14 and 16.” A great AE doesn’t just say the leads are bad. They say “our BDRs are probably cold-calling the wrong persona. We need to reach out to HR Directors instead of HR Managers. And avoid companies that have a more corporate suit and tie culture. They take forever to close.”

individual games are also team sports: Sonny built relationships with his teammates across the board. He would take the pit crew and the chief mechanic along for his daily run. He sat down with the car designer and tried to understand how she models air flow around the car. He asked for different designs that could help overtake other cars. Similarly, great performers build relationships with team members around them. For example, in a SaaS sales organization, a great AE is often talking to SDRs and BDRs on the type of customers that are good ICP fits (upstream connections), and chatting with customer success colleagues about what is the experience of customers that he sold to (downstream connections), and grabbing lunch with a Product Marketer riffing on some ideas for creating new vertical focused positioning.

(some) rules are meant to be broken: in intensely competitive games, sometimes alpha lies in thinking out of the (rules) box. Sonny Hayes frequently skirts the rules of the game and finds edges. One scene shows him intentionally slowing on the formation lap letting him start the race with better tire temperatures and a more aggressive angle into Turn 1. Applies to the SaaS world too. David Fallarme, VP of Marketing at Owner, in his advice for marketers, puts it nicely: “Remember that regardless of your constraints -- you own the outcome. Legal says no, you can’t do that campaign. Product says you can't announce that feature. Finance says you don't have the budget. Know which rules to follow, bend, break, ignore. Yeah, this will annoy some of your colleagues. But as long as you get outcomes, they will respect you. Your job is to be an effective marketer, not an excellent bureaucrat.”

don’t be opinionated, but always have an opinion: during race strategy sessions, Sonny didn’t just sit quietly while the senior members of the team, each with years of experience in F1, came up with Plan A and Plan B for race day. No, he would always have his own hypotheses, a Plan C, that he would articulate. For the typical knowledge worker, a lesson here is that you must be thinking of the bigger picture and always have an assertion about what you think is a better strategy. Don’t be opinionated, but always have an opinion. Over time, if your strategies match reality, people will trust you and follow you.

Thanks to Yash Mehta and Prashant Balaji for reviewing drafts of this essay

Avoid shiny-logo syndrome: Having Google as a partner is great but do your customers even want it? Turning on an integration doesn’t mean customers will roll in. Start with real customer demand or skip it entirely.

Don’t ignore culture fit: After every call with a potential partner, ask if working together felt easy or like a battle. Walk away from teams that don’t click; unwinding a bad match later is painful.

Ask the tough, awkward questions of your partner: What are they focused on this year, what are their KPIs, if there is no alignment, say no. Otherwise you’ll end up with weekly calls which go nowhere because they were never strongly interested in the first place.

Don’t skip user research: Talk to customers who asked for the integration, learn the exact workflow they need.

Add value to the partner early on: Send the partner a warm lead, let them speak at your event, share early-access feedback - anything that helps them before a contract is even on the table. Give first, then negotiate.

Become the steward of your partners inside the company: Internally for every big initiative and launch you need to represent your partners - articulate how they can add value to the business and muster support and resources for their enablement.

Full transcript

Adi: So maybe I'll start with some context setting: how do you define the different kinds of partnerships, and in your time at Slido and OpenPhone, which ones have you been working on?

Juraj: Yeah, yeah. So it's a good question to start because it does definitely look very different from company to company. Even if we just zoom in on Slido and OpenPhone and compare those two, they are different.

At Slido, the biggest pillar for us when it comes to partnerships was product partnerships and integrations. The way I think about it is very much informed by the product that you're building. For a product like Slido, we would not be able to grow or succeed without really deep integrations in two groups of software: one being video-conferencing--your Zoom, Google Meet, et cetera--and then presentation software--PowerPoint, Google Slides. It’s driven by the nature of the product that Slido is; unless you can use it with those two types of tools, without it, it’s really pointless. So that's why we invested really heavily. That was reflected in my role as well, which was very close to product. At some point, I led the product team as well in this partnership-and-product role.

Very hard to copy-paste to a company like OpenPhone, where, when I joined a year ago, their definition of partners and partnerships was very much on the affiliate and referral side, which is a very different motion from what I had seen at Slido. It was a healthy beginning of an ecosystem play, but very early days when you look at product partnerships and even integrations. So it's very different in that sense.

And yes, the role changes as the company grows and as you enter different stages, but with OpenPhone we are slowly moving toward it. We've known for a long time that we need to get better at integrations and really fill that gap between the product and making sure you can use our product together with the rest of your tech stack. But it's a different focus and lens compared to a product like Slido.

Adi: So when you say product partnership, is it the same as an integration?

Juraj: I think you can. Like, there are so many beliefs there. It's true: not every integration is a partnership--I agree with that--and there's absolutely a space when you're building SaaS products for integrations that are purely there from the technical perspective and there's not much go-to-market around it. But the part that I'm excited about is where you really combine. It all ultimately starts with a use-case--whether it's a purely technical integration or not--but you have the use-case there, something the customer wants to achieve, and it's a real problem. Then you add an integration between presumably two pieces of software, but there's the go-to-market wrapper around it as well. That could be going to market together with the partner you built the integration with--co-marketing to mutual customers, or even generally to each customer base--and applying that ecosystem-marketing lens: their customers could be our customers. That's the part I'm excited about. I'm very bullish on the type of partnerships I'd bet my money on. Even when I look at OpenPhone, where we need to go as we continue to grow, that part of the ecosystem play to me is the most important, I would say.

Adi: Got it. That makes sense. Currently, if you look at how you spend your time at OpenPhone, what percentage goes on product/integration-focused versus affiliate or referral?

Juraj: It's very interesting because, up until three weeks ago, I was a team of one, so my time looked very different--each day, each week--very scrappy, lots of building and setting up the foundation. The affiliate program, because it was set up before I joined and I inherited it and the team has done a great job with it, we're able to put more on autopilot. Affiliate programs are fairly easy to operate because they're not super high-touch; they're not super one-on-one, and you can really scale how you onboard and recruit partners, so that's what we wanted to keep.

But we wanted to invest in something that's a big focus area for us this year: scaling our agency-partner programs. Those are consultants, agencies, or businesses who have a one-on-one relationship with their clients and often implement OpenPhone for them or integrate it with their CRM. That relationship is very different--much more hands-on; you're onboarding the partner, working through enablement. So that has been taking quite a bit of my time, and that was the first hire I made--just three weeks ago--and this person is going to focus on that swim lane.

Product partnerships were probably the majority of the time in terms of setting the foundation and making sure we have all the ingredients to go after a roadmap of integrations and product partnerships. A big part of that was launching our public API last fall, which also allows other partners to build on top of OpenPhone and not just ask us to.

That probably doesn't answer your question in a super clear way, but as a team of one I was all over the place. Now we're starting to specialize: the new partner-manager hire will spend more time on the agency-partner program, and I'll continue to focus on product as well as building the foundations for that partnerships play at OpenPhone.

Adi: What you're saying is that you got the referral/affiliate motion handed to you, and more recently you've been working on the agency as well as the product partnerships. Where your strength lies--and perhaps where you see the biggest potential--is product, and you've hired someone to help on the agency side. So let me dive deeper on product partnerships. If you had to break down a product-partnerships role into “jobs to be done,” what would they be?

Juraj: Great question. The framing I like: when you purchase new software, you compare that choice to every other choice you've made in purchasing software. Say you're looking to buy OpenPhone or another phone system; you'll think, “I bought my CRM a couple of years ago—it's HubSpot, for example—and I bought this tool for that.” You'll assess OpenPhone against: does OpenPhone work with my CRM, because I've already made that choice. It's too late; you presumably don't want to change the CRM and your tech stack just to fit a tool around it.

That's a big shift in software-buying behavior--not recent, but more pronounced. Partnerships come in right there. So, job one: deeply understand the customer's tech stack and journey, and the use-case. For us, phone/communications plus CRM is obvious. You expect your communications stack to integrate into your CRM. Without the real use-case, no matter how cool an integration sounds, unless the real job-to-be-done is there, it's going to be hard to get off the ground. Yeah, that's what I’d posit.

Adi: So the first step when deciding which product partnerships to pursue is pulling data on current customers, seeing what other CRMs or tech stack they’re using, doing that data-driven view of the largest commonality— which products to target. Fair? Or have I missed anything?

Juraj: Yeah, you're right. Understanding the customer’s stack and journey is the starting point; that gives you a good map of what other tools our ideal customer relies on, and then: is there a use-case for an integration? It varies between teams—I work with different CS and sales teams—but one thing I always tell them, going back to how customers make buying decisions, is we need to be very early in those conversations. Whether it’s the discovery call or the initial meeting, ask what other tools this customer is using. If that’s an afterthought, we’re already missing out. It’s a strong value prop to tell a customer: “Yep, we work with your stack. We won’t give you a headache or add a silo.”

Once you understand the lay of the land and the use-cases, you start engaging partners individually: what are their priorities? Staying with the CRM use-case—are they building calling/texting features natively, or building a partner ecosystem? From there it becomes more tactical, but I always look at mutual customers and what the overlap looks like: if we launch tomorrow, who’s there that will care? Again, two logos together may sound cool, but do people care? Does it make customers more successful?

Adi: In that strategy question—deciding which partnerships to go ahead with this year and next—how do you think about small attach-rates with a big company versus larger attach-rates with smaller companies, but doing more of them?

Juraj: You mean specifically with integrations?

Adi: With integrations and product partnerships—one really large company where a small percentage become customers versus smaller niche CRMs with a tighter product use-case.

Juraj: Yeah. I like to treat each integration or product partnership as a standalone product or feature. That helps a lot cross-functionally; there’s no reason a strategically important integration should be siloed from the rest of your product roadmap—your integrations become the product as well. For us it’s 100 percent true: HubSpot is our most-used integration, higher attach-rate. We invest more there—huge ecosystem, great for co-marketing and co-selling. But then, something new to me when I joined…
Because the customers that we serve are SMBs, there are just so many niche, small CRMs—there’s a CRM for cleaning businesses, there’s a CRM for roofing businesses, I had no idea that that is the world I’m going into. That creates a good discussion for your point: where do we invest, where do we go? I’m sure my thinking on this may evolve, but right now I’m kind of thinking about the long tail of these integrations and how do we support these with tools like Zapier or Make or other solutions that actually give the power to the hands of our customer. Also, to our team—our customer-success-management team and our solutions engineer—this is where they actually step in oftentimes and help our customers design more custom integrations, if you will. Yes, we won’t be able to prioritize building a very niche CRM integration and putting our own product and engineering resources, because we have so many table-stake CRMs to build, at least right now. But I wanted to make sure that—you can almost think of it as a pyramid of product partnerships and integrations—at the bottom of it, we have a layer that supports and gives the tooling to our internal teams, but also our customers, to build and create the long tail of those integrations.

Adi: Gotcha. So suppose you kind of decided internally—strategized, used data, used qualitative interviews—to say that, okay, for the next year or two or three, these are the integrations or product partnerships we want to focus on. What happens next in terms of, like, what is the set of work that you need to do to make that partnership successful? And even just, what is the timeline for this to go live and actually start working?

Juraj: Yeah. I would say there are kind of two different streams that start and happen at that stage. One is the business-development—you could call it; it’s really kind of the partnership side. The other one is user research, and I’m really bullish on that. Again, it goes to the point of: I want to treat those integrations as products, as if you are building a product, because you in fact are. So I go—and this is probably my product background coming forward—but I like to then essentially kick off a user-research stream around a specific integration. So if you’re building an integration with OpenPhone and Pipedrive, for example, I want to get a list of all our customers who requested an integration in the past, or managed accounts who have already given us feedback or asked for that integration. I want to get, like, a good amount of them on a call.

And I don’t know how I’d scale this in the future—I mean, you scale it with a team, obviously—but at this stage, because we’re such a small team of two, I like to be on those calls myself. I don’t like to think of user research in this context as something that you can outsource. We actually have an amazing Director of User Research, and we often partner with him, but it’s just so much more valuable to actually sit on those calls, whether you’re organizing them or not. So that’ll be kind of the immediate step.

And I would say that oftentimes I would actually prioritize this before engaging the actual partnerships team at the company. Maybe we do them simultaneously at the same time, because it’s even better if the partner is committed to the research phase with you. But I would hate to go through negotiations and sign an agreement with a potential partner, then do a round of user research and realize that, really, our customers don’t need an integration, or it’s more of a nice-to-have. And then what are we doing it for?

This was an interesting contrast. When I worked at Cisco—when I was working on their Webex developer platform—it was a very different approach over there, where there’s just a natural push toward quantity of integrations on the platform over quality. It was an interesting culture shock for me, coming from Slido—which was, again, a startup, very product-centric, customer-obsessed culture—into a Fortune 100 company, Cisco; and I’m trying to convince them, “Maybe let’s get on a call with a couple of customers before we invest in building an integration,” and that just wasn’t in the DNA of the company. So it was interesting to observe.

Adi: Awesome. And so basically you’re saying, just try and understand very deeply how that integration—as a product—is going to be used, so that when you kick-start this partnership it’s clear on both sides what the end state is going to look like and how customers are going to benefit.

Juraj: Exactly, yeah. It also helps you then scope out the actual integration: What should we include in version one versus what is for later? What do we really need to go to market with? Yeah—things like that.

Adi: And you said this was one stream; what’s the other stream, and what are the steps to do there?

Juraj: Yeah, so the other stream—you can call it business development, you can call it purely the partnership work—is working with the BD or partnership contact at the other company. So there’s discovery in that sense as well, and you do get through a lot of that user discovery, but it kind of anchors mostly around the use-case and the mutual customer: Are we both serving— is there overlap with our ICP? Are we as two companies culturally aligned? That’s a really important aspect. If I’m going to a bigger company and I’m saying we want to build an integration, does that fit into what their goals are for the next six months? Does that fit into their strategy? So there’s a lot of that discovery work. And of course it then progresses into talking about the commercial aspect of the partnership—often contract negotiations and the more admin/ops things.

Adi: And what, according to you, are typical timelines, and what variables influence those timelines?

Juraj: Oh, it really varies. I remember at Slido one of our key partners was Google. From a product perspective we were building an integration with Google Slides, and that partnership took—I want to say—probably two years, maybe a year-and-a-half to two, from the initial meeting to actually launching the product. Because in that case Slido is a small fish—bootstrapped startup that Google really doesn’t know about—and then you have Google, the big fish, and you’re playing that dynamic of understanding. With them it came back to aligning with their goals and making sure that they, as an organization, want to invest in this area as well—and how can we help them as a partner as opposed to them building this and owning this?

So you can have strategic partnerships like that which take a long time. You can also have the opposite—in a matter of months. We recently launched an integration with Jobber, one of the leading field-service-management software that our home-service business customers use, and that integration partnership—like, it’s actually been in the works for a while, but from actual commitment on both sides, through build, through launch—it’s been a couple of months.

Adi: Gotcha—interesting. When you talked about working with a really large, giant company like Google—or a much larger-scale company—do you have advice on what to keep in mind? I feel like that could go wrong in many ways, and it could also be a hit success. If you were to think of what to do and what not to do, what would you say?

Juraj: Yeah—my advice there is to actually align. The questions are kind of hard and awkward to ask in these conversations, especially if you’re the smaller company and you’re asking this to the Googles or Microsofts of the world, but you really want to ask them: What is your team focused on? Very tactically, what are your goals, what are your OKRs for the next quarter or the next half-year? You want to understand what they’re thinking day-to-day and what they’re building toward. Yes, it’s an awkward question for the first meeting, so you’re building that relationship toward it, but it does pay off because you ultimately need that understanding to get anything across the line. If you realize early on that you’re complete opposites—in this case Google’s focused on something completely else and they’re not going to invest in the area where you fit—you’re just going to be constantly … every two weeks you’ll log into a call; it’s a nice catch-up but nothing’s going to happen because you’re at the mercy of them as the big fish.

And, cliché as it is, if the priorities are aligned and you can bring in that real use-case—the real customer—the bigger the customer, the better. That helps a lot. If a company truly says no and doesn’t want to listen to you when you’re bringing them real customers and their quotes, feedback, them asking for an integration or for something you want to work on, and the company just ignores that, then they’re telling me they’re not focused on the customer and making them successful. So again, it’s going to be hard to work with them.

Adi: Have you had that experience—where you really wanted to work with a company, there were interesting words at first, but their actions were completely different and you ended up losing time?

Juraj: Yeah, it’s happened many times. At Slido most of our partnerships in this space were with big companies. Those two pillars I talked about—presentation software: Microsoft PowerPoint, Google Slides; video-conference: Zoom, Google, Microsoft Teams—so you’re constantly interacting with big players, and timelines vary.

An interesting example: we had a swim lane in our strategy to invest in presentation software, but we weren’t set on PowerPoint versus Google Slides. We knew our customers—big majority—cared about PowerPoint (as much as I hate to say it, everyone’s still using PowerPoint). But the relationship with Microsoft, and their platform readiness, just wasn’t there; the platform didn’t have the access we’d need as a developer to build on top of—it wasn’t built with that context. So we shifted priority and worked on Google Slides first: the wrapper was there, goals aligned, and their developer platform and experience were better. You can go back and forth and shift.

Even in non-product-partnerships, brand partnerships take a long time. Ultimately it’s a lot about relationship-building. In Slido’s early days there were pure marketing or brand partnerships that took a long time because you’re investing in relationship and trust as opposed to building something or marketing something tangible.

Adi: Makes sense. So of the three “jobs to be done” buckets we discussed, on the first one—deciding where to go—what common mistakes do people make?

Juraj: This may sound obvious, but you still see it: shiny-logo syndrome, where the partnership on paper just sounds good. The logo—you want Google or your favorite company on your website, on your blog post announcing an integration—but is the use-case really there? Do your customers care? That’s a big one. Yes, partnerships also elevate brand; putting your logo next to a strong company does a lot. But make sure the investment level aligns with what problem you’re solving. That’s the one I see most often.

Adi: Moving to user research—typical pitfalls? Any advice on getting that part right?

Juraj: Probably not doing the user research. We may be preaching to the choir—people from startup backgrounds, customer-obsessed lens—but not every company has that. Sometimes you have to educate or push them. That goes hand-in-hand with shiny-logo syndrome—maybe you want to convince yourself otherwise: “I’m not seeing the data, but imagine if we launched; it’ll take off!” Just like with product, turning on an integration icon doesn’t mean customers will roll in. That’s a big misalignment.

Adi: Hmm interesting. How about business development and commercials—common pitfalls?

Juraj: Not paying enough attention to the soft pieces. You can almost stack-rank partners when you’re prioritizing: talk to ten partners and decide which to build first. It helps to rank across dimensions, and I always include culture alignment. Do you actually like spending time on a call with this person or partner? Or is it constant battle and friction? Could your two companies exist together if you really partner closely? That’s a big one. I’ve ignored red flags and invested in a partnership anyway—didn’t work out, and then you have to make hard calls, maybe sunset the partnership or go the other way.

I'll say that's it. Also, just being transparent with the partner—especially if you're the smaller company in that discussion and you're working with a larger partner. Transparency is key, you know: not truth-hunting, what are the data, what are the things, but also transparency plus also wanting to add value to the partner.
There's—even before you actually launch an integration—so much value that you can give to a partner in the early stages of a conversation like that, and that actually makes a huge, huge difference. So it's not a transactional thing only, where you're meeting to review data, you're meeting to negotiate a contract, then you sign a contract. Even in that span of time you can have so much value to the partner by maybe going the extra mile and sharing a referral to them—sharing that, you know, your customer was asking about their company and send a lead to them. There are many ways you can do that, but it kind of boils down to just the attitude of giving first and then asking, which is a big, big one for me in partnerships because there are just so many conversations you can be having, but ultimately those who stand out are the ones where it's less of a transaction and more of genuine help.

Adi: I love that. And apart from sharing leads or referrals, have you come up with any other interesting ways of adding value to the company or even to the other person on the team?

Juraj: One thing that we've done at Slido in that context was that we would actually invite a potential partner like that—we would invite them to an event that we would be hosting or to a customer meetup; we would invite them as a speaker. It depends who the partner is and whether this actually appeals to them, but it worked as a really good strategy for us, where you are giving them space to share their knowledge. It's really good for a thought-leadership exercise from that point of view, but you're also showing that you care—you care about giving them this spotlight and introducing them to your customer base, you're kind of opening the doors of your company to them. And there’s no reason you need to wait to do something like that as a post-launch co-marketing strategy; those are best done even before you start negotiating contracts or talking about business because they ultimately build trust.

Adi: I love that. Awesome. I’d like to maybe switch gears and zoom out: if you look at partnerships as a function in the whole company, what other functions do you work very closely with?

Juraj: Yeah, pretty much everyone. It's truly a cliché, but partnerships is a very multifaceted function; it's a very cross-functional team by nature. I don't even—when you're writing certain job descriptions or giving feedback—cross-functional collaboration tends to be the buzzword you highlight, or something you get praise on. With partnerships it's really table stakes; there's no other way, essentially. If we don't exist across the organization, there's no point in having a partnerships team.
And yes, this is true for many teams, but I truly believe that if you want to see impact from partnerships, then partnerships need to be embedded across the whole customer journey. So again, recurring impact—meaning you want to be there across the journey. That means—goes back to your original question about the day-to-day—it does vary, because sometimes you're spending a lot of time with marketing, then you're spending time with engineering and product, and then you're spending time diving into lifecycle, then you're spending time with your CSMs, but it really does vary. That's why I'm very bullish on where partnerships sit in the organization; that can have a major influence on these things. I think that's point one if you want to start investing in a partnerships function: go at it with this lens.

Adi: Right. Given that it's so cross-functional, building those relationships internally becomes super important. If we take marketing as an example, how do you, as a partnerships lead, build relationships with the marketing team internally? How do you get them to invest time with you? They could potentially be investing in current pipeline generation—short-term—versus working with you. What advice do you have on how you build that relationship and work hand-in-hand with marketing?

Juraj: Yeah, in partnerships I think there are two sides to your job. One is obviously the external one, but the other—equally full-time—job is the internal marketing, the internal ambassador, the internal voice of the partners that you become toward the rest of your company. It's not always easy, because the understanding of what partnerships are and what the team does will vary across the organization.
At OpenPhone I'm very lucky the whole org is very bought-in and open to this ecosystem-led growth and partnerships, but you're still doing a lot of work around nuances that make sense in your head as the partnerships leader, but not everyone will be at the same level. With marketing—an interesting exercise recently when we were launching our AI agent Sona—if you zoom in, it was really about making sure that through any activity, any marketing tactic for the launch, we're considering the partner. It's nothing wrong; the marketing team will not naturally think of partners as the first thing in terms of audience or someone who can help multiply that launch activity.
For us it was about starting with: can we give early access to our partners to this feature? Can we get feedback from them? We know partners have their own audiences, communities, networks—potential and existing customers. How do we equip partners to market for us? That's the ecosystem play: we don't need to own all the channels; we let the ecosystem do its job. That's mostly enablement. Exercises like that open the eyes of marketing—or other teams—on how we can leverage this ecosystem, this army of enthusiastic partners who care about the company’s success, and help them at the same time.

Adi: And similarly with product or engineering: you started off owning only partnerships at Slido and then got a chance to lead product and look at the company through a new lens. What were some interesting things you learned from that product lens that you now apply to partnerships?

Juraj: Most cross-functional relationships are about empathy. With product it's very felt—understanding the role of a PM, having actually been in a product role. You develop and work on your own product sense. I'm not saying every partnerships leader must have product sense, but for product partnerships, yes. I look at product sense as a skill everyone in a SaaS business needs to some extent. That empathy is something I developed in that role. It comes with rituals I apply in partnerships that may be non-traditional—talking about user research, writing up the spec for a partnership—this product lens. In larger businesses those functions are often separate: a product manager assigned to that area and a partner manager assigned, working together. I believe in a strong product sense plus a generalist partnership person who can dive deeper into the actual product, because ultimately we're not selling contracts; we're building products customers use.

Adi: That makes a lot of sense—the empathy of understanding the PM role, their time stress, how they think about user research, specs, documentation culture—great stuff you can bring into partnerships or any org part.

Switching topics: advice for partnerships leads entering investor or board-level meetings. Any learnings? Expectations you didn’t have? Insights on working with the board?

Juraj: Good question. My background—I’m not a channel-sales partnerships leader; that’s not what I enjoy. If you put me in a very salesy partnership role, the advantage is it’s tightly connected to revenue. The risk in other motions is it becomes flaky: “We believe revenue will come at some point.” It will, and I believe in that. Especially with product partnerships and integrations, I’d advise against over-focusing on revenue. You’re not building an integration purely for short-term revenue gains; you’re building it to improve the whole life-cycle—close new customers, retain existing ones. Revenue follows.

But one thing you can always do—especially with the board or leadership—is connect it to overall revenue goals. At OpenPhone I sit in the revenue org, close to our CEO. Before I joined, the team invested a lot of time to set up reporting and metrics that tie all the way to partners-sourced revenue. Most activities we invest in, we can see the impact on partners-sourced revenue. Ultimately I look at the contribution of partnerships to overall revenue: what percentage of new ARR are partnerships bringing? That’s a really important metric for board conversations. You may not look at it every day, but understand benchmarks for your stage and walk backward from there.

That’s probably the single recommendation: tie to the revenue number, no matter how focused you are day-to-day. Both things can be true—I’m not over-focused on pure revenue daily, but for a board meeting I focus on showing that impact.

Adi:
Awesome. When hiring for your team, how do you evaluate candidates? What skills do you look for and how do you assess them?

Juraj:
At OpenPhone—Series B, ~140 people—we’re a startup. I’m a big fan of small partnerships teams that are well-interconnected. So, in the first role I hired I prioritized a builder persona. Builder goes hand-in-hand with a generalist partnership person who can fold into marketing, product, or whichever life-cycle part we’re working on. Early hires: that’s more important than specific experience, because much work is experimenting with channels and approaches.
We debated whether the first hire should go deep into partner marketing or partner ops; different beliefs around that. I think partner marketing might be next, but builder and generalist were key for me here.

Adi:
Love that. This has been super helpful—thank you for answering all my questions patiently. This was fun. Thank you—I really appreciate your time.

Juraj:
Of course. Thanks, Adi—chat soon.

This incident got me thinking – how could the driver have prevented this? 

What actually makes for a great bus driver?

Over the last one and a half years, I’ve probably taken the bus more than 500 times. I think this qualifies me to comment on what makes a great bus driver. At least from the customer or rider point of view. Here’s my take:

• [Non customers] Before a rider even enters the bus, a great bus driver scans to see if there is anyone running to the bus stop to catch the bus. If they’re not too far away, a great bus driver will wait for them. An average bus driver looks at the stop, sees that there is no one there at the moment and leaves. 

• [Entry greeting] When a rider enters the bus, a great bus driver will cheerfully greet them. “Hello”, “Morning”, or even just a nod and smile. An average driver will be passive and not acknowledge anyone who enters. 

• [Fall prevention] I have seen the best bus drivers look in the rearview mirror if the riders who just boarded are holding on to something before they accelerate. I have also seen some drivers loudly announce “Hold on, bus is moving!” to remind people to be mindful of their balance while the bus accelerates. A great bus driver will do one or both of the above at the very least when he sees older people or people with kids board the bus.

• [Smooth driving] The best drivers also have very smooth acceleration and braking. This not only reduces the likelihood of people falling, but improves the overall experience of the ride. 

• [Crowd management] The best drivers are clear and confident crowd managers. They will assertively ask people to move to the back and make more space for people who want to enter, especially during rush hour. 

• [Special accommodations] I have sometimes seen drivers make special accommodations like letting a passenger get off even when there isn’t a stop. Knowing when to break rules in order to help your customer is an art and great drivers know it.

Personally, the lessons for me from this episode are:

1. Greatness is composed of a million tiny things.

2. You must always be in search of actionable tactics to become better at your work.

3. You must care about your customers a lot and try to put yourself in their shoes as often as possible.

4. You must observe how other people who are very good at their job, do their job. Greatness has many flavours and you will often be blind to the other ways people are good if you have never observed it. 

5. It is often operationally difficult to quantitatively measure greatness. But it is so so easy to see who is really good at their job.

On his early career: He worked for a VC firm called Ventures West. They didn’t do too well, mostly because the VC industry in Canada sucked at the time. He got his true start (Constellation) later in his career in his late 30s.

On work/life balance: Mark studied a bunch of successful business builders, almost none of them had any real work-life balance. If you want to build something great, you need to dedicate a large amount of your time to it. Brought up the Dunbar number – basically states you can only really have ~50 meaningful relationships max. If most of those are people you work with, doesn’t leave much for people outside of work. Makes work/life balance statistically difficult.

His biggest regret: Not spending enough time with his family. Was hard to tell this was going to be a regret while in the midst of his career.

On leverage: 3 forms of leverage: knowledge, people, and capital. Mark says knowledge leverage is actually relatively easy to obtain if you focus in a specific area. People leverage is hard, you need leadership skills. But you want to eventually have all 3.

General business advice for a newcomer: Read a lot, especially business history and business biographies. Mark thinks they should teach way more biz history in schools.

On operating: Experiment frequently in business. The scientific method is the best method for any business.

On mentorship: Finding a good mentor is hard because no one who is successful/smart will have time for a mentee. Find something you can do for them, add value to them somehow. Something they’re genuinely interested in & you just happen to be good at. Bosses can be good mentors.

What would he change if he re-built CSU: Change incentive structure to be focused on organic growth. The current incentive structure caused managers to become acquisitive over everything else. That said, he still mentioned that organic growth is lower IRR on invested capital.

Another thing he’d change if he re-built CSU: Go global sooner, especially large regional platforms outside North America.

Learning from mistakes: Setup a system of iterative improvements in your business. Sooner you can learn and iterate, the better. After each deal, CSU does a post-mortem 1 year in. They discuss and share learnings, and improve process accordingly.

>  Odoo is extremely protective of their culture and they NEVER hire external leaders. They only do internal promotions. Fabien: “We are a startup that grew super fast. So we have a culture that is very strong. One way to keep the culture alive is to avoid having these external managers and team leaders coming with their habits. They’re probably good habits but they won’t be suited to our environment.”

> They have over 5000 employees globally, but the average employee is … only 26 years old! Fabien believes that young people are more capable than they’re given credit for and that they can be coached to become very good at their job. 

> People retention is key to growing your business. The productivity of an employee who has stayed for 4-5 years is more than double of what they did in their first or second year. So keeping people in the company for longer is extremely important.

> Hiring in tier 2 cities is a great hack for better employee retention. Fabien says about their Buffalo office: “… when you are next to Google and Microsoft and Apple. How can you get the best people with that? And then you have a higher turnover than in other cities. In Buffalo, we have no issue. Nobody is leaving. People are happy. They have a very high salary for the area. Retention is very good.”

> Odoo’s geographical expansion strategy is peculiar. They first find the right person to lead a new office and then basically set up the office wherever that person wants to go. Again, the emphasis is on the right person and culture fit more than anything. 

> Team leaders at Odoo are not there to manage people. Their main goal is coaching and helping the team become more productive. Fabien: “What I expect from a team leader is to just make your team become better. That’s the only objective I have for a team leader. And so in order to do that, you have to be the best of the team. There is no way you can make a team of developers become a better developer if you are not the best developer of the team yourself.” 

> Fabien thinks KPIs are overrated, especially in product and engineering: “When you work with people, you know who’s good or not. You don’t need to put a KPI.” 

He discusses a story of how in the US office, some of the team members were struggling with a few consulting projects. So he got his best guy from Belgium, where the company is headquartered, to come in and help. The then Director in the US was someone who was insistent that the best way to manage the team was to have KPIs and measure individuals based on their performance. “So, I couldn’t convince him to drop his KPIs, and so I waited to see what happened. He did his KPI, and after three months, the guy who had the worst KPIs was actually the top expert I got from Belgium to deliver all the projects. And it was obvious – it was obvious for the whole team that this guy was the best, yet on the KPIs, he was the worst. It’s just that we gave him the worst projects.”

> On how to recruit young people: “We don’t look at resumes. We assess them on the core job. So if a developer, we’ll ask him to develop. A salesperson, we’ll ask him to do a demo and pitch the product, just that. We also do an IQ test, and it’s the second best predictive KPI on the performance of the person.”

Watch the whole episode here:

Effective Outbound Strategy

In the early days of cold outbound, it’s tempting to buy a sequencing tool and blast emails to potential customers – but this is not a good idea. Instead, Brex’s approach was more thoughtful:

• Start with your network: Brex began with first-degree LinkedIn connections, leveraged the YC network, and sought warm introductions

• Creative outbound programs:

  • Champagne Campaign: Sending champagne and handwritten notes to very targeted companies in San Francisco where their ICP was located

  • Billboard strategy: Placing billboards throughout SF and sending targeted emails to companies in the billboard radius – the probability of someone replying after seeing the billboard was much higher because they already knew of Brex

The fundamental philosophy is reaching out to companies who have some engagement with your company – for example, they visited your website or downloaded a whitepaper. Avoid blasting emails into the ether.

SDR Hiring: Finding the Right Talent

The SDR organization is a fantastic pipeline for future leaders and high-performer ICs in the company. However, SDR will always be the most challenging role to hire for. Unlike AEs and Manager roles where you have past performance data and references, there isn’t much for SDRs who are typically fresh out of college.

Key traits to look for:

• Coachability

• Ability to navigate change and failure

• Organization skills (SDR work is very structured)

• Hunger and motivation

Ashley’s tips for who makes good SDRs:

• College athletes (high on teamwork, time management, coachability)

• Students from “work hard, play hard” schools (UCSB, Chico State)

• Folks with fraternity/sorority and other extracurricular backgrounds

• Students who worked through college (who had to balance school and work)

• Ex-recruiters (very transferable skills)

Interview process tips:

• Hiring manager phone screen

• Panel interviews with specific questions testing for key traits

• Can they drive the conversation? That’s a good indicator they can do that in sales

Setting SDRs Up for Success

Junior employees are coming from decades spent in structured educational environments. Help them transition to their first job by creating structure:

• Be clear about what a successful day looks like – block off chunks of time in their calendars for calls, account scrubbing, and sequencing

• Don’t make it a checklist like “you need to do 70 dials a day” – this will get you exactly that much and no more

• Instead, create an SDR-sales equation and explain it: “To get A customers, we need B meetings booked, which means C accounts need to go into a sequence…” Get the reps to buy into this logic

Balance structure and autonomy: in the early days when the org is still learning, provide more autonomy. Tell reps, “Here is what has worked for us, but please feel free to try new things.”

Outbound efforts today show up tomorrow – so it can get emotionally high and low for reps. Make sure to celebrate the small wins every day. Celebrate the inputs and the process.

Performance Metrics

• In the early days, use Sales Qualified Opportunities (SQOs)

• It’s important to give SDRs enough direction on where to hunt for them to be successful

• Work closely with data and sales ops to get account scoring right (Brex used Alexa ranking to gauge website traffic as an extremely useful indicator)

• Later stage, moving to a revenue-based quota even for the SDR team can dramatically increase output (3x at Brex) – but this will only be successful when deal cycles are short and the team has insight on what works

Scaling Considerations

As you grow your SDR organization, pay attention to:

• Per-rep production as the first indicator (are they consistently hitting quota?)

• Account penetration metrics (accounts to stage 1, stage 1 to stage 2)

• Ramp time

• Optimal SDR:Manager ratio (8:1 at Rippling) – helps with coaching especially in remote work

• TAM limitations – more SDRs doesn’t necessarily mean more opportunities if you’re saturating your market

SDR Career Progression

The SDR organization truly is a talent pipeline:

• The best SDRs go on to become top-performing AEs

• They become future managers and leaders

• They can transition to marketing, CS, recruiting, etc.

Hiring from your SDR team results in lower risk than external hires, as you already know their capabilities and cultural fit.

A culture related tactic that failed was when they started having an empty seat in every meeting for a customer. The idea was that the customer should have a seat at the table in every meeting. But within about 5 seconds of the meeting starting, the team ignored the empty seat.  Then Bryan had the brilliant idea of getting a large doll and putting it in that empty seat to be the voice of customer.  Bryan says: “Also didn’t work and made me look like an idiot.”

Things that worked (in rough order of impact)

• [Very high impact] Sales: HubSpot decided to comp the sales team based on retained customers instead of simply on new customers who signed up. While internally an unpopular decision, this changed the incentives of the sales team to avoid bringing in customers who were likely to churn in the initial few months. New customers dropped initially, but the cohort of customers who did join were much healthier and had better retention. Bryan: “Of all the changes… this might have been the most important one to move the needle.”

• [Medium-high impact] Customer Success: Hubspot added a CS team whose job was to focus exclusively on the customer post the sale and implementation and help with any issues they face. This team was comped on retention rates and eventually a usage stat. Bryan: “This caused them to really think about it and really put pressure on the reps who were signing up crappy deals to clean up their act.  This wasn’t cheap, but it worked very well.”

• [Medium-high impact] R&D: The company initially spent too much on Sales and Marketing versus R&D. They changed this and retention improved when the product got stronger.

• [Medium impact] Ops: HubSpot changed the metrics they used to evaluate the performance of the leadership team. Specifically, they added customer NPS and net retention to the bonus calculation for the entire leadership team. Bryan says: “ I “think” this worked.  If nothing else, it definitely sent a message that we were serious about changing the culture.” The other two important analyses they started doing regularly was cohort analysis on retention/ usage and looking at net new ARR as kind of a north star. Bryan says it took them way too long to realize the importance of these metrics.

• [Medium impact]Culture: HubSpot made several changes to shift from employee-first to customer-first. They restructured management team meeting agendas by reducing discussions about employee issues (culture, benefits, recruiting) and replacing them with customer metrics (NPS, usage). They also added customer panels in all management and board meetings, with customers coached to give the cold, hard truth about their experiences. The customer panels brought clarity to the organization and eventually connected everyone from board members to engineering interns with the customer voice.

• [Medium impact] Product: Initially, HubSpot’s core product was focused on customers looking to improve their top of the funnel. But after looking at product analytics data they found that customers who were using their other product modules which were about middle of the funnel, were much stickier even though that part of the product was half-baked at best. Armed with this new data, they shifted resources from TOFU to MOFU and made some progress. They acquired Performable to help strengthen the MOFU product. 

• [Medium impact]Channel: HubSpot had both direct and partner channels to market, each representing about 50% of their business. Bryan: “One intrepid ops person did some analysis and found out that the retention rates for the 50% of customers closed by partners was better than the retention rates for customers closed directly.” In more recent years, HubSpot developed effective strategies by creating strong incentives for direct reps to bring in partners and hand direct accounts to partners for setup and service.

• [Medium-low impact] Pricing: An investor suggested that they add another axis of pricing, so they introduced pricing based on the number of contacts you have on HubSpot. The larger a customer’s database of contacts would grow, the more they would pay, but the less they would pay per contact.  This change largely worked and aligned incentives relatively with customers.

• [unclear impact] Marketing:  Hubspot had three customer personas – Owner Ollie (small business owner, luddite), Marketer Mary (first full time marketing hire at a 20 person company, mid tech skills), and Internet Ian (tech founder, geek). While they ruled out Internet Ian early on, there was a lot of back and forth about whether they should focus on Mary Marketer or Owner Ollie. The team decided to focus on the Mary Marketer persona as it had better retention and that they would not serve Owner Ollie or at least not build for that persona. Dharmesh (the other co-founder of HubSpot) often reminds Brian that Shopify focused on Owner Ollies and still made it big.

Customer Success in SMB 

CS for SMB is unique in a few ways. First, the average CSM handles a large volume of accounts, possibly 100 or even more. Second, the variation between accounts in a CSM’s portfolios increases over time. This happens because SMB software companies naturally tend to move upmarket as the product evolves and also because some customers grow faster than others. This means that there is almost always a meaningful variation in the account size/ revenue contribution and product needs between accounts in each CSM’s portfolio. 

The above chart is a rough visual representation of this problem for the CS team. Each blue dot represents 5 customers. In year 1, CSMs have customers in their portfolio which are roughly the same ACV. But by year 3, the variation in ACV is much much higher.

This volume coupled with diversity in customers leads to a challenging environment for CSMs. Add to  this, the fact that the smallest customers are the loudest and command a disproportionate amount of the team’s time. Teams are forever in firefighting mode, with no time left for proactive and strategic work that can actually make a dent in the company’s P&L. 

How to bring focus and make time for strategic work?

Firefighting takes away time from activities that can actually get you better retention and higher expansion revenue. The most common solution to the firefighting problem is to bring in “data-driven playbooks” for CS using a software tool that is supposed to magically solve all problems. But as always, the devil is in the details of the design choices you make while executing this new way of doing CS. 

In my experience, there are four pitfalls of making CS data driven 

• Pitfall 1: Using too many indicators to create a complex customer health score

• Pitfall 2: Premature automation 

• Pitfall 3: Not making it dead simple for the team to do their work

• Pitfall 4: Ignoring project management

Decide on a high signal metric

The first step in designing a data-driven engine for your CS team is identifying the right set of accounts for your CS team. Choose 1-2 high signal metrics that you can use to narrow down the set of accounts that are at risk of churning (accounts for retention) and that are growing more than expected (accounts for expansion). Beware of Pitfall 1 which is using too many indicators to create a complex customer health score. These scores typically have a lot of noise and are not great to actually identify accounts at risk or accounts which are promising for upsells and cross sells. More about this lesson on avoiding composite metrics here.

At JustCall I used MRR as the single metric to base all calculations on. It included both license and usage MRR, and theoretically had a strong enough correlation with both potential churn and expansion. We knew that customers who were at risk of churning typically reduced usage (calls and SMS) and more importantly, gradually reduced their subscription licenses before deciding to churn. And vice-versa, we knew anecdotally that customers who bought more licenses and/or increased usage were more likely to entertain our pitch to move to premium or buy add-ons. 

Choose the appropriate frequency, thresholds and account tiers

Next, the goal was to make three design choices. First – at what frequency should I measure MRR movements? Should we look at weekly, fortnightly, or monthly movements? Ideally, we want to look at movements in real time but they are not often meaningful movements that warrant any action from us. Second – what should be the threshold for a movement (increase or decrease) to qualify as a signal? For example, a 1% decrease in MRR is not really a concern, whereas a 40% decline month on month would definitely be worth investigating. Finally, for which accounts do you want to run this exercise on? Do you want to exclusively focus on your tier 1 accounts (highest value accounts), or do you also want to include tier 2 and 3 accounts which are lower MRR.

With the help of a dashboard made by the data team, I downloaded weekly, fortnightly, and monthly movements in MRR in all our accounts. After multiple iterations, I narrowed down on fortnightly frequency with a threshold of 30% MRR movement, for all tier 1 and tier 2 accounts as the right design choice for this program. For each CSM, these filters mostly surfaced accounts which were genuinely worth working on. 

Don’t automate too soon

Here, it is worth highlighting Pitfall 2 which is premature automation inside the CS org. If you look at CS software like Gainsight, Churnzero and the like, almost all of them have a product module which allows you to set a frequency and threshold of movement for a metric of your choice. The problem with using software to automate these alerts is that you really need to iterate and play around with multiple thresholds to see what makes sense for your product and customer base. It is not uncommon to see CSM inboxes littered with hundreds of these alerts which makes it extremely difficult for a CSM to actually investigate all the accounts rendering the whole automation useless. This is the idea behind Pitfall 2 – premature automation. During setup, I strongly recommend working with customer data manually on google sheets and getting a feel for whether the filters and thresholds you have used make sense for your team. 

Make it dead simple for the team

Every two weeks, I would make a spreadsheet with all accounts which met the filters defined above : tier 1 and 2 accounts which had a 30% increase or decrease in MRR over the previous two weeks. 

Then, I would add relevant additional information from the CRM/CS tool for these accounts so that everyone had the most amount of context. For example, the age of the account, name of onboarding manager, and previous comments from CSM. Finally, I would split the sheet into multiple tabs – one tab for each CSM with a list of accounts from their portfolio. The output looked something like this: 

The screenshot above clearly charts out the accounts that Toby, a CSM, should focus on. The customers are listed in descending order of $ change in MRR. MRR increases are in green and decreases in red. In the other tabs of this spreadsheet, there are a similar set of accounts for the other CSMs in the team – Yamini, Peter, and Josh.

This view of accounts is essentially Toby’s to-do list for the next couple of weeks. He would investigate each account to understand what is actually happening. Are they changing their usage? If yes, why? Are they adding or removing user licenses? For the accounts in red, he would look at their support tickets, prior communications and try to alleviate any problems the customer would be facing. The accounts in green (especially those still on Standard plan) would be good candidates for a potential expansion opportunity. 

Somewhat ironically, running this program out of a google sheet spreadsheet with color coded list of accounts made it super simple for CSMs to figure out what they should focus on and allowed us to avoid Pitfall 3 which is not making it dead simple for the team to do their work.In a world of distractions, it provided a simple to-do list for CSMs for the next 2 weeks which consisted exclusively of strategic and proactive jobs to be done. As opposed to working out of clunky software needing hundreds of clicks and with potential distractions in every part of the software, the spreadsheet is simple and clean. Importantly, it saved the team multiple hours of account planning and enabled them to focus on truly helping the customer. 

Further, the ritual of the fortnightly call with all CSMs, where we started with previous week’s action items and ended with the next steps for the new set of accounts brought an operating rhythm to the team. This is how you can navigate Pitfall 4, by keeping a tight project management schedule around your team’s work ensuring the most important events in the most important customers are under control. 

Controlling inputs is the first step to controlling outcomes

Following these steps doesn’t automatically guarantee an impact on retention and expansion. Much of that is still driven by the quality of your product and the industry you sell to. But setting an operating rhythm in CS that is actually based on customer data will definitely help you feel more in control of your team’s activities and inputs. Doing it consistently will pave the path to the outcomes that are so elusive in SMB SaaS – a world class net dollar retention. 

Lesson 1: Do NOT measure your customers’ health using a composite score

This is one of my pet peeves especially in Customer Success orgs. If you look at the leading software that are used by CS teams, a very important module is some version of a ‘Customer Health Score’. It’s typically made up of a slew of metrics including number of logins, product usage, account growth, customer support tickets, product surveys, renewal and expansion history, and

The problem with having an “exhaustive list” to make up a customer’s health score is that they become incredibly noisy. They are probably okay for reporting at an overall customer base level to see changes over time, but they are HORRIBLE at providing insight into what a team member should focus on.

Jessica mentions that they had a similar experience at Doordash with their Merchant Health Score. They calculated it as a composite metric to see the likelihood of the merchant being on the platform and getting orders.

“It included many things like the number of orders, number of active hours, whether the merchant had a full menu listed, what % of their SKUs had images, and many other metrics. All of these factors were then given some weights and then a comprehensive Merchant Health Score was created. Someone found that one of the merchants had a score of 0.35! Ummm, so what does that even mean?|

It was so hard to understand what it was and how to move it, that it became meaningless. “

The lesson for BizOps teams is basically this: avoid composite metrics for important things like customer retention. A simple metric that’s intuitive to understand is more valuable than a perfect, comprehensive one.

If you do want to use a few different metrics, figure out 2 or 3 factors that are most important to the health of the customer and just focus on those before moving on to the next ones. This simplification will make your org move faster and in the right direction.

Lesson 2: Every initiative should be measured in a common currency

Businesses must choose which projects to pursue from many options. For instance, to grow DoorDash, should the focus be on lowering pricing or lowering delivery times or signing more restaurants or onboarding more dashers (delivery persons) or should they make improvements in the login flow?

It’s very hard to decide. By having a universal impact metric, DoorDash actually is able to compare the business impact of each potential project and decide to allocate resources accordingly. For DoorDash, this universal currency is Gross Order Value (GOV). So they run mini experiments, and quantify how each project is likely to have an impact on GOV and then decide on which ones to focus on in the next few months.

Lesson 3: Focus on edge-cases and hidden customer experiences

Most metrics are designed as averages. But this often means that edge cases are left out of the focus of the team. For example, DoorDash has orders which are never delivered. A very small % of consumers ever face this but when they do, it’s absolutely the worst experience for them, increasing their likelihood of churn dramatically. They are also very expensive for DoorDash and severely impact the unit economics. If we only looked at traditional “average based” metrics like average time to delivery, they just wouldn’t turn up. So DoorDash has a metric called Never Delivered defined as the % of orders that were never delivered, and there are teams both in product and ops whose sole goal is to eliminate this.

Another interesting point was that there are often customer experiences that are hidden from us. For instance, login errors. There are users who are probably stuck in the login screen and never even enter the product to place an order. These don’t show up in the data but it’s important to be aware of them and solve them proactively.

See the entire podcast here:

Sharechat, another Indian company, has been the pioneer of social network startups in India. In 2015, Sharechat came to India Quotient’s office with an idea. There was a lot of social behavior happening on the web and on Facebook/Whatsapp groups but those platforms weren’t really conducive for it. Rediff.com, for example, hosted a live cricket scoreboard. On that page, conversations were happening among cricket fans despite the fact that the scoreboard would get refreshed every 30 seconds or so. Similarly, there were Facebook posts with photos of Sachin Tendulkar or Salman Khan where thousands of people were commenting with their phone numbers to be added onto a fan Whatsapp group. Once added to the group, there was a constant bombardment of messages with no real conversations happening.

Sharechat’s vision was to build a social network that allowed these users to meet like-minded people, and meaningfully converse and share content with each other in their local languages. Today, Sharechat has 160 million monthly active users and has raised a total of $262 million in funding.

This is lesson number one for anyone looking to build a social company. Identify a large group of users who are interacting with each other (possibly suboptimally), and provide a convenient platform that amplifies and streamlines existing behavior.

Lesson number two is to iterate and iterate fast. Sharechat, for example, replicated what was happening on millions of Whatsapp groups and on web portals onto a mobile platform. Then, they realized that the sheer volume of people entering and leaving groups meant that meaningful conversations couldn’t take place. So, they pivoted to a chatbot model where users could simply go to a joke chatbot or a ‘good morning message’ chatbot and get the content they wanted. Again that didn’t yield the results they were looking for. Finally, they switched to a feed format where users could download and directly share content on Whatsapp and that’s when they really saw an explosion in the number of users on the platform. User feedback loops were important in many ways. For example, more than half of all users selected English as their preferred language but these users had very low engagement levels with the app. The team called up these users only to realize that they didn’t really speak English. They were selecting English because it was aspirational and because they trusted English language apps more. Sharechat then did away with English altogether and stuck only with local languages which drastically improved app usage levels among users.

There are a few factors which give VCs the confidence to invest in a social/content company. The most important of them all is the team and this is lesson number three. Ideally, a young and scrappy team with no baggage on how products should be built is best suited. The core skill sets to build a social/content company are product, design and engineering for the backend. If the founding team has one person for each of these functions then they are well positioned to iterate rapidly based on user insights and behavior and achieve a product-market fit. With a seed cheque of a couple of crores, the company should ideally be able to do 2-3 major and few more minor pivots in a span of 12-15 months.

India has 1.3 billion people and upwards of 500 million smartphone users with access to the internet. For many of these users, the internet is basically Whatsapp, Facebook, and YouTube. But, as users mature in their digital journey, there is a strong need for better products that serve their personal and business requirements. There are many more opportunities to build social network products from India for India and the world. For example, a network for farmers. Farmers want to discuss and get solutions for their crop specific issues like pest attacks, find information about prices in the mandi/market from traders, get weather forecasts, and even share selfies of their bountiful harvest with each other. Today, this happens organically on FB and whatsapp groups. Similarly, microfinance took off in India and the world on the back of a strong community-led lending approach. There is perhaps an opportunity to mimic this social network to keep all its benefits while doing this digitally to increase access and reduce costs drastically. Is there a LinkedIn equivalent for Indian SME owners waiting to be built? Most definitely.

The excitement for social and content startups from India continues to remain high.

This piece is inspired by conversations with Ankush Sachdeva of Sharechat and Madhukar Sinha of India Quotient.

The Twitter Filter is comprised of two items:
A. Is the founder on Twitter?
B. Are they sharing their thoughts/ views in public?

A. Is the founder on Twitter?

• Selection effect: My own opinion is that people who are on twitter are more curious, more hungry to learn from the best, and friendlier in general than people who are not on Twitter.

• The role of a founder is to be the Chief Evangelizing Officer for the company. They need to be hyping up their company all the time- to customers, investors, partners, potential employees. This is especially true for consumer focused companies where brand matters a ton. If they’re not doing it, then it is a red flag.

B. Are they sharing their thoughts/ views in public?

The best founders are doing this. Go and see all their tweets, likes and replies in their profile. By doing this you get to see how the founder thinks: what is their vision for their company? What interests and excites them? What is their life outside work like? Use all the info to see if that aligns with your own values and interests. This is sort of like a replacement for Glassdoor reviews.

You can also replace ‘founder’ with ‘person you will work with’ and the same considerations should largely apply.

Of course, there will be many instances where you can find good opportunities that don’t conform to this heuristic. But, in a vast and overwhelming world with lots of opportunities and huge information asymmetry, The Twitter Filter is a great way to narrow down and select the next place/ person you want to work for.

Photo by Joshua Hoehne on Unsplash

AgriTech investments in India in 2020 were worth $1.1 Billion. In 2013 this figure was only $89 Million. In an economy that contributes to 15% of the gross domestic product and employs close to half of the workforce, AgriTech came as a rather late entrant to mainstream venture funds’ portfolios. Well, better late than never.

Undoubtedly, agriculture poses a massive opportunity. Typically, the sector is segmented using a ‘Farm to Fork’ approach with technology layers (AI/ML, IOT, etc.) added on top. In this piece, we take a fresh approach of looking at Indian Agri with a product lens. This will allow the reader to grasp and appreciate the vastness of the sector, and also get a sense of the startup activity in Indian AgriTech.

The 8Fs of AgriTech investing are Food, Fuel, Fibre, Feed, Forestry, Farm inputs, Financing and Ferry. Let’s look at what each category encompasses and what the past, present and future look like for each space.

Note: We have attempted to give examples of companies that are innovating for the future. It is not an exhaustive list.

Food

This category encompasses everything inside the kitchen and fridge cabinet of a consumer. It includes the following items:

• Fruits and vegetables

• Meat and seafood

• Pulses, Cereals, millets, oil,

• Spices, flowers, medicinal plants

• Dairy, Honey, Algae

Two main types of changes have been happening to these products : how they are produced and in what format.

Category

Past

Present

Future

Startup examples

Meat

Chicken, Mutton

Hygienic, traceable meat

Plant-based meat, Cell-based meat

GoodDOT, ClearMeat

Dairy

Milk, curd, butter

Flavoured milk, ice creams, cheese

Milk with active ingredients, Flavoured ghee

Milk Mantra

Groundnut

Fresh nuts, homemade confectionaries

Peanut butter

Energy bars & Super foods

Yogabar, The Whole Truth

There are 250 other commercial crops that are consumed by Indians. How are they going to be reimagined?

Fuel

There are three types of fuel relevant for agri:

• Non renewable: oil, natural gas, coal, nuclear

• Renewable: Solar, wind, hydro, biofuels, etc.

• Organism based energy: algae, cell-based energy, animals (bullock cart), ethanol (plants)

Category

Past

Present

Future

Startup examples

Fuel

Animal and human based, fossil fuels

Renewable sources- solar, wind, hydro, nuclear, biomass

Plant-based, microorganism -based

JSP Enviro

Today, 80% of the energy generated in the world is through fossil fuels. Given the large size of the market, and potential for impact through plant-based and other clean sources of energy, we feel this sector is severely overlooked.

Fibre

This category largely includes whatever we wear today and what we use to store/protect goods that we consume (packaging).

Currently, there are three forms of fibres in wide use:

• Synthetic: typically made using petrochemicals

• Natural: cotton, jute, banana, pineapple, opium

• Blend of both synthetic and natural fibres

Category

Past

Present

Future

Startup examples

Apparel

Cotton, indigo (colours), wool, silk

Synthetic cotton, wool, silk

Hemp, Banana, Pineapple fibre

BoHeCo

Packaging

Cardboard, wood

Plastic and styrofoam

Biodegradable/ plant-based and / or renewable resource based

Bambrew, Kriya Labs

Bags

Cotton and jute bags

Polythene, leather bags

High strength, water and fire resistant cotton, jute, and hemp bags

LaFabrica Craft

Consumer durables, furnishing, housing- anything that today uses plastic can potentially be displaced by natural materials and fiber.

Fodder/Feed

This category includes all types of feed for livestock, fisheries, sericulture (silk) among others.

Category

Past

Present

Future

Startup examples

Animal feed (poultry, fish, cattle, etc)

Grains, oilcake

Pellets, fish meal

Sustainable protein feed

StringBio, Keetup

Mary McCarthy writes: “45 percent of global greenhouse gas emissions from livestock production are related to feed production and processing. About half of global agricultural land is used for feeding animals, and more than a fifth of wild-caught fish is fed to animals. In many countries, livestock production is accelerating deforestation and biodiversity loss, as well as water scarcity — irrigation of feed crops consumes 12 percent of global groundwater and surface water.” Sustainable methods of production of animal feed are hence a large market opportunity for AgriTech startups.

Forestry

Forestry consists of timber and non-timber forest products (NTFPs). NTFPs include fruits, nuts, medicinal plants, fibre, firewood, resins, honey, etc.

Category

Past

Present

Future

Startup examples

Furnishing

Wooden

Plastic

Paddy straw based alternatives to wood

The Bio Company

Indian forests and the biodiversity hosted by them are under pressure for many reasons, ranging from fuel wood collection, extraction of resources, fodder, wood, and non-timber forest products (NTFPs). The wooden furnishing industry by itself is estimated to be worth $18.46B and is growing at a CAGR of 30%. Clearly, this is yet another sector waiting to be disrupted.

Farm inputs

This category includes anything that goes into growing agricultural products:

• Seeds

• Fertilizers

• Pesticides/ insecticides/ weedicides

• Irrigation systems and monitors

• Farm machineries and equipments

Category

Past

Present

Future

Startup examples

Seeds

Farmers grew their own seeds

HYV seeds

Climate and disease resilient seeds

Tierra Seeds

Farm Tools

Manual tools

Mechanized improvements

IOT, Robotics

Fasal, GRoboMac, Tartansense

Crop protection

Intercropping, natural methods- fire as a trap for insects

Chemical, synthetic inputs

Blended/ sustainable inputs, eg: pheromones, biopesticides which only targets the pest and not the crops

Barrix

Crop nutrition

Farmyard manure or biomass

Generic chemical based products like Urea, Muriate of Potash

Bio-fertilizers and products that provide targeted nutrients

FIB-SOL life science technologies

Agriculture in India is marred by low levels of productivity. One of the reasons for it is because of the lack of adoption of effective farm management practices and high quality inputs. The Agri inputs market and farm management tools market is expected to reach a market size of $1.5B and $3.4B respectively by 2025 per a report by EY.

Finance

Here we include both financing and financial protection (insurance) for farmers.

Category

Past

Present

Future

Startup examples

Farmer financing

Self financing, moneylender

Banks, NBFCs

Consumer financing the farmers, contract farming, digital platforms for lending to farmers

Farmart, Jai Kisan

Crop insurance

Communities covering risk

Government provision and financing of insurance

Digital insurance distribution

Gramcover

As farming increasingly gets digitized, financial institutions will be better positioned to provide financial services like credit and insurance for farming activities in the country.

Ferry

This category includes all logistics from farm to fork including aspects of discovery between a buyer and seller.

Category

Past

Present

Future

Startup examples

First mile transport

Bullock carts

Unorganized shared transport, fossil fuel based vehicles

Tech optimized shared transport, EV-led logistics

Tessol

Trading – grains

Home based storage and bartering

APMC (Agricultural produce market committee) Mandis and private market places

Digital market places

Bijak

Trading – livestock

Trading based on personal networks

Informal middlemen, semi-annual trade fairs

Hyperlocal online platform based trading enabling better prices and quality

Animall

With 1.3 billion consumers, 235 million cultivators and agricultural laborers, and a rapidly growing interest in AgriTech from both entrepreneurs and investors, the future of Indian AgriTech looks more promising now than ever.

Photo by henry perks on Unsplash

As an entrepreneur, you might be wondering “I’m doing everything that an investor wants, but am still unable to raise funds for my business. Am I doing everything correctly? What am I missing?”.

This a common grievance we hear as investors from entrepreneurs and to-be entrepreneurs irrespective of various sizes and stages of a business. Why is this the case? For starters, not all businesses are suitable for generating returns for external investors. And more generally, today there are more businesses than there are funds to invest in them. Typically, less than 10% of all startups in India have gotten funded.

We have split article this into five sections covering the Why, What, Where, When, and Who. All these are influenced by the type of business and the stage of business you are running. For example, your business could be a product (like Fitbit), a service (like Ola), or a combination (like Amazon).On the stage front, you can either be at the stage of idea, prototype/minimum viable product (MVP), market pilot, category leader, or market leader.

The Why

Have you carefully evaluated why you need money for your company? The obvious answer is to grow the company but are you clear on how that will happen? We have seen that sometimes entrepreneurs pitch with an ask of X crores and a split of say 40% for product development, 40% for marketing and sales, and the rest for ops. But when a clarification is sought to understand what they will do with the 40% on marketing, there would be a non-specific reply like “We will use it for online marketing.” Investors like to see clarity of thought. So, it is advantageous to have a strategy of the marketing- who will you hire for the marketing/ branding role, what kind of experience and profile would you look for, why do you prefer online marketing and how much is budgeted for social media ads, how many customers are expected to be acquired with that spend, etc.

Zooming out a little, there are multiple functional aspects of business that the money could be deployed on. It is crucial to be clear on what you expect to spend money on and how much because from the investor’s point of view this would make the ‘Why’ of you’re raising money.

Here are some functions you should keep in mind while thinking about the Why:

Depending on the sector/industry that your company operates in, there may be other costs you need to budget for. For example, healthcare businesses may need to spend on clinical trials, education businesses may need to spend on accreditation / licenses, etc.

Once you have the nitty-gritties of how much you need, for what and how you plan to spend the money figured out, it’s good to also pen down the expected outcomes from each of the spend. For example, with the one crore spent on R&D, you expect that the MVP will be ready in a timespan of 12 months.

The key takeaway for entrepreneurs is this: be clear on what functional aspects you are raising money for and what outcomes you expect to achieve after spending it.

The What

What type of capital are you going to raise? Is it going to be grant, debt funding or equity funding? Each of them caters to different needs of the business and has different risk appetite & return expectations.

Selection on the type of capital should be looked at along with the Why, sector and stage of business. For example, a healthcare company making hardware devices at a development stage may not be suitable for venture capital (VC) funding as the development to commercialization phase is longer than the cycle of investment and delivering returns. VCs typically have a 10 year fund cycle in which both fund deployment and exit needs to be done which would not fit in this time frame. This is why, chances are you’ve heard a venture capitalist say “It’s too early for us to invest”.

More suitable in this case, would be to approach a government funded research grant which typically funds companies in the development phase aiming to take their idea to a prototype. Typically a product development cycle is 3-4 years for a healthcare hardware/device company and the uncertainty in this timeline is also not suitable for a VC. On the other hand, a company developing software can get through the development phase quickly and is more amenable for VC funding vis-a-vis hardware devices. Depending on the sector, it needs to be looked at in a nuanced manner.

More structurally, here are the considerations for you while deciding what kind of funding you should raise

Grant/ Non-dilutive capital

• Any company which is in the development phase that carries an inherent risk of product-solution fit and product-market fit not established should look at grant/ non-dilutive funding. Through this, the entrepreneurs’ personal economic loss will be limited in case the product fails in the development phase.

• Any company which has a superior product/ service which is well established but there are certain segments/ markets that they do not cater due to their unviable nature could also look at grants. There are potential grant givers/ partners who will be interested in developing those markets and encourage these companies to cater to and develop these markets. Example: Considering positive environmental impact, governments across the world gave grants and subsidies to companies to promote solar technologies. Through this example, it is important to note here that grants are not just restricted to early stage impact businesses and nonprofits/civil society.

• Grant money by no means is free money. Though it is non-dilutive in nature, it comes with specific expectations and outcomes from the receiver. If an EdTech company receives a grant from a philanthropic foundation, they will be expected to deliver certain learning outcomes among the children in the school(s).

Equity

• Equity as an asset class is expected to produce an outsized return for investors. The return expectation varies significantly depending on whether the equity lender is an individual, private institution or government. Invariably no one wants to see their investment multiplied less than a safe bank deposit and/ or Government bond.

• The second important element in equity as an asset class is the time frame within which the returns need to be generated. Most of the VC funds, as discussed, are operating in a 10 year time period (of deploying and generating returns) hence businesses that are perceived / can massively expand & generate cash/ increase value in a short-time frame are the ones that end-up getting this money. Example: A standalone retail fashion store which may be popular in a place may be giving over 10% returns to its promoters but when an external equity is infused it comes with an expectation of inorganically expanding it, which the promoter and business may not be ready to do. Hence, the promoter(s) have to weigh their choice of taking equity in their company given the time and return pressure it brings.

Debt

• If the company is cash flow positive

• Minimum revenue

• Networth positive

• With assured paying customers, can even do bill discounting (described below)

If, at this point in time, any of the above types of capital is not right for you, then generating revenue from customers is the ultimate form of funding. This is how traditionally businesses have been built in India and across the world!Key takeaway: think carefully of what a funder expects and what the business is capable of while deciding whether to go for grant, debt, or equity funding.

The Where

This aspect is very closely connected to the What of fundraising. Put simply, here we will discuss where the capital will come from or who the funder will be and some considerations for each.

• Grant

  • 

    Government

  • 

    Multilateral organizations

  • 

    Philanthropy (individual/family office/ organization)

  • 

    Corporate Social Responsibility (CSR) arms

All the above sources of grant capital have their own requirements / expected outcomes depending on the mandates of the funder.

• Equity

  • 

    Friends and family

Friends and family may have expectations of return. Therefore, it is good to set expectations for them at the time of investment both in terms of money returns and the timeline. This means you should clearly explain the downside of the investment.

Also, having this captured through a formal agreement is critical. This will ensure that the relationship doesn’t go sour.

• 

  Angel investors

  • Active angels- angels who, for example, lead strategic partnerships for the company along with the capital they bring in. Essentially, they play a large decision-making role in the company.

  • Passive angels- largely just a capital provider; low touch involvement

Here, it’s recommended to have strong references for the investors. Have they worked with someone you know? How helpful are they in times of distress?

A growing trend is that many angel investors are now being aggregated by angel platforms and Micro VCs.

• 

  VCs

  • Sector-specific investors: e.g. Education focused, FinTech focused, Agri focused

  • Stage-specific : Seed/ Pre-series A, Series A, B, C and so on…

  • Technology-specific: Artificial Intelligence (AI), Machine Learning (ML), Software as a Service (SAAS)

  • Geography Specific: Continent focussed (Asia), Country Focussed (India), Emerging market (South & South East Asia)

  • Special Case focused funds: Social impact, Critical infrastructure

VCs can be one or a combination of the above. VCs typical cheque size can range from $100k (pre-seed/seed stage VCs) to around $20M(growth stage).

• 

  Private Equity

  • Growth: these funds acquire minority stakes in growing, high potential companies.

  • Leveraged buy-out: LBO funds typically acquire controlling stakes of mature, cash-flow-stable companies. They do this partly with their own money and partly by borrowing debt from another institution (hence the leverage).

Private equity funds typically invest upwards $20M in mature businesses. The parameters that are evaluated by PEs are largely if the company is profitable and if can potentially become a listed company.

• 

  IPO

  • SME (see eligibility criteria here)

  • Regular BSE/NSE

• 

  Debt

  • Banks: The risk appetite for banks is low compared to that of equity financiers. Hence, their return expectations (i.e. your cost of capital) is also low. A majority of businesses who borrow are reasonably established in that they will have positive cash flows to service interest and also assets to pledge as collateral. Banks are also sometimes constrained by giving out debt to businesses around their nearest branch/ circle of servicing. However, there are special schemes like Credit Guarantee Fund Trust for Micro and Small Enterprises (CGT-SME) through which banks give collateral-free loans. Of late, there are banks which have initiated start-up banking through special branches to increase their lending to new businesses. Typically, the interest rate is in the range of 7% to 15%.

  • Non-Banking Financial Company (NBFC): The risk appetite is slightly higher than a bank hence cost of borrowing is also higher. They offer specialized financing products like bill discounting. A company may have received orders from a credible customer and they may not have sufficient working capital to fulfill it. Based on the bill amount, NBFC gives a short-term credit to fulfill it. Some of these customers who are receiving a bill discounting product need not be profitable hence they are different from a bank and its customers. Typically, the interest rate is in the range of 15% to 23%.

  • Venture Debt: This is an emerging asset class. As the name suggests, it is given to companies which have an institutional equity investor(s) and it is growing rapidly. Returns to venture debt providers are capital and interest rate payment and a small portion through equity when they raise the next round of equity funding. Promoters and companies enjoy the benefit of not diluting their equity for want of working capital in their business and interest rate is low when compared to an NBFC. Typically, it comes between Series A and D. Promoters, therefore delay giving away equity too soon for capital needed.Special Cases: There are new types of capital emerging which are a blend of some of these. For example, crowdsourcing platforms where a business can showcase their innovative product before beginning manufacturing at scale. If it interests the audience, businesses can avail capital through it either as debt from its investors or as order advance for shipping their product to the interested customers.

Key takeaway: within each class of funders, there are multiple types of funders. Approach the right type of funder depending on the stage and type of business you have.

The When

A minimum of 6-9 months from the time of taking the decision of going ahead with the process to getting the money in the bank. In some cases, like a friends and family round or angel round, the timelines can be shorter. Here, it’s recommended that enough money is raised for the next 12-18 months at least, so that you can focus efforts on running the business itself, rather than on fundraising.

The timeline also depends on the readiness of the company for diligence by external investors & borrowers. Be it equity, grant or debt providers, they will do diligence on various aspects like business, financial and legal before taking a decision on lending/ investing. Faster the turnaround of companies when investors/ lenders seek these info and data (on legal, business & finance), faster the decision to lend or invest.

The Who?

Who can help you in the capital raising process? It is a specialized job and it’s important to invest time and money to achieve the desired outcome.

Mentors/Advisors who have gone through fund-raising process themselves or have supported it in the past

Incubators/Accelerators

Investment Bankers

Investment Platforms

Lawyers/CAs

It is recommended to seek advice from professionals as mistakes in structuring the deal can turn out to be very costly for the company. For example, let’s say a company gives upwards of 35% equity in the initial angel round itself. When VCs look to get a 15-20% stake in the company in the subsequent round, promoters already would have become a minority. Giving away too much too early would mean that the promoters would lose most of the control and incentives (skin in the game) in the company too soon. In this case, a right advisor would have benchmarked the round according to market standards and structured the deal.

That’s all folks!

If you’re looking for support during your fundraising process, please feel free to reach out to us on our emails below- we’re happy to guide and advise you.

About the Authors

A B Chakravarthy is a seasoned venture capital professional with over a decade of experience in emerging markets in sectors like agri, energy, skills, waste management, ICT, health, water & sanitation. He can be reached through abcmonarch@gmail.com

Aditya Jahagirdar works in the investment team of Ankur Capital, an early stage VC fund focusing on the next billion markets. He can be reached at aditya.jgr@gmail.com

Views expressed here are personal. Readers’ discretion is advised.

The wondrous thing here is that as a business, Khatabook has not even made a single rupee of sales!

The high finance gurus who have pumped in so much money into the company had no profit and loss statement, balance sheet, or cash flow statement to judge the operational and financial potential of the company. Instead, the investment decision was made largely on the basis of how rapidly the company was able to reach users (potential customers) and engage with them.

Instead of looking for growth in revenues, the investors looked at the growth in the number of downloads of the app, monthly, weekly and daily active users among other app metrics.

Instead of looking at financial ratios like net profit margins and operating efficiency ratio, the investors looked at the DAU by MAU ratio to evaluate how often users were actually coming back to use the app.

Of course, the ultimate goal of any business is to make money and Khatabook could potentially leverage their large merchant base to offer other financial services like credit. But ultimately, the operations team is essentially going to be the tech team.

Today, the Khatabook app is used by over 12 lakh small retailers every day. The company managed to achieve this scale with a grand total of …15 software engineers! Think of the alternative: how many thousands of people would be needed to be employed if Khatabook were a physical widget that was being sold (or even given away for free) to retailers in the country? Even more striking is the speed at which this was done. The app was conceptualized in 2016. So, all this in less than 4 years.

The digitization wave is here, led by smartphone penetration and cheap internet.

This means that distribution of products and services, and hence, operations of companies will fundamentally change. The traditional business models of buying raw material, making things and selling them above cost of manufacturing are going to be disrupted.

The top five most valuable companies in the world (Apple, Alphabet, Microsoft, Amazon, Facebook) are all tech or tech-enabled companies. Similarly, going forward, technology or digital companies are going to capture a significant share of market cap in India. They are going to be massive businesses which will serve many millions of people digitally.

I can’t wait for the day when class 12 commerce students will be yawning when their Business Studies teacher will be lecturing them about the theories of DAU by MAU ratios and why retaining an existing user is a better growth strategy than acquiring new users.

The future is exciting and technology is magic!

Submit a form.

Reposting the article here.

FB – Jio platform has 4 core aspects to it: Jio telecom rights – Distribution capability, FB – Tech capability, Reliance – Retail capability and WhatsApp – Reach, loyal user base & payment capabilities. However, the entities involved are still only 2 (FB and Reliance) with mostly centralized decision making structures reducing the complexity in synchronising the various moving pieces of this platform.

Now, replicating this strategy is hard and needs all these capabilities to come together. Clearly there is no immediate name which comes to mind, hence a congregation of 3 or 4 similar players will have to come together which most likely might result in some efficiency loss or even downright failure of the project. But is still worth trying.

For example, with rumours of Google putting money in Vodafone Idea, at least 2 of the 4 ingredients are addressed (telecom rights, tech competence), Google Pay can counter WhatsApp Pay but you still need good retail coverage. A strong communications platform can be a huge plus but the strategy can be executed without it as well.

In this post, I argue that Big Tech should seriously consider investing in India telcos even if the business strategy may be hazier than the FB-Jio model at the moment. Here’s why:

1. Telecom is the biggest strategic asset in a country like India where smartphones are emerging as the most powerful distribution channel for certain high volume and value products such as Fintech, EdTech, Content, Media etc. You can’t sit on the sidelines and let a big market like India go away especially since these big tech companies also lost China in the last 2 decades. I wouldn’t be surprised if the next election will be fought on the promise of a free smartphone for everyone!

2. Signalling a deep commitment to Indian markets early is important and the effects can be of significant consequence. It is most likely going to be a long drawn competitive scenario played out in phases over the next two odd decades. In such a scenario the first mover can consolidate market monopolising tactics if there is no imminent threat with sufficient credibility and reserve firepower to it. Early signalling can affect a lot of change in sequential moves and market evolution.

3. Cost of the call option at $100Mn (5% stake in Vodafone Idea) or even $1Bn is not too high compared to the cost of the alternative i.e having less or no say in India’s emerging platform play. Cash reserve positions of five largest tech companies as of early 2020 (approximate figures): Apple $150Bn, Microsoft $135Bn, Alphabet (Google) $120Bn, Amazon $50Bn, FB $50Bn, is huge. Just to reiterate, that’s approximately 18-20% of India’s GDP. Deploying such large quantum of money consistently in high NPV projects was already hard but has become even harder now (a long drawn global recession is the most likely scenario post Covid). Very few countries/geographies such as India offer sound business opportunities both domestically and as a gateway to SE Asia – home to 25% (India and SE Asia combined) of the world’s population. People are seeking upward social mobility and consumption patterns are evolving.

4. Conglomerate diversification has always been a growth strategy for thriving in the long term (Ex:3M, GE, Tata, Berkshire Hathaway etc) . The current scenario offers Big Tech a great opportunity to diversify and diversify big, planting seeds for growth over the next few decades.

So then, what is the biggest risk?

In my opinion the biggest risk is of Vodafone Idea not surviving the current market pressure from Airtel and Jio. Current user base of Vodafone Idea at 350mn is a very strong number but fast depleting according to reports. They have an outstanding AGR due of approximately INR 55,000 cr+ ($7.5Bn) while Jio has no dues to pay and Airtel has around INR 25,000 cr ($3.5 Bn) to be paid.

This has a few implications for this deal:

Firstly, from a business perspective – investor firms (hypothetically, let’s say Google) should be okay in paying money to clear off the dues and propping up Vodafone Idea as a significant 3rd player in the market.

Airtel and Vodafone-Idea have been pleading to the government for reducing the AGR dues, some movements have happened but no significant relief has been offered. Keep in mind Jio has no dues and hence no need to join this cause, which means there is no united voice from telecom players (largest emerging player Jio doesn’t care). A large company investing in Vodafone Idea is only going to exacerbate the problem since the government will view it as an opportunity to recover the full amount (government is in dire need of it from any and all sources) and the probability of reduction in AGR dues thus becomes close to zero.

Second, $100Mn (quoted amount in Google – Vodafone Idea deal) doesn’t appear meaningful enough to save Vodafone Idea, hence the amount should be increased or more private equity investors should join the deal subsequently at higher valuations providing long term comfort to the company. Precedence of private equity joining the Jio deal is already set and the players who did not participate in the Jio deal would be looking for an opportunity; someone will have to lead the way and show full commitment.

To conclude, big tech firms should use the current market dynamics to invest in Vodafone Idea with strong reserves for subsequent infusions as increasing capital immediately might not be possible at current market cap for Vodafone Idea. But even more important will be the market commentary post deal to show extreme confidence in their strategy and commitment. Half hearted measures would not suffice in taking on a refined strategy of FB, Jio and the suite of PE investors.

Image credits: Business Today

Here’s his take on two different ways of looking at friendship and why one is better than the other:

When a good friend hurts your feelings, what do you do? I normally chalk it up to miscommunication, and silently forgive them in my heart. But I seem to be in a minority here. I often see friends grow apart over the tiniest of slights: A says the wrong thing to B, B tries to get back at A somehow, A wonders what B’s problem is… and a trivial incident spirals out of control.

As far as I can tell, the underlying critical difference between me and people who lose their friends is that I judge people as stocks, while they judge them as flows. When a friend hurts my feelings, it’s almost always trivial compared to all the joy they’ve brought me. So why would I get upset at someone who, as a package, is still a great deal? In contrast, many other people focus on flows; their friends are just one faux pas away from getting purged.

On the surface, admittedly, the flow approach has a lot going for it. Won’t people treat you better if you charge a high price for bad treatment? And if a friend knows that he’s got a huge emotional bank account with you, isn’t that an invitation to abuse?

On reflection, though, I think that the stock approach to friendship is vastly better than the flow approach.

The first and biggest reason: Misunderstandings between friends are much more common than betrayal. The flow approach raises the price of betrayal, but it tends to amplify misunderstandings. The stock approach, in contrast, extinguishes the fires of misunderstanding before they can spread.

The second reason and smaller reason: The stock approach gives better incentives for building long-term relationships. If your friend takes a flow approach, you can do him a long series of favors, and still get purged overnight. So what’s the point of amassing goodwill when you can suddenly lose it all? In contrast, if your friend takes a stock approach, you don’t have to worry about being “expropriated,” because your friend won’t forget all that you’ve done for him.

I have lost at least one friend because I looked at friendship as a flow model. If only someone would have told me this before!

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In the meantime, tell your friends!

For the startup and investing world, the parallel that can be drawn from the question is simply- what valuable company is nobody building?

Zero to One is written to be a short and easy read but is packed with insights. Thiel walks us through his view of the world, and what the future holds, by using anecdotes from his personal journey of building PayPal and Palantir, and investing in startups through Founders Fund.

So, what exactly does Zero to One refer to? According to Thiel, there are two models of progress in the world. A 1 to n (horizontal) progress which refers to incremental changes or taking something and building more of it. On the other hand, 0 to 1 refers (vertical) progress involves building something new, something that no one has ever done before.

“If you take one typewriter and build 100, you have made horizontal progress. If you have a typewriter and build a word processor, you have made vertical progress.”

Thiel advises people to eschew competition and instead aim to build creative monopolies. Competition and rivalry leads us to overemphasize old opportunities and simply copy what has worked in the past.  Further, businesses that are in highly competitive markets often get derailed of their main focus and start doing petty things.

Monopoly is the condition of every successful business, he writes:

Tolstoy opens Anna Karenina by observing: “All happy families are alike; each unhappy family is unhappy in its own way.” Business is the opposite. All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.”

It is important to note that here, Thiel refers to the monopoly of the creative kind- one which is built on innovation and value creation for society and not one which is built on government regulation or licensing.

A monopoly business will typically involve building something completely new, for example, a drug that can safely eliminate the need to sleep or a drug to cure baldness. Otherwise, the product has to radically improve over the current solutions by at least an order of magnitude. PayPal, for example, made buying and selling on eBay at least 10 times better. Instead of mailing a check that would take 7 to 10 days to arrive, PayPal let buyers pay as soon as an auction ended. Similarly, Amazon could claim to be “Earth’s largest bookstore” because, unlike a retail bookstore that might stock 100,000 books, Amazon didn’t need to physically store any inventory—it simply requested the title from its supplier whenever a customer made an order.

Thiel offers clear advice on how to build a monopoly. First, every startup should start with a small, concentrated market, and capture a significant share in it before expanding to other segments, ala Amazon which started with books first and then captured CDs and videos, before becoming the “everything store”. In the process of scaling, disruption of competitors is overrated. Competitive markets are to be avoided like the plague.

For VCs and investors, the most important lesson in the book is that investment returns follow the power law distribution and not a normal distribution. In other words, since most startups fail, the best investment in a successful fund equals or outperforms the entire rest of the fund combined.

This implies two very strange rules for VCs, Thiel writes.

First, only invest in companies that have the potential to return the value of the entire fund. This is a scary rule, because it eliminates the vast majority of possible investments. (Even quite successful companies usually succeed on a more humble scale.) This leads to rule number two: because rule number one is so restrictive, there can’t be any other rules.

Consider what happens when you break the first rule. Andreessen Horowitz invested $250,000 in Instagram in 2010. When Facebook bought Instagram just two years later for $1 billion, Andreessen netted $78 million—a 312x return in less than two years. That’s a phenomenal return, befitting the firm’s reputation as one of the Valley’s best. But in a weird way it’s not nearly enough, because Andreessen Horowitz has a $1.5 billion fund: if they only wrote $250,000 checks, they would need to find 19 Instagrams just to break even.

Here are some more assorted practical advice for entrepreneurs:

• The beginnings of a startup are supremely important. Set a strong  foundation by choosing the right co-founders and employees. It’s hard to go from 0 to 1 without a strong team.

• Hire co-conspirators who are passionate about your mission and who also enjoy working and hanging out with each other. ” At PayPal, if you were excited by the idea of creating a new digital currency to replace the U.S. dollar, we wanted to talk to you; if not, you weren’t the right fit.”

• Have a small but exceptional board. Not more than 5 people (ideally 3) who you trust to exercise effective oversight.

• Equity for employees can help shape incentives to maximize future value creation. It’s okay to discriminate on the amount of equity distributed to the team based on talent and responsibility but keep the information private.

• CEO pay is an effective tool to set the standard for everyone else:  “Aaron Levie, the CEO of Box, was always careful to pay himself less than everyone else in the company—four years after he started Box, he was still living two blocks away from HQ in a one-bedroom apartment with no furniture except a mattress. Every employee noticed his obvious commitment to the company’s mission and emulated it.”

• On assigning roles to employees: “The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee’s one thing was unique, and everyone knew I would evaluate him only on that one thing. I had started doing this just to simplify the task of managing people. But then I noticed a deeper result: defining roles reduced conflict.”

• Distribution is as important as the product. There are two important metrics to look at for distribution. The total net profit that you earn on average over the course of your relationship with a customer (Customer Lifetime Value, or CLV) must exceed the amount you spend on average to acquire a new customer (Customer Acquisition Cost, or CAC).

Thiel’s own answer to the contrarian view question mentioned in the beginning, is that while people think that globalization is what will change the world, it is actually technology that is more powerful.

He is optimistic about the future of technology and strongly believes that technology will be complementary to human talents. Thiel shows that building 0 to 1 companies requires eccentric founders. It is these unusual individuals who can set aside traditional wisdom, think from first principles, and build monopolistic companies based on radical innovation.