Episode 79- Being Resilient & Committed: Lessons from Three Startups, B2B- Marketing, Pricing, Why is Generative AI the next Saas w/Vijay Rayapati @Atomicwork
About Vijay Rayapati:
The next guest on The One Percnet Project is Vijay Rayapati, the co-founder and CEO of Atomicwork a startup that helps enterprises bring their employees, IT systems, and HR operations together to drive business impact. Previously, Vijay co-founded Minjar, a cloud management startup. Minjar was acquired by Nutanix in 2018.
Vijay’s journey is a testament to grit, patience, and perseverance. From his early life in a small town in Andhra Pradesh in India to becoming a prominent entrepreneur, Vijay shares his counterintuitive insights on entrepreneurship, the importance of people's success, and his passion for seeding and building.
Join us as we explore Vijay's journey, from his roots in a small town to his role as a leader in the tech industry.
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Key takeaways:
Resilience is a transformative power, and if one has the ability to leverage experiences, including failures, it can be a catalyst to success. As long as one is willing to adapt, learn, and seek opportunities even in the face of setbacks, one will excel.
Trust is deeply embedded in high-context cultures like India, where personal relationships, mutual understanding, and implicit communication play a pivotal role in business. In such contexts, trust operates as the fundamental currency, fostering lasting partnerships between businesses and customers. Modern businesses can integrate elements of traditional trust-building practices into their operations for sustainable business relationships.
Bold decisions aligned with emerging trends, even in the face of investor/industry scepticism, can ultimately yield remarkable results for founders, their teams, and eventually consumers if the timing is correct.
Pricing should reflect the product builders’ conviction in their product. Pricing just isn’t about trying to undercut competitors or offering discounts but it should rather be based on a genuine belief of its builder in the value the product provides.
Vijay’s Book Recommendations:
In this conversation, he talks about:
00:00 Intro
02:28 Influence of his mother
05:01 Journey from a small town to Atmoicwork
13:52 Why build Amnigos- a Food delivery startup in 2007?
20:28 Why build Minjar after Amigos’s failure?
25:23 Types of entrepreneurs
27:27 Why build Atomicwork?
35:13 Outbound vs. Inbound lead generation
39:17 Pricing
42:07 Why is generative AI the next Saas?
46:40 Generalist Vs Speacialist
47:07 Counterintuitive insights about entrepreneurship
49:24 Three Books
51:05 Advice to younger self
Transcript*
Pritish: What is the influence of your mother in your life?
Vijay: My mom, whom I call Maa in both Kannada and Telugu, was the most influential person in my life. She grew up in a fairly well-off family, but they lost most of their wealth by the time she turned ten. She went from okay to-do to abject poverty and married fairly early. Then she moved from Andhra to Karnataka, where she married my dad and came to this village with no road or electricity, telephone, TV, or newspaper. Not even a radio. So, my mom was the first person who purchased a radio in that village and she was the only one who could write letters that time. That was the way of communicating because I knew everybody used to reach out to her in the evening asking her to draft the letter, and she was probably the only person who could do 77 paddy bags into 180 rupees per bag. That was the cost used. So, I was very fascinated why everybody was reaching out to her and how come she's so smart? Because I didn't know that she didn't have a great education. She probably got to middle school, not even high school, but she was also like a great reader. She had one big trunk of books and she told me the only thing she carried when she migrated. So, I think, when I was a small kid, it was a lot of curiosity. And as I went to study with my aunt, she was always motivating. And even when I want to go and do business like we don't come from a business family. So, we come from an agriculture family and business is like an alien concept, especially in an India context where people say that business is not for good people, it is for bad people. And she always discreetly said, hey, it's okay to do business, and you should consider doing business or you doing something on your own because her grandfather used to be a trader, who used to trade with Burma and Kolkata and a bunch of coastal places. So, she basically said he didn't study anything, but he really built his good business of trading and going to our territories where you don't know the language and still build relationships and, that's how she used to be very proud of her grandfather. That was like a big influence on why I ended up considering doing business or at least starting up rather than taking a formal full-time job.
Pritish: And from that village, 400 kilometres from Bangalore, to Atomicwork. How has that journey been for you?
Vijay: I'm actually grateful for how life turned out to be for me. The reason why I say basically grateful is there are so many people along the way who played a pivotal role. My mom's younger sister, who was super instrumental in enabling me, my sister, even my younger brother to have an opportunity to get it because this village has no school, I mean, like you wouldn't believe the first road to this village happened in less than 10 years ago. I mean, it was that bad. It's like if it rains, you just can't walk because it's muddy. The concept of using shoes or slippers is very alien to me because like in a mud road, there is no way you can actually use any, but I think my aunt, I think she played a significant role in helping us successfully get educated. And after that, a bunch of friends in the college who always encouraged me to do more because they always used to think I'm smarter than even I used to think I am. And you know, then when I went to work, a few places, people who basically said, hey, you actually deserve something better than this place. I think you should go to Bangalore. Then I came to Bangalore, the people who hosted me, and it took me to introduce me to what I call the super early ecosystem of Bangalore at that point to a lot of people. So, I think a lot of times we underestimate people, strangers, events, how much they influence our trajectory. That's one of the reasons why, you know, I am a big believer in paid forward.
Pritish: It's fascinating, right? How powerful our network can be. And if they believe in you, it can take you from X to Y, which is exponentially bigger.
Vijay: No, absolutely. I think that's why people say this. When you truly want something, the universe will conspire to make it happen. It's not really the universe. The universe, for me, is the people around us. Because they either feel very sorry that, hey, we have to help this person. Or they believe that somebody else can help us because they see that passion in us or hunger in us or believe that, okay, he or she can do it.
Pritish: In your school in Hyderabad, you got bullied because of your height, and you were the youngest kid in class as well. So how did that play out?
Vijay: The reason I ended up being the youngest in my school was I said I went from village to a town near Hyderabad, and I didn't have a formal education certificate, right? So, the way things work in India is that you need proof that you study. I didn't know that people would ask because I was very young. My aunt and my uncle took me, and my uncle used to come with me to the schools to get me admitted, and everybody refused admission because they believed that I didn't have a study certificate but everybody offered. There were a lot of kind people who offered me; you can get started with the first time. He basically thought, oh, I studied for four years in this village. I know the basics, so that's basic maths and what not. So, I don't want to go back to the first standard. So, I had this opportunity where a teacher encouraged me to go write a seventh exam because seventh used to be a board exam in the early nineties. She said, if you clear it, essentially you get a piece of certificate from the government saying, okay, he did seventh. You can go back to school. So, because of that I skipped a couple of years of formal schooling. So, you go to eighth grade because you are like two, three years younger to most kids in us. So, you are shorter. The thing people do, if you are the youngest, the shortest kid, the weakest days, try to bully you. That's what happened to me. And that's probably one of the reasons was also, I used to spend most of the time in the library, in the school library, away from the classes as much as possible, because I didn't want to deal with these people. But it also taught me some survival skills, essentially, to make friends, right? I mean, nobody wants to be your friend because you're not considered equal. And I think my mom basically told me if you really study well, and if you top your class, maybe some of them would want to be your friends. So that also worked out. They started slowly. When I got to, I think in ninth grade, I made a couple of friends because they thought he's a kid who studies well. So, let's not bother him. But there will be some people who, irrespective of it, you know, they want to bully you. That time it used to be very painful. If you ask me, I used to cry a lot. And I also used to feel this underdog kind of a thing, go fight with people. Even though I was not physically capable of doing it. But somewhere you have this, I really want to punch back. I really want to push back. But now if I look back, I smile. And I also think it's okay because when I started companies, I ended up hiring people who are much older to me. And you know, that experience probably helped me.
Pritish: So, moving from school to career. Your career started with TCS and from there to a failed startup to another startup, which almost failed, then got acquired and then to Atomicwork. How has that journey been? Personally, it's been a journey of growth, an immense journey of compressed learning and a lot of gratitude to people who really helped along the way. Yeah, I went to TCS, Michelin, they had this joint venture where we used to build software for them, for Michelin brands. And the project had 50 APIs in a year, right? So, the way they scoped out is you write, you build one API per week. But by then already, I was hooked into a little bit of open source from college days. I discovered this tool, which translates WSDL definitions to web services automatically. You just run the tool, give the spec, it will generate the code for you. I did that in a month or so. And then I didn't have much to do because they didn't expect that somebody could do it in a short span. It's not like I used a tool to generate most of that code. I got bored. And then a couple of friends there encouraged that look, for your talent, this is probably not the place, right? They didn't say probably talent. They said, look, you will be dissatisfied here because you want to do a lot. Because I used to code for them, fix things for them, which was a habit that I developed to make money when I was in college. So, the college that I went to in Hyderabad, most people from there go to the U.S.A. for their Master's or PhD programs. Some of them used to outsource their work back to me because they can't either code it up or they don't have time. And initially I did pro bono, then they started giving me some money. Then I turned it into a way to make money. So, I continued doing that even after college. That's how I pulled together some money to even attempt to do my first startup. I think my dad was dead against it because he's like, I don't know what the startup is. You've got Tata, it is such a great place. You can just spend time there. But my mom basically said, look, if you really want to do something, maybe you can try. Right. But so, I used all the savings to build this food delivery business in Bangalore. It didn't work out. It didn't work out because one, we didn't have any understanding, the only thing I knew was how to write code. No understanding of business, no understanding of logistics, no understanding of capital takes. We also thought, Oh, we have more than enough for us to go to base. And so, it didn't work out. Then I actually shut it down and took up a job to pay off some of the credit card debt, etc, that I've accumulated trying to do this for the startup. But look, there were people who said, look, a lot of us have much more experience than you, but we never had the courage to start. The fact that you started itself is like a great thing. Then I wrote a blog post, about this failure, which kind of went viral at that time in Google groups. So, Google groups used to be the way most founders used to talk to each other and connect. So, it went viral in a couple of groups and then a lot of people reached out and told, okay, don't worry. Like most of the time things won't work. I think that was very reassuring. And that also enabled me to get connected to a few people. And who in turn then connected me to people which helped me co found Minjar with Anand and Prashant and the founding team. I think that failure was probably the reason why I got connected to a bunch of people in the ecosystem.
Pritish: So, let's take a step back. Why did you choose food tech or food delivery? It's not that Zomato and Swiggy were prolific in 2007.
Vijay: So yeah, they were not there, but there were other people. So, the reason why I started that was because Pizza Hut had started doing pizza deliveries in India around 2006. So, I basically thought, why can't we do the same thing? And, look, as an entrepreneur, you always think the timing is right. Somebody's many restaurants, many decent restaurants, telephone, main telephone. They also had a desktop computer because the government, I think a couple of years ago, introduced VAT and few taxes and stuff. Many decent restaurants had a computer, desktop-based computer, and Google started reaching out to people to organise their information. Otherwise, the only way the information was organised was you call the local yellow pages, which is like just a kind of a thing which had, which started also aggregating this information. We basically thought, hey, a lot of times we were always wondered about, okay, where do I go? What do I eat? Can I make a reservation? Can I get that food? So, we basically thought that the timing was right. What we underestimated was the capital required for you to do these deliveries. And one of the funny stories from that time was taking online payments in India, there was like literally one credit card processor, who at least responded to us saying, okay, I can give you some APIs, et cetera, for you guys to integrate, but he said, uh, how much are you planning to collect in a month? So, I basically thought 3 lakhs, that's going to be a big amount. And I said three lakhs is what I'm going to collect. Then they said, okay, you have to do a three lakhs deposit with us, to allow you to get three lights per month, because they were worried about fraud. But yeah, it's not that long ago, 15, 16 years. It feels surreal to see what's happening now. And sometimes, I think most of the times when things fail, the founders who started those things always think everything is ready. But eventually it also takes like a bunch of iterations. So now after I was like a bunch of people came, that's a second iteration. Then this whole Swiggy, Zomato kind of thing. They are like essential services even for me today.
Pritish: I was recently at a cousin's place in India and he lives in Bangalore. And I couldn't believe that the bell rang every 15-20 minutes. And Zomato, Amazon, Swiggy, it just doesn't stop.
Vijay: Yeah, it's just unstoppable. What's happening in India in terms of this digitised commerce is unbelievable, right? Unbelievable.
Pritish: Yeah. An interesting fact, because I was doing an episode on Domino's. Domino's started their operations in 1995 in India, and I believe that they were the very first people who set up home delivery systems, right? So, you started in 2007, but Domino's came into the market, but obviously they had the money and obviously the wherewithal to stand the test of time. But technically they're probably the first people who started the concept.
Vijay: No, that's actually true. So, I think the first guys who started home deliveries are those around the street, Kirana folks, in the morning, you tell, please send these two, three things home. And they just send it. And at the end of the month, they charge you. Maintain one ‘hisab’ or whatever ledger of what you purchased and stuff. But technology in general, both internet and mobile, and the availability of logistics, allowed us to compress the time it takes to deliver things and also scale at which we can deliver. It's insane. Recently, one of the guests from the U.S.A. came home and it was an early morning thing. We realised the milk was not there and we ordered it. And we are just having a conversation. So ordered, he knows that we are ordering. We were having a conversation even before the conversation ended, the milk was here, right? So, some deliveries in India, even where I live, happen in seven minutes, six minutes. Which is crazy. Of course, our parents think why are you being so lazy? Why can't you just go out and bring it?
Pritish: I think they don't realise that it will take me more than seven minutes to go and come. So that's interesting. Having said that, you talked about Kiranas, right? Have you ever realised how trust works between them? I think hardly any of us or our parents ever tallied the ledger. They said at the end of the month, your bill is, let's say a thousand rupees, and you would just give that guy a thousand rupees.
Vijay: Yeah. I think India is a very unique market. I think we're also a very high context culture. High context culture is like where you have to know the person, know the language, and you have to feel comfortable to get in. So, I think the thing with high context cultures is inherently there is a trust, right? So, if you look at Japan or Korea, India, China, some of these very high context cultures, the thing for what is not great in high context cultures is we can't take direct feedback, we can't be very open to communication, everything is implicit, right? And so, because of that context, I think the trust levels are very high, generally, and it works both ways, right? If, let's say this vegetable vendor, kirana vendor, cheats you, figure out, then he loses lifetime business because he's hooked to that street of the city or that village. So, he can never come and do business again. And generally, Indians are really good at whispering. The news travels faster. So, I think there are both incentives. On the other hand, if you don't pay the vendor, there is a shame associated. You don't want to be known as someone who takes things, doesn't pay back as a family, as an individual. Because you can't ship houses. So, the mobility was not there both for the vendor who is delivering, giving you these groceries on a 30-day credit period, he didn't have mobility. And as a family, it's not like you're shifting houses every six months, every year, for most of us, you probably acknowledge this, but our parents and all, it's one house for 50 years or 40 years, right? So, for you, it's a shame if you don't honour your commitment. So, I think the system works both ways. And I think a lot of those things are still visible even today. So even if it's a credit card, when you take a trip, they never used to ask you to pay up front. So, they will charge you at the end of the trip. If the credit card fails, the only way you can book the next trip is you pay the previous amount and book it. I mean, India, probably they're asking you to pay up front because they're measuring what it costs because cash collection can impact potentially the business cash flows, right? But yeah, I think there is so much we can learn from the traditional world of things and carry some of those things for the new world.
Pritish: From Amigos to Minjar, firstly, why did you start Minjar? Secondly, what was the learning there?
Vijay: The reason I started Minjar was I always felt that there's an unfinished business, right? Building products is not enough. You have to build a business. My unfinished business was, hey, we have to build a business. Okay. I basically thought, okay, let me go make another attempt. But for that item, I basically thought, okay, how to first pay off this debt that was lingering. I accumulated credit card debt and it was pretty bad because credit card interest rates are insane, right? Even if you pay more than minimum, it takes years and years for you to pay off. So, I probably accumulated like a million rupees, which is like a 10x or so credit card debt, which is like a fairly big amount for, and because of that thing, I basically took a couple of years to essentially pay off that. And also take care of some things on the family side. And then, my co-founder and Prashant, these folks basically believed, I used to work for my Anand as a CTO. Anand used to be CEO of Kulisa. And me and Anand and Prashant, we took a step back and said, okay, we need to actually go build a different kind of a company. That company could be Minjar, where I become a CEO and Anand becomeS a COO. The big lesson there was when things work out, they really work out well for you. So, what happened was when we started Minjar, the public cloud just started taking off. Okay. We were like one of the earliest folks who are doing building products against the public. When everybody used to think, what if Amazon steals it or can I really put my database there? The network is not stable, but we basically, since we previously had experience building against public cloud services, I felt, oh my God. In 2006, I had to do one project for a large financial institution in the U.S.A. where the job was to process their transactions. In order to process their transactions across the world because they're a financial institution, they have transactions in New York, in London, in Hong Kong and Bombay. So, you have to bring all of them and process them on the day for reconciliation. Now, in order to do that, we had to build a distributed file system. So, we built a very simple distributed file system that can replicate data between multiple servers. When this cloud started emerging, especially the object storage phase three was like a big aha moment for me. I'm like, okay, next time I need to build this kind of a data analytics or data processing system, I don't need to build a file system. I can just go build on top of it. So that was like learning for me and I basically thought this is a super promising technology as a developer, and as an engineer. So maybe more and more people will adopt. I think that assumption has worked out. The big lesson there is when timing works out, you can actually build a really good company. Sometimes even a great company. I think Minjar worked out for us, despite a lot of challenges of convincing investors to give money for an infrastructure software company. Because in India, nobody believed at that time, you should build infrastructure software. So, people were super excited about e-commerce software. They were like even instances where people offered me money to shut down this, just go back, build an e-commerce company back. And then they thought, okay, maybe we can replicate a low-cost application software. They thought building infrastructure software is a high pressure. It takes a long time to set. It requires compliances. So why do you want to get into that game when there is an easier game to play? But we basically thought, okay, this is something that is super aligned to us as engineers. And two, we basically thought it is very promising from a personal experience standpoint and three, we thought, okay, we saw also a bunch of other friends and some of these e-commerce companies themselves started using public cloud for getting, supporting their elasticity because they used to run these campaigns for Diwali, Dasara, New Year, Christmas, whatnot, the Black Friday equivalent of India. Then they started using more and more public cloud infrastructure. Then we found traction because of that. And eventually it was a great outcome for all of us. For 10 years, you struggled, nothing happened for you. Then suddenly you are able to take care of yourself because of a really good financial outcome. In our case, it really paid off as a founder and it was like a huge mountain of a burden on my shoulders as a founder and CEO. Because when you try for 10-12 years, even though you're making progress, the system works in India in a way that you have to buy a house, you have to buy a car. And here you are still struggling for those hundred dollars, right? Because all your cash flows, anything that you have created are financially struck with the company. When Nutanix decided to acquire us, it was a fantastic outcome for all of us, for us as founders and also for the founding team and everybody in the company.
Pritish: Brilliant. And from there you said, let's do it again. Before we get to Atomicwork, do you believe you are a seeding entrepreneur?
Vijay: I don't know the criteria or the qualification for it, but generally founders; whom do we call founders? Founders are people who are not just interested in tinkering with things, but also, they are interested in commercialising those tinkering, right? I think most of us, I believe as founders, get a lot of energy in seeding things, maybe scaling them to a level. Some of us also like operating at scale and operating at an accelerated scale, but many founders, at least I have seen from my network, don't like after some scale. So, I have friends who build companies to pre-IPO and to post IPO. And they basically say, okay, I'm not interested in this post IPO company. But when everybody in the world will be like, okay, that's a fantastic opportunity to build with the public market. But some, they might not enjoy it because now you are no longer doing creation, which is the first love of most founders. I think for me, I like seeding things. So, if you ask me why you started again instead of retiring or doing something else, investing or some other job, I would simply say I love seeding things and refining things and maybe even taking them to scale, right? But if you ask me personally, would you enjoy it? I got a lot of job opportunities after Nutanix, three plus years at Nutanix. People used to reach out to me saying, I have this 500 million dollar business unit or a billion dollar business unit looking for a general manager, it has a decent growth. There is a 10 percent growth, in some cases 15 percent growth, but I never considered it. Once a recruiter actually responded back to me saying, this will pay you a lot of money. I basically said, I really appreciate it, but I'm not the person who is interested in just operating things. So that was probably a trigger for me to consider doing one more. And as I said, just getting close to 40 and I still believe there is a runway for me to go and at least make an attempt and just enjoy the process.
Pritish: Atomic work: why should anybody care about it?
Vijay: Yeah, great question. When we thought of starting a company, me, Kiran, Parsu, my co-founders, initially we didn't have any idea. Initially we thought, okay, all of us together should spend, we ask ourselves, do we really want to do a company? If you want to do a company, are you willing to commit personally another 10 years of your life? When we are already financially independent. If you ask me, my financial dream when I was in college was to make one crore, which is at that point, probably like 300,000 dollars or so. Today it is probably less than 200,000 dollars. The idea was, okay, I make one crore, build a house with 25 lakhs, buy a few acres of land with another 25, 30 lakhs, put 25 lakhs in FD or in some investment, just have a peaceful life. And so, because we all came from these villages, right? So, in villages people use, if you have five lakhs or ten lakhs, you're already considered as a wealthy person. If you have a few acres of land and then a few lakhs of money, people consider you very rich. If you have a crore of money, which is 10 million Indian rupees, you are extremely wealthy. So, my reference point was let's make a crore and just retire. This was like when I just went to college, like the first year of college, you know, in my head was like, okay, just let's make a crore. But then I realised, okay, it's not about money. Because after the Minjar exit I also deeply thought about it. Should I really be in this race to say, I want to go build one more company? Why not actually just do things I really love? Then when I started thinking about things I love doing, then I realised the most important thing I love doing is actually seeding new things, seeding new ideas and tinkering with them, refining them and selling them. So, I basically said, okay, if that's the thing I like, then probably I should actually make one more attempt before I buy a beach house and just read books. And I seriously considered just why not just read books and not do anything else. But I think one of my mentors, Sharad Sharma, says that for the first 25 years you have to give it to yourself to skill yourself. The next 25 years you work, you do whatever business or you create value through your skills. To create comfort for your family, because there is a person probably who trusts you, marries you, probably has kids, and you have some elderly parents to take care of. So, the next 25 years focus on that. The last 25, you must give it to the community and country. So having said all this, we were basically in a dilemma of all this. And then we said, okay, what happens when we start companies? So, everyone starts a company. With the belief that I want to grow this company, you grow the company and the growth brings complexity, in order to manage complexity, you create processes. Now, in order to manage those processes, you hire people just to manage processes. So that's how as humans we invented front office, back office, support, all these functional roles. And then we basically realised that humans can only do so much. So, we need to put in software to manage these processes. That's where we have all this software to manage payroll, people, leaves, internal support, internal process automation, expense reimbursement, vendor management, procurement, and whatnot. And then we basically realised that when you put these processes and a lot of different tools, it is actually slowing down the execution. And now you start integrating these tools together to say, we have to deliver a simplified experience so people can actually get the internal work done so that they can actually focus on doing the customer work, right? Which is the reason for survival of any company. Now we basically said, okay, you start a company, you grow the company. The growth brings complexity and that complexity requires process management. That process management today is inefficient because of a lot of tools, like a lot of dissimilarities and data silos, etc. And that actually causes friction. And this friction leads people like us to leave companies saying, okay, we don't want to be in a big company. And so, we said, why don't we build a software to essentially unify these internal processes and reduce the friction, then maybe companies, even at a scale might be fun. And my co-founders also went from the startup to a very big company, Freshworks, very early. I think Kiran and Parsu are like third or fourth employees or fourth and fifth employees at the company. Think of it like from that journey to going to a few thousand people. And then I went from like a few hundred people to a few thousand people. And that was like two, two and a half thousand people company to like went to seven, eight thousand people company at Nutanix. So, I have seen how complex internal work is when companies grow. So, the reason we basically thought was if he builds this company, maybe it can help other people build companies without hating the same company that they started. I talked to a lot of founders. When you talk to founders, they don't like the company that they created once it becomes a really big company. When I say really big, when it becomes like 5, 000 people, 10, 000 people company, they say, boss, if you ask them, would you join this company today? Publicly, they might say yes, but privately, if you ask in a friendly conversation, they will say no. Why do they say I don't like the HR, I don't like the culture, I don't like the complexity, I can't get anything done because there is too much friction, internal friction, the internal friction comes from the process management team, and scale. If you ask me why anyone should, why we are super excited to work on this is not only we should build companies, but our thing should become like an operating system for other people to build companies and manage the growth and scale and complexity of their internal work, internal operations, internal support, their employee experience, all these aspects.
Pritish: You work with different teams and different heads? HR, IT and operations. Which team is the hardest to convince?
Vijay: I think every operations team thinks they have the most simplified process. Okay. Convincing them for simplicity, they think we are already very simple. I think every IT team thinks they really want to, it's very hard to convince IT teams on technology. It's very hard to convince an HR team or to pay for it, I think, and the ops team to simplify it. And generally, when you have to bring three, four people together to make a decision, now it's no longer about your software. It is about them coming together and aligning them. So that's one of the reasons why we also basically said, look, from day one, we can't basically go and say we solve everybody's problem in a company. I think we have to insert all that problem at one place, all that problem, then expand from there to really fulfil this way. So, I would highly discourage founders from selling to multiple personas, multiple buyers, or multiple stakeholders. You really have to have one decision maker, who basically decides that I want to buy this and use this. Maybe the user could be different in a business context. The buyer need not be the user because as a startup, you don't want to deal with their politics, their dynamics, their ego set player, because as a human, if I pitch for a product, somebody might say, okay, that's good for you, but it's not good from IT perspective, where IT pitches from their perspective, somebody might come and say it's good from an IT side, but you are never thinking from a business perspective.
Pritish: The kind of business that you are in, do you think it's an inbound business or an outbound business?
Vijay: Great question. Great question. Right. I always believe that every company has both inbound and outbound, but we also like you’ve read some of these definitions, right? For most of us inbound means somebody coming to your website, signing up and trying your product and then buying your product. That's how at least SaaS folks have valued it. For me, inbound is also about your brand. So why did you go sign up or decide to open a bank account with a specific bank when there are five banks out there? You heard them. You probably saw their campaign, probably offering a good mobile app that one of your friends said it's a much better mobile app compared to bank B or bank C. So, I think every business has both inbound and outbound, but I genuinely believe in outbound. The reason why I basically say in outbound is even great products will not be purchased if you don't package them well, if you don't position them in the marketplace, if you don't price them, if you don't give great experience for them, not just before buy but after but. The difference between a good company and a great company is that great companies provide exceptional support after purchase. Most companies provide good support before purchase. That's why we hate a lot of things that we buy even as individuals, right? Which is also true in a business context when you buy B2B software. And then the reason I also basically say you have to go is it's a super competitive world. Okay. If you asked our grandfathers, they would say it's a super competitive world to do agriculture because everybody's growing. And today for us, the agriculture that we are doing is creating software. And distributing it. They used to go to a marketplace to sell it, a physical marketplace. Now we are selling it in a digital marketplace. Now you have to tell me that even my dad used to tell me, I used to say I make the best tea because I use the least fertilisers. He used to use fertilisers, not like in every, and he would dry them, then package them, then take it to this physical marketplace to sell it. A lot of people don't even dry it. So, his pitch point was, look, if you want to verify, you call, you talk to anyone in my village, I will tell. I am like one of those farmers who just follows the good practices because he tries to take and wait to sell it if the price is not good, and at least in another month, another, another couple of months. We are now selling in a digital marketplace, but going away from this analogy, the reason of why I say outbound is nobody wakes up, especially from business to business software, because nobody wakes up there Monday morning, Friday evening to say, let me go search and buy a software, which essentially means as a company you have to create awareness about the problem that you are going after, how uniquely you are going after that problem, and why they should probably take a bet on you. Probably you basically say, look, I'm applying AI, or I have the best customer support, or everybody who bought this software loves us. We are competitive. We won't fleece you with the pricing or with our renewals. So, I basically believe you have to do inbound. You have to do outbound. Anyone who says I only do inbound or anyone who only says I only do outbound, either they are like taking a very narrow view or they have not seen the full cycles. Look at Apple, how much advertising they do to target, they say you can take the best photos with it. They can't say this is better than Samsung, etc, because then people will compare the price. Okay, you are better, but maybe in some aspects, the price is like 3x, 4x, but you play to the emotional needs of people. So, they basically, these days, you go to the airport, they pitch privacy because anybody who is rich, the thing they probably care about is privacy. And it is one of those 10 goods where, with every year, the price is increasing. As the demand increases, the price also increases.
Pritish: Before we get into AI, how do you think about pricing?
Vijay: Yeah, great question. So, I generally keep reading a lot of books. One of the books, like I read, is like a lot of books. I think everybody basically says as human beings, we want the best product at the cheapest price, if not cheapest price, the best possible price and have a great experience with it while using it. And if you have a problem, then we need someone to help. So, when you think of pricing your software, a lot of times you get obsessed about what competitor A is doing or B is doing. Maybe we price cheaper than them, then we can tell that we are the cheapest software or we basically price a little bit more than them saying we are better than them, but when it comes to discounting, I'll just give a discount and take the deal at any cost or whatever. For me, pricing reflects the conviction of the product builders in their product. So, the reason I basically say that is if you truly believe you're creating value, you actually demand more versus if you think you're not creating enough value, where you probably say a buy for $1 per user per month. That's when you have products that charge like $1 per month to probably charge $20 per month. The difference between them is the guy who charges $20 per month has to build a great product. Otherwise, nobody's going to pay $20 for a shitty product. So, product design is important. The product has to work exceptionally well, because if it has friction, you're better off with a $2 product than a $20 product. And it has to provide probably, if not $2, 000 value, it at least has to provide $200 value to the user. So, for me, pricing is something that people should think about before they build a product. And pricing is something they should think about, as I said, it reflects the conviction of the builders in their product. The problem is if you price it too cheaply, you can't actually do the things that you need to do to support your users after they buy the product. Because if you are sending it for, let's say $10 instead of $100 per user, how can you give them human support? Essentially through automation, the more the world gets automated, the more humans crave for human interaction, right? That's why we hate this bot interactions and this robotic assistance on the other side, when you try to reach a bank or an airline or e-commerce, etc. So long story short, I highly encourage founders to spend an enormous amount of, not just on products, on distribution. The first aspect of distribution is how are you going to package and price it?
Pritish: You talked about AI, you talked about how people like it, dislike it. You've also mentioned that AI is the new SaaS or generative AI is the new SaaS. Can you double click on that?
Vijay: As you can see from my bookshelves, I'm like a big reader of history. Okay. And I always basically look at those exponential curves, right? That generally accelerates progress. Today, at least it looks like AI is one of those exponential curves. If you ask me, Vijay, why do you believe in it? I already see immediate value for me when I use some of these AI tools like ChatGPTX. And I also see that the use cases are expanding. So, it's real and it's personalisable. And of course, it has its own quirks and whatnot. And most of us, at least in the tech world, if not from non tech world, agree that it's an order 10 magnitude earthquake. That means most of the landscapes will be remade. No. So what happens when an earthquake happens? Order 10. At least from history, we know that the landscapes will be remade. It can cause tectonic plate shifts. But we don't know which of those landscapes will be remade faster compared to some of the other landscapes. That's why as founders and investors, we are figuring out, okay, maybe this is an area where it will be remade much faster, right? So that's why people say content creation, creative tasks, basic task management, etc, right? Or L1 support, whether it's a customer or technical, these are jobs AI can easily take or paralegal work, whatnot. Now the reason I basically say AI is a new SaaS is because of this reason, right? We basically find immediate value. We are seeing expansion in the value as these things are getting faster, better. We believe that there is an exponential value of this. From the internet, all of us learned that the cost of distribution has dramatically come down. One of the things at least internet enabled, if not for all businesses, for many businesses, it has reduced the cost of distribution, but the cost of creation is still the same. Now with AI, potentially the cost of creation can dramatically go down. The cost of creation for a software engineer is code generation, for a marketing person, it is writing copy or coming up with creative ideas, etc, for a sales person, it's a better intelligence about prospect, their usage based on the interactions of customer: can I price this, is there a deal or no deal? So, I think for a lot of these things, AI can potentially help us. Now, because of that, we genuinely believe the new SaaS is AI, in a B2B context, because AI, we also believe that it can help drive significant productivity for a lot of things. Let's say you have created an email. Most of us, any thoughtful business person, would spend five minutes to ten minutes, even sometimes half an hour, just trying to review it. And before you just push it, because you don't want to send an email that has spelling mistakes or that is not well formatted, that doesn't bring out the essence. Today that three minutes or thirty minutes is becoming three seconds to thirty seconds. So, there's a significant productivity gain for you. You don't need to read a whole thing and essentially extract it just from it. So, there are a lot of these small trivial things which can actually drive productivity gains. Because of that B2B software is always about productivity. What is software? Software is either increasing productivity at an individual level or delivering efficiency at an organisational level. The difference between productivity and efficiency is productivity is mostly tracked at the individual, at a team level, efficiency is tracked at a company level. Now, we always use software to improve productivity or efficiency. Because of that, you make more money or you spend less money. Because of that, you basically believe there is a game. That's why people pay for softwares, right? In a business context. You now can essentially accelerate this. So, I think from a B2B perspective, we know that it's a productivity accelerator. From B2C it's probably personalisation, like a lot of softwares. What social folks personalise things for you? E-commerce things personalise for you. Even today, a lot of B2C software is not personalised. And, AI can potentially help us personalise a lot of software. B2C perspective and B2B perspective drive extreme productivity. And hopefully, my only scepticism is generally as technologists and people, as engineers, I would say more than technologists, we overestimate the impact of technology in the short run and underestimate its impact in the long run. We'll say it, it's not my quote and I always refer to it because we always overestimate what it can do in a short run and underestimate what it can do in a very long run.
Pritish: Do you think AI, now that it has become consumer grade, is going to shrink the size of companies? So, what I mean by that is the next Facebook, the next Atomicwork, will they be built of the same impact of the same revenue, but with smaller teams.
Vijay: Oh, absolutely. I often say this, even in my previous discussion. I think if you look at what it takes, let's say 40 years, it will take tens of thousands of people for you to build a billion-dollar revenue. You really have to throw a lot of people to build a company. I think probably 20 years ago with 10,000 people we have seen. At least on the technology side, people are building a billion dollar plus revenue company. Then we saw, okay, even with 3,000-5,000 people, you can actually go build a billion-dollar revenue company, not a valuation. But we have seen very few examples of AdWords or Figma, like very few companies with less than a thousand people who had a potential to even acquire a billion dollars in revenue. So, I genuinely believe with AI, the next companies, whether it is on the consumer side or on the B2B side, will require far fewer people to build, you know, a scale company. So today also if you look at listed companies, even on site if you look at the number of people that they have, like anywhere from 3000 to 12, 000 people for a billion dollars, today, these are like software companies. I'm not even talking about non software. Now, I don't know if we can shrink it by 10X, but I genuinely believe we can shrink it by 2X to 3X. And that's how we even want to build Atomicwork. As I said, we don't want to have 10, 000 people. If this thing takes off to get to a billion-dollar kind of revenue, we should be able to do this with like less than a thousand people. I think that's a productivity gain, right? And I think that's how, as humans, we always have driven significant productivity. Now, obviously the sceptics or these people who take, okay, what happens to jobs, etc in a short run? Every technology will cause a lot of fear. In the mid-run, it will cause some job displacement, but in the long run, it will create more jobs. So, if you look at 2023 as the year of the human race, we are employing more people than we have ever employed in our entire history. Despite all the technological progress that we had in the last 100 years or 1000 years or 10 000 years, you know, from the agricultural revolution.
Pritish: Your views on generalists versus specialists.
Vijay: I think the startups need a lot of generalists because seeding generalists are really good at seeding things, tinkering things, moving fast, having a bet, but scaling requires a lot of depth. If you have a scale company, you end up hiring specialists to scale, but at startups, you mostly hire generalists who have that ability to do things beyond their job. I think specialisation is extremely good when you get to scale.
Pritish: Counterintuitive insights about entrepreneurship.
Vijay: I think what looks rosy from outside is not rosy once you're an entrepreneur, but what probably looks like, Oh, too much pain or too much risk, probably not that much risk, that much pain once you're an entrepreneur. And the big thing is I think entrepreneur, if you want to be really an entrepreneur, I think you have to deal with being uncomfortable while getting comfortable and have ambition, but also be paranoid. Have patience at the same time, perseverance. So, I think a lot of the skills need to come together. I think it's a world of contrast, I would say. But the big thing, if I have to say, what looks great from outside of being an entrepreneur is not great. But what looks from outside not great of being an entrepreneur is probably not that tough.
Pritish: You have had three companies now and obviously then they have been tough times. What has been that one thing that you did or helped you get through your self-doubt that you would have again and again?
Vijay: I think if you had asked me this even a few years ago, I wouldn’t have been able to articulate, but I think to this day I can answer that there are these two things, patience and perseverance. See, patience is like a passive skill. It's your ability to stay put. Perseverance is like an active skill, your ability to keep doing, keep contributing to make progress. So, I think probably both of these things have helped because a lot of people say you have patience, and you also don't give up. I think I was reading one of the books, I forgot the name of the book, it is about entrepreneurship. So, they did some research and then published it. So, there's one part of the preface, which basically says that the difference between the successful entrepreneurs versus the ones who gave up is that last bit of perseverance and patience. When you think, okay, this is it, this is the end you're done and you give up versus the people who basically say, maybe I'll just make that last one push and you continue to do that. That's why when you go read all the successful entrepreneurial stories, everybody says, okay, we are on the verge of bankruptcy, on the verge of shutting down, on the verge of thinking, okay, this thing is not going to work.
Pritish: And, three books or blogs that have transformed your life.
Vijay: I am a big reader of history. So, I really love this book, written by Will and Ariel Durant, it's called The Lessons of History. It's a great book to read. It talks about millions of years to 10,000 years to 500 years. The second book I really like is by this professor, Vaclav Smil l called Energy Civilization. It essentially talks about how energy is a universal currency and our ability to harness energy is actually what draws civilization progress and continues to drive civilization. It's a fascinating book. I highly encourage folks who are interested in history to read it. Third, I think a lot of books can compete for third position. If I have to say again, Homo Sapien, it's a great book because I believe reading history gives us comfort. From comfort, courage, you can have some courage; when you have courage, you take more risk. So especially if you're in entrepreneurship, what you need is comfort, courage, and these two things can give you a lot of risk-taking ability. And, I think history rhymes as people say. Very often, what we think is amazing progress today with AI Because we work with internet technologies. For somebody who has seen from cycle to car for that generation that was like the AI of their world, who has only seen cars for them, flight was like, Oh my God, AI.
Pritish: Because you're a reader of history, If I had to ask you one person from history, you would like to meet who would that be?
Vijay: Oh my God. Okay. Oh my God. So probably Tesla I would say from a recent kind of history. And if I have to go beyond that, I also, both Alexander and Chenghis Khan, for like just sheer ambition and audacity and the perseverance to take such long expeditions, like when logistics wasn't just convincing small groups to work together itself was a task, I think these are the three people would basically like to meet.
Pritish: And one advice to a younger self?
Vijay: My younger self, I think I spend more, like I'm generally restless. I would say breathe more, right? Just pause and breathe. Hey, I think as a founder, generally, you know, I was always this restless person to get things done. These days I'm telling myself again and again, pause because that reflection is a great value creator for you, for me to make probably better and faster progress.
Pritish: Vijay, that's a great place to close the conversation. Thanks for being on the show.
Vijay: Thank you so much. I really enjoyed chatting with you and I really appreciate that. Thank you, Pritish.
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