Episode 148: Building a Winning SaaS Startup with Indus Khaitan, CEO and Founder of Quolum
In this episode of Product Thinking, Indus Khaitan, CEO and Founder of Quolum, joins Melissa Perri to share his experiences as a serial SaaS entrepreneur. They delve into startup funding and team member-building strategies, as well as how to find a co-founder that will complement your skills.
You’ll hear them talk about:
[18:19] - Indus' entrepreneurial journey highlights several key lessons. First, persistence is essential, as success often takes years to manifest. Second, continuous learning, especially in areas like marketing and sales, is essential for adapting to market and customer needs. Three, personal growth involves stepping out of your comfort zone and improving communication and collaboration skills. While you can't time the market, as an entrepreneur, you can persist and adapt until the market is ready for your product.
[27:55] - Before taking investors' money, entrepreneurs should focus on validating their business ideas and gaining traction without external funding. This involves experimenting and securing interest from potential customers with the goal of reaching around a million dollars in revenue before seeking investment. This allows you to retain control over your business and minimize unnecessary spending.
[31:09] - Indus started Quolum to tackle the challenges of managing multiple SaaS applications, recognizing the complexity and disorganization in tracking payments, security configurations, contracts, and invoices within organizations. Quolum aims to streamline the finance, IT, and security aspects of SaaS management.
[44:41] - While reflecting on his experience of building Quolum, Indus shares the importance of having a co-founder and a balanced team. A co-founder with domain expertise in product development or marketing would complement a generalist perspective and delve deeper into customer personas, UX design, and marketing strategies. Entrepreneurs must understand their strengths and seek team members who fill in the gaps, ensuring a well-rounded approach to business development.
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Transcript
Melissa Perri - 00:00:01: Creating great products isn't just about product managers and their day-to-day interactions with developers. It's about how an organization supports products as a whole. The systems, the processes, and cultures in place that help companies deliver value to their customers. With the help of some boundary-pushing guests and inspiration from your most pressing product questions, we'll dive into this system from every angle and help you think like a great product leader. This is the Product Thinking Podcast. Here's your host, Melissa Perri.
Welcome to another episode of the Product Thinking Podcast. Today, we are talking all about entrepreneurship, and we're joined by Indus Khaitan, who is the CEO and founder of Quolum. Indus is a serial entrepreneur, first founding a company called Bitzer and selling it to Oracle, and now working on a second venture, Quolum, which is a cutting-edge SaaS procurement product that effortlessly marries finance, IT, and procurement, addressing the complexities of SaaS spend management in today's enterprise world. Between these two ventures, Indus was an advisor at Sequoia Capital and the chief of growth at Chargebee. I'm so excited for you to hear all about the wisdom that Indus has for you on entrepreneurship. But first, we're going to our Dear Melissa segment. In this segment, you can ask me any of your questions about product management or any other topics that you have on the top of your head that you think I can answer. So this week's question is all about working with investors, PE and venture capitalists. So let's listen to the question.
Dear Melissa, my question is, what is the best way to deal with PE investors who are very financially driven and have limited product knowledge and product culture? Should the companies just bet on the CEO or the CPO's advocacy?
I've worked for two companies which were both owned by PE funds. I had the chance to work with PE professionals in these contexts. I've observed that they are extremely good financial analysts, but they have very limited understanding of product or product culture. Unlike their cousins, VCs, who are equally return-driven, at least some VCs come from entrepreneurship. Even some were ex-product managers. PE instead acquire mainly late-stage companies and their rationale is more like capital allocation. We invest this amount to build these products in order to obtain that return. The control from PE is very strong to ensure their returns. Understandably, this approach changes the product team to a feature team as the product culture requires companies to give space to the team. This also kills product innovation. So what is the best approach for companies and teams in this context to deal with owners of companies who don't understand much about product management? This is a great question. So I've worked with both PE firms and with VCs. Now, I want to clarify that there are different types of PE firms. There are some PE firms who invest in companies that are growing, but they actually expect, let's say, a lower outcome, not like a home run Facebook type exit for those companies. So they're trying to get a marginal return, usually about five times their money back. And I've worked with a lot of these PE firms. When you look at VCs, they want typically like 10x, 15x of their money that they put in. They want high returns in a very fast area. PE are usually more conservative about their returns, and they look at the whole portfolio and try to balance it out. In these PE firms, though, you are correct. A lot of times they're more financial analysts. And honestly, in venture capitalists, too, depending on which venture capitalist firms you go with, a lot of those are financial analysts, too.
What's going to happen is that most of your board, if they are investors, are actually people who are financial people and not product people. When a finance person owns a company, though, like some PE firms do, they do buy these later stage companies. They take them private. I've been part of a lot of these types of acquisitions or mergers like this. They take it private. They own it. What they're really trying to do is optimize it and turn it around and bring it back to profit. So what they typically do is they acquire companies that are in distress, and then they try to turn it around. So that's one type of PE firm. So let me just put that out there. Not all PE firms operate that way. But if you do end up in a one of those PE firms that have basically taken this company, acquired it, own it fully outright, and they're trying to do a turnaround and bring it back to a profitability, they're going to be concentrating on EBITDA, whereas a lot of VCs concentrate more on growth. How are you growing? And some other PE that are not doing turnarounds like this, they're falling somewhere in the middle. They look at both growth and EBITDA. They want a combination of it. EBITDA is all about your profitability, right? How much money are you actually taking away? How much money are you making profit at the end of the day? Growth is about how many new customers you're adding. So when we think about companies, usually we're really trying to strive for this thing called the rule of 40, which is where you're looking at the percentage of your EBITDA, and you're adding it to your growth percentage year over year. And you're trying to get those numbers to equal about 40, which means that when you look at that with VCs, they're willing to take a leap on a company that is not profitable or is negative profitable if it's got a very large growth trajectory, right? Let's say you are... You're doing 60% year over year growth, but your EBITDA is negative. If that comes out to about 40, that's a good investment for them, right? That's actually where you want it to be. They think they can make money off of that. With the changing markets though, a lot of people are wanting to see that EBITDA go up a little bit more. They don't want it to all be in growth.
So we're seeing those kinds of shifts. Now, either way, when you work with VCs or you work with PE, you have to learn to speak the language of finance. And the key here to be successful when you're working with these board members is trying to get them to understand that you're not going to be able to make money understand, one, the return on investment for product, and two, how the products help financially unlock the value of the company. And this is something, no matter if I work with a PE firm or a VC firm, that I help chief product officers and CEOs do as a board member. So I'm a board member. I usually sit on a board of a company and I work with a lot of finance people. And what we're trying to do and what my role is to help people shape a product strategy and help connect it back to the growth ambitions. So one thing that you're going to want to do is you're going to really want to understand, no matter what type of company you're working with, is what are the outcomes? Am I holding this company for five years and I want a 5X return? Is that good for the investors? And especially a PE firm too. What's good, right? Are they looking at EBITDA? What's the return? How long do they expect to hold you? What is the end game? Are they going to sell you to somebody else? Are they looking to IPO you? Are they going to spin you back out? What's the end goal? And you need to align on that. So that's my biggest advice for any chief product officer, any CEO, anybody who's working with these firms is if you don't understand what their intentions are with you, it's going to be really, really hard to build a roadmap around that. Because you are probably going to be doing things that are different depending on what you're trying to get to with those goals. And those goals help you understand how you should shape the rest of the goals for the company as well.
So sometimes product people get uncomfortable with this because they're like, oh, we shouldn't be managing towards financial outcomes or we need to be doing things that are in the best interest of our customers and we want to pay down tech debt and we want to do all these things. And those things are all good. I'm saying like we do want to do all of these things and we always want to act in the best interest of our customers and provide value for them because that's how we get value in return. But the way we might prioritize different features might be different depending on what those outcomes are for a PE firm or a VC firm if they own the company, right? So for example, you've got one year left on your hold period and a VC wants to flip you out or a PE firm wants to flip you out and you've got massive tech debt. They do not want you to go re-architecture the it's going to be somebody else's problem in a year. Like it's not about paying down all your tech debt right now. So they're going to not be very responsive to a product strategy or a roadmap that's like pay down all my tech debt and spend all my costs there and sacrifice that for growth. This is why this actually helps you understand how you prioritize and how you work with them. So that's my first piece of advice there.
Two, if they don't understand product management, the idea here is not to educate them in what product management does and what you do from a day-to-day basis. It's instead to bridge the gap between what their language is and what our language is. So when I talk to PE firms or when I talk to VCs, I do not go in there and talk about user stories or JIRA or experimentation and all these different things. What I do instead is talk about how this product strategy is going to help us meet our goals. And what we want to do is make sure that we paint with a lot of data as well, right? A great product strategy that shows what the return on investment would be, how we are thinking about building this product strategy, and how we are thinking about building this product strategy. And what we believe that will unlock for our financial goals and how that goes towards the long-term plan of the company. Every time we've done that, I've never had an issue with a VC or a PE firm. We might just talk about where we want to spend if we need to hire more people or if they're not willing to do that, how it cuts back down on the roadmap. But when we've had those conversations at that level showing this high-level product strategy and how it adds $20 million in ARR, let's say, over five years because it helps unlock a new customer segment and it solves this problem for them and that's how we're thinking about growing this platform. There's usually only pushback about strategic concepts of do we want to go into this market versus that market, right? We keep it high-level. It's usually not meddling in the weeds. If you're not having that conversation, though, what always happens is that they will go meddle in the weeds and they don't know much about product and they don't know much about tech, but they will still comment on it and they will find things to comment on it because you haven't brought it to their level and you haven't brought it to their expertise. So if you're not bringing that conversation up, that's where you're going to get people diving into these. You're going to get people who don't really know what they're talking about and they're not able to think outside the box there, right? They're going to be dictating what features that you should be building.
They're going to be dictating how you work and it's because you're not showing the leadership of, hey, we've got this. This is the strategy. This is how it makes money and this is how I'm going to execute on it. Now, of course, you will end up in situations where a PE firm might take over a company, get rid of the entire executive team, and then try to bring in somebody to run a product who has no experience whatsoever. That happens. And that's extremely hard to get around. Good PE firms know that they have to hire chief product officers. And I've worked with PE firms to hire great chief product officers and people who know what they're doing. There's also a different playbook for turning around a company and being a chief product officer or a CTO for a turnaround versus a growth stage company. So let's say you were a CPO or a CTO and they turned around the company and they brought it back to growth. And now they're thinking about scaling like it might be time for a different executive. So that's something to recognize too when you're thinking about these PE firms. Now, for you, I'm not exactly sure if you have the power to run this whole executive team. I'm going off of what you wrote in here. But from a product strategy perspective, what's the most important thing that you could do is communicate it back into how it unlocks financial values and align on what those financial values need to be and align around what type of growth you want to get and what type of EBITDA you want to get and what the holding pattern is. And then you come back. And you use the data. And you tie that back into your product strategy to show them what the path is forward. And that is what's going to be the best working relationship with your PE and VC firms. Yep. Like I said, not everything is that cut and dry because it comes down to people dynamics at the end of the day. I have seen PE firms that will take over a company, throw a whole new exec team in there, and then they just like slice, right? Like it's just cutting costs everywhere and then trying to turn it around and cut it to growth. And that is a big playbook for like takeovers. In that situation, you have to know what the playbook is, right? Like that's the playbook. And if you see a PE firm that does that pretty frequently, it's going to also tell you, do I want to work there or not?
So for you in particular, if you have not had success working with these PE firms, sounds like you've been at two that don't quite understand the product, I would maybe steer clear of those in your next job, right? That might not be a great fit for you. And it does sound like it's been a takeover where they take the whole company, own it out 100%. They're the owners now and they dictate things. If they are willing to listen to a strong product executive and they're willing to hire that person, this can solve a lot of those problems. But if they're not, at the end of the day, maybe that's not the place for you. Great VCs and great private equity firms know that they have to bring in great product leadership and just let them do their job. And great CPOs know that they have to communicate the financial terms and the product strategy and bring those two things together, and especially in board meetings and with their investors. And that's the bridge there. So when you ask, should we just rely on the CEO and the CPO? Yes, if they know what they're doing. But if they don't know what they're doing, it's going to be hard for everybody else. Going to be extremely hard for everybody else to get it done. So that's why there's an importance of having great chief product officers. And that's why I also teach chief product officers how to do this at my CPO Accelerator. A huge portion of what we teach is how to work with boards, how to work with investors, how to build a strategy that goes back to the financial terms, because I see this gap a lot, right? And this is actually what causes a lot of friction in these companies. So if you are a product leader out there and you want to learn how to do these skills and become an executive there, you can check out cpoaccelerator.com. We are taking applications until the end of the year for our cohort that starts in February. We do have small cohorts that go through this and I teach it live through video chat so you can apply from anywhere over a period of time that will start in February. So definitely check that out if that's interesting for you. So I hope that answers your question. And now we're going to go talk about entrepreneurship with Indus.
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Indus Khaitan - 00:14:26: Fantastic. Good afternoon.
Melissa Perri - 00:14:28: So you're a serial entrepreneur. You are actually on your second venture now, founding Quolum, which we're going to talk about in a minute. But that's actually not your first company. It sounds like a lot of your entrepreneurship journey started with Bitzer Mobile, which excited to Oracle. Can you tell us a little bit about what Bitzer Mobile was, how you got started, how you actually grew that idea?
Indus Khaitan - 00:14:50: Yeah. I think the idea was pretty straightforward. If you remember when Steve Jobs announced the brand new iPhone, every executive in a large organization said, hey, I'm going to chuck my BlackBerry and I'm going to use my iPhone to access my documents and emails and SharePoint and whatnot. Guess what was the impediment? IT would give them the middle finger and say, no effing way. You cannot. You know, BlackBerry is the default device. And that was the problem statement. It meant IT would not allow the iPhones and the iPad. We found a hack to elevate the security of iPhone and enabled hundreds and thousands of employees to access their corporate intranet on their iPhone. And that was the starting point for us. And we grew very rapidly from there on.
Melissa Perri - 00:15:38: That's amazing. That's so funny when you say that too, because I remember I had two Blackberries at one point and my last name's Perri. So people started calling me Black Perri because I would I always had these two ones on me and it was because I worked for a bank and the bank was like, there's no way we're going to allow you to have iPhones. So you're the reason why we can have iPhones in corporate climates now.
Indus Khaitan - 00:16:03: We had a contribution or a dent in our own universe we made, but that space grew very rapidly. If you remember from BlackBerry to iPhone, the transition was difficult initially, but 99% of organizations now are on iPhone. So at least in the United States, it's all iPhone anyway. So we did contribute in a small way to that universe.
Melissa Perri - 00:16:27: That's amazing. So what made you want to take this leap to become an entrepreneur, right? Like that's a big step and it's not safe. What kind of gave you the drive and gave you the, I guess, the confidence to go after this?
Indus Khaitan - 00:16:42: I think if you take a longer term view, it does look like a leap of faith and then, hey, let's go do this. But as you live in the moment, you just think in small increments saying, ha, this is an interesting problem, let's solve it. And then when you solve it, oh, this could be an interesting business. Let's build something around it. Can we find people who can pay for it? And the progress in the thought process was very incremental. Like, hey, can you do this? Can you do that? You know, small dots connecting. And then one fine day, I convinced my wife saying, hey, please, let's go on this journey together. You have to support me. And, you know, three of us started, two of my co-founders and then me. And then we started this venture.
Melissa Perri - 00:17:28: So what were you doing before that led up to this moment?
Indus Khaitan - 00:17:32: I was a Java developer. I was writing code. I had little smaller gigs in, you know, helping companies analyze huge amounts of marketing data, click stream, building dashboards, running campaigns. So gain that knowledge. And then one thing led to the other. I was in India and then got connected to the two co-founders of mine who wanted to start this. And so, yeah, mobile is growing. It's an interesting problem to solve, but let's figure out what could be much bigger than just solving a data integration problem. So we thought, hey, identity access is a huge issue. You can't take your iPhone inside your intranet and say, hey, I'm going to authenticate using two-factor. So we solved some layers of problems and then, you know, started building from there.
Melissa Perri - 00:18:20: So when you were starting this with your friends, looking back on this now, right, because you've been at many different companies, you've invested in startups now, you have been in board roles as well, and you're on your second venture. What kind of lessons did you learn from that first company?
Indus Khaitan - 00:18:36: I think two things didn't dawn on me then, and it does, when I reflect on it, it's now that you cannot time the market. It's cliched, very easy to say that, yep, you know, market's going to happen when they're going to happen. But many factors are outside of our control. You have investors who are looking for growth, you have employees who want the investment of time to be returned as money, and you have your family who is thinking, oh, you've invested five years of your life, what's next? So if we come back and collate all of this together, what I learned is persistence is the number one thing. You got to go in thinking it's going to take five, seven, 10 years of your journey. Second, you do not know everything that you're going after. You don't know the customers, you don't know the market. So it's a skill that you have to continuously hone and learn. So I think learning is on the job. Plus, you know, being persistent are the two things I always carry with me after the first venture.
Melissa Perri - 00:19:38: Okay, so persistence and definitely learning. What types of things were you learning about in that first venture?
Indus Khaitan - 00:19:45: Sales, marketing. I'm an engineer. I had no idea what marketing is and what sales is and why sales is such an arduous six-month cycle. And over a period of time, I developed this appreciation for why sales takes longer and you have to establish credentials and trust and whether the problem could be solved. So those are the two things that I learned. The third one, and you're gonna laugh at this, as an engineer, I was an introvert. I didn't want to engage with people. What I learned was, yes, you have great ideas, but if you sit quiet in a room, nobody's gonna interact with you. So you have to figure out a way to change your personality, engage with the audience, engage with your colleagues. And that was another great takeaway for me.
Melissa Perri - 00:20:34: So you're definitely stepping out of your shell a little bit, starting to collaborate with more people. How's that helped you going forward? Especially you've gone to work on boards, you've been an advisor for Sequoia, you're an angel investor now, and you also were the chief of growth in Chargebee, which is a great scale-up company that has been amazing. How'd you take this and start to apply that in the future?
Indus Khaitan - 00:20:59: I think the foundational skill for any entrepreneur is, hey, can you take a problem and analyze it and say, hey, this is a solution and scale it to solve in many parts. Can you bring people together? And that skill is applied through and through. Every startup I have worked with or entrepreneurs or founders I advise or sat on boards that, hey, can you take a problem and solve it? Especially in tech startup is the proverbial product market fit. So the question is, you can't time the market, but can you persist long enough to wait for the market to emerge and then see if there's a product market fit? So I have taken that and applied in my journey to every successive startup. Even at Quolum, my current startup, we saw this problem firsthand that the SaaS explosion was happening and nobody was building controls to manage this. And that learning came because you hear customer stories and say, can you apply the problem statement to solve newer and elegant problems? So I think that's where I would start.
Melissa Perri - 00:22:09: So if you're trying to kind of like wait for the market to catch up to where you're at, how do you manage that with like early customer feedback? And also, how do you know that you're going into something that's going to be worthwhile at the end of the day, right? Because you're kind of taking a gamble where we're like, we believe the market's going to catch up, right? But we don't 100% know it. So how do you navigate that?
Indus Khaitan - 00:22:32: I think that's one of the biggest conflicts. There's a meme on the internet where it shows that there's a guy digging a tunnel and then there's a pot of gold just behind a thin layer and he gives up saying, oh, there's nothing. I've been just, you know, digging dirt. And that's the conflict. How much more time can you sink into this journey to avert a loss and come out of this versus can you go a little bit more, you know, one more day, one more week to find that proverbial pot of gold? So it's not easy. I think it all kind of comes together based on who you are as a founder. Do you understand the market enough? Do you understand technology enough? Can you build it? Can you sell it? Can you persist for three to four years? Do you have money to outlast everything else? And I think that's the skill. I don't think anything else matters. I think the product market fit is the biggest conflict. And you could wait forever. And there are many stories that we know collectively. You could wait and not hit that 5, 10 million ARR. Or you just quit. And then another competitor builds the market and comes out of it on the other side. Not the answer, Melissa, unfortunately.
Melissa Perri - 00:23:48: Yeah, this is a good one to go back to and think about. Like for Bitzer Mobile, right? You're looking at these trends out there in the industry. Did you feel like you were ahead of the market at that time? Like it wasn't quite taking off or do you feel like it took off all at once?
Indus Khaitan - 00:24:03: I think we're ahead of the market. I don't have the numbers at the top of my head. So if you look at 2008 or 2010, when mobile came out initially, there was no consumer business for mobile. It was just the business and then some users who wanted a better phone. There was no app store. There was no mobile advertising and there was no India as a market. Today, India has 700 million mobile subscribers. It was probably 5 million back then. So all of this is in the last, what, 12, 15 years. Nobody could have predicted it. I think if we would have waited, we could have built at least 100 million ARR business. But we thought, hey, this is the maximum, that's what's gonna happen. And we sold it cheap.
Melissa Perri - 00:24:52: So you did exit this to Oracle. When you think back on that acquisition too, you mentioned like we sold it cheap. We didn't think it was gonna happen. How'd you decide like when to sell? When was the right time to kind of walk away or give your baby to somebody else, right? You're the founder, that's your baby. How was that journey?
Indus Khaitan - 00:25:11: It's a tough choice. So between three of us who are the founders, we had internal disagreement on the path forward. Also, we had investors who were on the fence of how big this could be. Plus, the more we wait, the more we have to fund it. Every month there's a cash burn. We basically concluded and disagreed, but concluded saying, okay, Oracle as a company is interested, they will take it to the next level, hopefully much bigger business, but without the three of us running the show, I wish we did not. And the two arcs that emerge, so the identity and authentication business itself is a big one now. If you look at companies that have crossed billions of dollars on mobile authentication, that's one arc. The second is device management continues to become bigger. Everybody has an iPad, everybody has an iPhone in a corporate setting or a B2B setting. That itself is a billion dollar business. We could not see that coming. Immediately in the 2013, 2014 days, and we collectively took a decision, okay, that's the best path forward for the company.
Melissa Perri - 00:26:18: That's really interesting. And one thing you did mention was you had the investors in there too. And there's been a lot of talk lately about taking investor money. Sometimes you have to do things that you typically wouldn't do if you were just in full control. Do you feel like that played any part into the acquisition or how it shaped your path forward? And what would be your advice for entrepreneurs looking at raising a bunch of money?
Indus Khaitan - 00:26:41: Definitely, investors have a point of view. They are on your board. They also have a duty to their own investors. So their LPs give them money for a 10, 12-year fund cycle, looking for returns after year five, year six. And investors are always thinking, hey, if the startup is not going to go to the next level, maybe we sell this at a 4x or 5x, the multiple of the previous round, and give that money back to the investors. So their point of view is probably the mightiest one on the board. Unfortunately, venture investing and venture entrepreneurship is very asymmetrical. And I hate to say this is because founders have a single track saying, hey, I got to build this company and take this forward from a product and go to market. Investors have much broader horizons saying, oh, we have $100 million corpus to deploy. Let's find the biggest ones that are going to return. Let's turn the investment. And that's the lens they're taking. So sometimes it's a dichotomy between those two parties, but the outcomes are essentially driven by a collective intelligence of these two parties.
Melissa Perri - 00:27:54: So when you are advising, like as an angel investor too, you're advising these startups, you're helping other entrepreneurs, what kind of factors would you tell them to consider when they're choosing to take an investment? Like hopefully they have that choice, right? Hopefully they get to make a choice about whether they want to take the money or not. But there's many different paths to get funded these days. You can do angel investing like you participate in, but you could go to a VC, go to private equity firms. You could go friends and family routes, all these different ways. What do you advise the companies that you work with on how to think about funding and how to think about control and decision rights and those types of things?
Indus Khaitan - 00:28:31: I'm a very conservative entrepreneur from that question's perspective. My lens is don't take money to experiment. You experiment on your own. You take, you build code, you know, find a co-founder who knows how to code. If you don't, you're a salesperson and see if you can generate interest from five potential buyers before you take any money. There's a new school of thought, which is very point in time to what's going on in the macro environment. People are saying, don't take money until you have a million dollars in revenue because investors would come in and try to modify the trajectory that you have in your mind. Rather than investors telling you, hey, go take this path or go talk to this business, go get acquired. It's a good idea to have that optionality, have that control and minimize your burn. And I kind of like that. And that's how I have built some of my businesses in the past. You know, go in early, build something, write code, show it to people. And, you know, just like you can raise money in multiple ways, today you could build a product and showcase it in hundreds of different ways. There's product hunting, there's indie hackers, there are a bunch of forums. You can go to a meetup and showcase and get feedback before you go ask for money from somebody else.
Melissa Perri - 00:29:50: That's really good advice right there. And I think that lends as well towards the investing climate where money's not readily available like it was, let's say, last year or the year before. So a lot of people are being pushed to show profitability or they're being pushed to show traction and can't really just raise money off of an idea anymore. So it sounds like that might be in the best interest as well for some founders to be able to show that.
Indus Khaitan - 00:30:13: And that was the default posture of entrepreneurship. I think if you take out 2020, 2021 and 2022, the default is you raise a small amount at a much lower valuation, you know, go acquire a million, five million in revenue, then you do a little bit more. I think what happened in the last three years, anybody who had some connects into the venture industry had some proof point could go out and raise. And that's going to hurt us for another few years. You know, that money has to unwound and flush itself out before we get to normalcy.
Melissa Perri - 00:30:48: So what are you anticipating from the market that we can expect over the next couple of years?
Indus Khaitan - 00:30:52: I think we will see at least 12 to 18 months of softness in SaaS, in fintech, in overfunded consumer segments. We will see corrections for at least 12 months more before we start coming back.
Melissa Perri - 00:31:08: Interesting. So you are also building a new company, Quolum, and it does look at SaaS, right? How are you thinking about the market and what that looks like for Quolum? And tell us a little bit more about what Quolum does.
Indus Khaitan - 00:31:21: Yeah, we started with a simple problem saying, hey, there are way too many SaaS applications that an organization can manage. And for the buyers of SaaS, how do you know who has paid for it, who is using it? What's the security configuration? Where are the contracts? Where are the invoices? All of this is fragmented. Can we have a single pane of glass? And that's the view we took to organize and ring fence all of this together and started a few years ago. And we did not have PMF until 2022. And you're going to laugh at this. We built it, but then nobody was interested in cleaning the kitchen. People said, oh, I want to buy more. I want to get new products and new subscriptions. I don't want to clean my house right now. It's okay. Let it be on the floor. And then when markets started correcting last year, people started returning our phone calls saying, oh, I need this. I need. I need a better way to view this. And we found a PMF in that area. Today, looking at the macro, some of the things that we are noticing that the sales cycles have become much longer. You know, we would close a deal in three months. It's now five to six months. Doesn't matter what we do is, you know, helping their bottom line. But finance and IT are wary of investing any dollars in any new product and services. I think this is. This is going to continue. You know, I think the businesses are eventually going to figure out a steady state. And then for us as well, we see a lot of these transactions going through. It'll be an interesting time for the next 12 to 18 months, Melissa.
Melissa Perri - 00:33:04: Yeah. I'm hoping that it's going to be all up from there afterwards. We can keep our fingers crossed.
Indus Khaitan - 00:33:11: Fingers crossed.
Melissa Perri - 00:33:12: So when you were starting Quolum, did that problem you were describing, did that originate from something that you experienced?
Indus Khaitan - 00:33:19: I think it was a mixed bag. Some of these I experienced at Chargebee. You know, my team was investing money on growth programs, marketing campaigns, tools and technologies. And the finance director would come and look at my credit card bill saying, Indus, I see those charges. Who paid for it? And my card was being used by my team. I think Joe paid for it, but I don't remember. And then by the time Joe has moved on to something else and Joe has stopped using that product altogether. So that and then I kind of saw as a macro that, you know, SaaS explosion is real. And how do we have a first class view of all these tools? And both the combinations helped me propel into this thought saying, hey, something has to be done to solve it. I did not know what the product should have been or should be. I thought the problem itself should be solved. And we took a leap of faith saying, let's solve it for finance, then solve it to IT. And then let's solve it for security. And then all of these three forces come together as a single pane of glass around SaaS.
Melissa Perri - 00:34:25: So when you were kind of exploring that problem and getting started with Quolum, what'd you do to understand the market, see if it was a big pain point with other people?
Indus Khaitan - 00:34:34: I think I took a very simple approach, which is very well known, did a discovery process, reached out to 130-odd CFOs in my second degree of LinkedIn. I got lucky with at least 30 interviews, and they told us, hey, this is broken, go fix it in a particular way. Or they told us, ah, you're smoking weed, get out of my head. So we collected some feedback, and we started building the product.
Melissa Perri - 00:35:02: I think what's interesting about your story too, is that you were at Chargebee before this, and you were the chief of growth. And Chargebee was on this pretty large trajectory at the time where it was scaling and it was growing. And it was definitely what we would consider like a growth stage with probably like tens of millions of dollars, right, in revenue. And it was scaling. And then you left there to go back to basics and start something from scratch. So when you think about like your career and your trajectory, what draws you towards entrepreneurship? Because you've done it twice now. And how do you kind of compare that with larger scale growth issues like Chargebee had?
Indus Khaitan - 00:35:39: I think you touched upon something very interesting. My mom used to tell me I'm a stubborn kid and stubborn and restless in a kind of a yin and yang way because I would keep tinkering with whatever was at home, pick things up, break things up. And that experimentation, analytical mind continues to look for problems in the industry that has been solved or not solved in an elegant way. And that's where I picked up the thread of solving this problem for Quolum. And even, you know, the previous startup at Bitzer, and there are many such smaller experiments which are not startups. But for example, yesterday, a friend of mine and we were arguing about this whole thesis of identity and access management in the chatbot universe, the chat GPD universe, and why can it be solved in a much better way? And both of us started writing a collaborative paper. It's like, I would say 20% done. So many of these thoughts are, hey, what's broken? Or I see this broken, let me go fix it. That's where I come in and apply my own intuition. Hey, let's go fix this problem. You touch upon that. You know, my mom used to tell me, hey, you don't even sit quiet for like 10 seconds, you know? Okay, watch the TV. Okay, play a video game or read a book or go out and play all of it at the same time. So I think that's where it comes from in many, many ways.
Melissa Perri - 00:37:03: Wanting desperately to fix problems. Yeah, I like that. So this relentless drive to fix things coupled with, I would say it's probably not just that, right? There's problems at like large scale companies, right? You were at Oracle for a while. So you're in a very large scale company and you went to Chargebee, which is definitely a scale up. And then you're going back to foundations now, Quolum, starting it yourself. When you think about how to address problems and doing product development, right? In the large scale versus the startups, what kind of lessons are you taking from some of those larger companies, let's say, and applying them back to building out Quolum?
Indus Khaitan - 00:37:39: That's a great question. When we as a team got into Oracle, I was very skeptical. Too big of an organization, nothing would work. We would get lost in the crowd. I won't learn anything. My time would be wasted. But surprisingly, and when I tell this to my friends, that two years was one of the two most amazing years of my career. A, I did not know how sales works, how big companies work. And the biggest one is how Oracle sells to 330,000 of its own customer base. It's a machine. There is, I would say, lack of supply for the amount of demand Oracle's customer base has. And Any company, any software company would kill to sell to that installed base. I think that was my MBA in sales for two years. And when I come back and look at Oracle, I think you could frame it in a different way. The frame is when you are selling at larger companies, a different motion of sales and go to market has to be used. You cannot be just PLG when you are building a business that's going to be, let's say, a 50k ACV product. It has to be guided selling. You have to first become the trusted counsel to your customer, show them the value, spend two, three months, gain their trust, build an influencer community within the company. These are not decision makers, but are on the table. And then you go and sell. It's a totally different skill than you write an amazing blog post or launch and product on. People come and do a DIY sign up. You collect 10 bucks. Per month, different motions altogether. So that the former was the enterprise motion that I learned would not trade anything for those two years.
Melissa Perri - 00:39:28: That's really interesting and enlightening to hear because I find like there's this visceral reaction for startup people and entrepreneurs like you had at the beginning, which is, oh, large company, like I'm not going to get anything done. But you approached it from a very unique perspective of what can I learn? And wow, look at what I learned. And that was going to be my other question. I feel like you just answered it. Like you went on this path of being a developer to an entrepreneur. And your career since then has been very organized around like product management, but also like marketing and sales. So you kind of took that technology background and then built on top of it and encompassed so many different avenues. I think a lot of startup founders who come from a tech background take for granted, right? They take the sales for granted or they take the marketing for granted or sometimes even the product piece, although most of them I think agree that they need a product. So this seems like a very nice, well-rounded experience that kind of sets you up now to go do it at Quolum, right? Like you're entering it with all of these interesting, unique experiences. When you look back on Bitzer, what are you going to do different at Quolum? Like what are some things where you're like, I'm not going to repeat these mistakes or I know that worked okay the first time, but I'm not going to do it again because I want to save myself a headache.
Indus Khaitan - 00:40:41: So, of course, mistakes are plenty, even if I remind myself that I'm not going to repeat this. But inadvertently, mistakes come in totally different form or shape. The mistakes that I have not made is people 's mistakes. You know, how do you build a team mistake? How do you activate your product mistake? Because those were the mistakes that we made or I made in my previous startup for not knowing how to run a business, for not knowing how to manage a team. As simple as, and this is very foundational. Now I take it for granted. But when I started this, it felt like, why am I doing this? So at Quolum, we do a 90-day 360 across the team, very religiously, every 90 days and collect this feedback. The talent person does it. And just one activity kept me very real in terms of what my team is looking for versus what I am looking for. And very elemental peer-to-peer feedback rather than wait for a year and come the appraisal cycle. Because I want to know what people are thinking about me as an individual and us as a company. And I would not make that same mistake that I made earlier. I would say, hey, I kind of know why is he looking to work for us. He wants to make money or he wants to work for a startup. But there are layers which we have not peeled. And I've become a much better manager because of one small thing.
Melissa Perri - 00:42:08: What types of things do you look for besides they want to work for a startup? What types of things have you found to be successful hires, especially in early days?
Indus Khaitan - 00:42:17: I think one trait that we look for is, has this person worked or had a hunger to work hard or work very, very deeply in their own life? Doesn't matter whether he has cracked an SAT for 800 or got a job, although he had a full-time, you know, family to support. So something that exhibits in the resume that the person has worked very hard, very deep in his life, that's a trait. Great. What responsibility has he taken beyond his or her call of duty? Because if I'm a nine-to-five person, it's okay. But is the startup a nine-to-five job? Probably not. It's a 24-by-seven or 24-by-five job. So what I'm looking for is, is he just taking orders to do the nine to five or he wants to get the job done? Doesn't matter whether it's nine to five or one hour or two hours in a day. That's the trait we look for in everybody we interview. Doesn't matter what college, what background. What university, et cetera. But that one unique trait.
Melissa Perri - 00:43:20: I think that's such a great trait too. And I've had my share too of hires who have not had that drive, right? Like they viewed it as somebody else's problem. It makes it harder to actually get things done. I read about it. I don't know if you consider it the same thing, but when I was trying to figure out how to make better hiring decisions myself, I read about it as conscientiousness. I think there's two things. There's like one, you're talking about the drive to overcome challenges and you've experienced challenges. And you've, you make an effort to actually do things right. And then there's the conscientiousness factor. And I read somewhere, I don't remember where it is, but that is one of the number one indicators that somebody is actually going to be successful is if they're conscientious. And that means they have followed through. They've got like a drive to work. They do what they say they're going to do too, which I think is huge, right? Like actually contribute, they perform. I think that to me it has been so important to find people who are conscientious. But then I think in startups or smaller companies, there's this whole like drive to get better as well. And, and wanting to learn and wanting to push yourself and wanting to like thrive on those challenges too.
Indus Khaitan - 00:44:28: Absolutely. I think the follow-through that you pointed out is very important because follow-through kind of signals intent as well as the other properties, you know, drive to succeed and desire to learn. Absolutely agree on that.
Melissa Perri - 00:44:41: Yeah, I like that. I like the way that we think about that. So when you were building Quolum, you've got this great, robust experience now of both IT, product, sales, marketing, growth, all this wonderful stuff. When you were looking for co-founders, what were you, or do you have co-founders, right? What were you looking for in early hires and to balance out the skill set, let's say?
Indus Khaitan - 00:45:03: I don't have a co-founder now, but that's the mistake I'm not going to make again. So if I start again or pivot or do whatever, you know, get a co-founder who could be my, who could bash me in terms of my ideas, you know, be truthful about it. So, you know, I definitely want to fix. I think I've become a generalist. Unfortunately, in the last 15 years of my career, kind of know a little bit of everything, but have lost the specificity of many of these individual subjects. So a domain expert in product would be a great co-founder because he and I, or she and I could take some ideas that he or she could go and dig deeper and figure out a customer persona, the design, the UX patterns around it and go build it. Same thing for marketing. You know, I've become a product marketer and I could write copy, but I could fail on following through and implementing and getting the website done and doing a social media campaign. So I've kind of lost, not that I don't want to do it. But as a generalist, you become like, yeah, I'm going to help generate these ideas, but I need help in execution. So the specificity goes away. A marketing person would be a great co-founder to have as an example.
Melissa Perri - 00:46:16: Okay, that's really interesting. So you were very much looking for who can help me execute on this. And I think that's important too. I've taught MBAs for the last three years, and a lot of them want to be a co-founder or join an early stage startup. And it's interesting because they all want to concentrate kind of on strategy, right? They didn't want to do the execution, but they wanted to do the strategy. And I keep telling them, if you want to go into a startup and work for somebody else, it's different if it's your company, right? But like, if you want to go work for somebody else in a startup, usually the founder has the strategy. Like they don't need necessarily super strategic visionary help. They need somebody to go do the work. So it sounds like you reached that point too, where you're like, this is my baby. I've got the vision. I've got the strategy. I need people to go do things.
Indus Khaitan - 00:46:58: Luckily, what has happened in the last 10 years, I've heard you, Melissa, talk about the playbooks. People can take the playbook, but somebody has to implement it. So the execution is the most important aspect.
Melissa Perri - 00:47:10: Yeah, definitely. And if you don't execute, you get no product.
Indus Khaitan - 00:47:13: Yes.
Melissa Perri - 00:47:14: You sit there and strategize for like 10 years, but if you don't ship anything, like nothing's going to happen. So I think that's definitely something to look at too. You also brought up a little bit about domain experts. And we were talking about this before we jumped on. How do you think about founding a company within your domain expertise, like something that you're very comfortable with or that you know a lot about versus going into an area that you don't know anything about?
Indus Khaitan - 00:47:38: I think if I can speak for B2B, Melissa, I think domain expertise is super important because you know when the markets are going to open up for your product or service. You know who the people are and who you could hire. You know your customers better if you are a domain expert. A great analogy for this is when the 49ers started rushing for gold, this is 1849, 1850 of the San Francisco Bay Area or California history, who were the first ones to come? The folks who knew how to dig and shovel. And these were the explorers with an intent, hey, I can ride a horse as far as possible, survive in the worst weather conditions, and I can dig. And when the Niners rushed, they started exploring. They started looking for gold. And when they found a few lumps of gold here or there, some of the other folks joined in, as we call them, settlers, to help them pan, help them refine, help with food, help with food. Help with clothing. So as a founder, we got to understand our own context. Who are we? Are we pioneers who could weather the storm and keep digging? Or are we settlers? Let the pioneers dig. I'm going to help the pioneers with food and clothing and supplies. Or even better, you come in much later. And this is the big company context. Are you a town planner? Yep. The gold has been found. We need to go sell this to other states and nations. I'm going to figure out the finances. The back office. So your context is a slightly larger company, and you may not understand the early days of founding a company. So I think as a founder or as an entrepreneur, we have to understand our own context of who we are and then make our contributions accordingly.
Melissa Perri - 00:49:23: I think that's really interesting because I kind of explained to product leaders as well that to me, there's different profiles of product leaders. And also I'd say like, whether you should be an entrepreneur or not. And it kind of gets into what you're talking about. So pioneers, they're the entrepreneurs, they get their hands dirty. And I also think they're the types of people who have come into a startup, you know, work with the founder as like your first product manager or your first head of product, right? Where it's like crazy experimentation, everything's a mess, but you're like, that's okay. I'm going to persevere, right? Like I'm like, I'm going to dig in and I'm going to execute. Like I'm just going to make this work. Right. And you're constantly experimenting and you're trying to figure out what sticks and it's messy, but you find the gold. And then if you're not the person who loves mess and all of that comes with it, but you like to optimize, right? Like you like to take that gold and then figure out how do we make more gold very, very quickly. You're kind of like in the growth stage. Where you're like, I want to take the thing that somebody did all the work to find.
I'm characterized by more of growth, adding the blocking and tackling around it, the optimization, figuring out how to go from product A to product B, how to expand that portfolio, and how to do extremely fast. And that also is characterized though by tons of stuff changing very quickly, right? Like where you have to refine your processes, figure out what works, look at the team and be like, where do we have to restructure? What else do we need? Adding more departments, more complexity, all that different stuff. And then there's the enterprise chief product officers too, who are more about when you get into that role, it's more about adding the structure around stuff, right? Making sure that it scales within very large institutions. You're not characterized by super rapid growth. It's more about sustaining growth over a long period of time. It's a lot of bureaucracy. It's a lot of like trying to figure out how portfolios make sense over time, how to like add some innovation in here and there and how to like streamline operations across like a very large company. So I kind of feel like that goes a little bit with what you're, you're talking about there. And I tell people who go from growth stage to, or, or large company to entrepreneurship and don't love it, this might not be your profile. You've got to really love digging in the mud to be an entrepreneur.
Indus Khaitan - 00:51:33: Yeah, and most of the time, many startups fail because either the founders fail to recognize themselves or they brought in the wrong set of people at the wrong stage of the journey or there was a mismatch of stages. And hence, everything is a mess, more chaotic than it was earlier.
Melissa Perri - 00:51:50: Yeah, I've seen that happen a million times as well. So definitely good lessons for people there. So you also had an interesting path on your entrepreneurship journey. You moved from India to the United States when you were at Blitzer. How has that shaped your path as an entrepreneur?
Indus Khaitan - 00:52:08: If entrepreneurship is tough enough, moving to another country and then being an entrepreneur is a second layer in that complex cake right there. I think when I moved here, of course we moved with my own startup, but all my support system was still in India. And when I moved here, there was no plan B. If Blitzer failed, this is like 2013, we're still kind of building it, we're investing money, we're building a team. If Blitzer failed, at that moment, I had my one-way ticket back to India. So there's no plan B and your support system is a small family and your co-founders and a little team that you've built. And that kind of shapes your mindset saying you gotta be successful. You haven't thought through what's the backup here because that's the only way out is success.
Melissa Perri - 00:52:56: That's a really powerful mentality to have as an entrepreneur too. And I think that probably aids with what you were talking about earlier, their persistence mechanism too, wanting to really be persistent and wanting to see it through. How do you think that affects your decision-making too, when you're looking at the only way out is success?
Indus Khaitan - 00:53:14: I think it comes with its own fault, Melissa, because we are looking at only one path forward. And I don't know, I may be wrong, but it feels like, hey, let's not close the shop and stop the losses, but it feels like let's continue going. And the reason I say that, because I feel that as a macro, the software eating the world has famously been told, it's still less than 10% penetrated across the industry. So there's a lot of work to be done in software. You know, there's now AI coming in and AI is going to append everything that we built in the last 25 years using the internet, which gives me a very big hope and a light in my head saying, if we continue doing what we are doing, if not this, something else is going to come out of it. So let's not give up and have that one track mind to follow through towards the end.
Melissa Perri - 00:54:06: That's an interesting perspective too on looking at how you thought about Bitzer versus how you're thinking about Quolum too. So that sounds like it's something that's changed for you with the experience of having done this before and looking at all these different things. What else do you feel like has changed this time around? What are you looking forward to, I guess, with Quolum compared to Bitzer?
Indus Khaitan - 00:54:26: Yeah, so I am, again, very thoroughbred in my trade, which is I love the complexity of IT systems, love the complexity of software and how can we solve it. At Quolum, we started with our journey solving for finance and a very specific problem statement. We are adding a new, very large product feature around security because, as you know, AI plus SaaS can all agglomerate it. There's a huge amount of data moving back and forth. Data being unlocked from SaaS repositories going into your LLM. So you're trying to position a brand new product and a business saying, how can you solve for DLP configuration and controls and security of the same software that you worried about saving money for? That's what's the next step for Quolum and we're working on it.
Melissa Perri - 00:55:18: Well, that sounds really exciting. And I am very excited to follow your second entrepreneurship journey. So thank you so much, Indus, for being on here. If people want to reach out to you, learn more about you or about Quolum, where can they go?
Indus Khaitan - 00:55:30: Yeah, Quolum is quolum.com on the internet. You know, Google it. You can find me in this Ketan on LinkedIn and on Twitter.
Melissa Perri - 00:55:37: Great. And we will put those links in the show notes. So if you go to the product thinking podcast.com, you will be able to find those links under indices episode. Thank you so much for listening to the product thinking podcast. If you enjoyed this episode, make sure that you like it and also subscribe so that you never miss an episode. We'll be back next Wednesday with another amazing guest and we'll see you then.