About a year after he sold his company application intelligence company AppDynamics to Cisco for $3.7 billion in cash, its founder Jyoti Bansal visited Bangalore early in 2018. Pankaj Mishra got to sit with him for a deep conversation on his (Bansal’s) entrepreneurial journey — from his roots in a Rajasthan town to Silicon Valley. “There are depression moments, there are moments like when things are very hard, you want people with whom you can talk to, even though it’s a lonely job,” Bansal said during the conversation before a full house of Accel Partners invitees. “In my case I didn’t have a co-founder which is one thing I really think was a bad idea… I didn’t plan for it but the first person I hired, he became a de facto co-founder and so at least I had, you know, you want someone who you can talk to but everything…” Here’s the lightly edited transcript of the podcast that we ran in March 2018. Thanks to Kanika Berry for transcribing it.

Pankaj: Welcome to Outliers. This is a Podcast with Outliers and this is the 50th episode and you know it’s been a conversational journey, like entrepreneurs have a journey. Conversations are also like those long journeys. I am so excited that we have Jyoti Bansal here to do this 50th episode of Outliers.

Jyoti, I believe you are an Outlier because you are not on some island or on a yacht… you are here sitting and chatting with us. I mean, when I first heard of the Cisco exit, $3.7 billion is quite a lot of money. And you are an Outlier even more so because you are again trying to build a company. I am a just-born rookie entrepreneur, one and a half years, you know it is not easy.

Let us start from the start, Jyoti. How do you define yourself? Who are you?

Jyoti: I would say, I like to build things, I like to create things, that’s what I’d define myself, that’s where I get passion from, building something from scratch, solving a hard problem, kind of learning, improving, that’s the core of what I like to do. Like you know, some people do things for money, for fame, whatever. For me, it’s like a hard problem, big problem, exciting, something that you just want to build and you know build value, solve a hard problem, that’s the thing that drives me.

And you know, to build something of substantial value, you know when I used to always start something, you start building a technology, then I realised that if you want to build values, it has to be beyond technology, so you have to monetise it and it has to be business and then you learn if you want to build something as a big business then it’s also really about people and leading people. For me, everything kind of goes from that framework like I want to build things and create things and solve problems and it’s challenging and it’s interesting.

Pankaj: Give us a sense of where do you come from. I mean you are from Rajasthan… So, tell us a little about your background and growing up and how did you become a tourist and land up in the Valley?

Jyoti: So I grew up in a small town in Rajasthan and when you grow up in a small town, middle-class family, normal things, your parents want you to become either an engineer or a doctor… That’s the only option anyways, so that’s what I did. I wanted to go and study engineering, so I applied for IIT, went to IIT Delhi.

For me, one of the interesting things growing up was, you know, it was a Marwari family and my dad was a small businessman, like a shop owner. Everyone I knew was some kind of a shop owner, like someone selling clothes, someone selling whatever but everyone was selling stuff. So, I was like always fascinated with business because I have seen business when these are very small businesses in small towns but you have seen what works and what doesn’t work, so I was fascinated with business. Even though I went to IIT, to me it’s like a small business was always interesting and fascinating. So I was one of the few people in IIT at that time, now it’s like, I just went to IIT Delhi last week, everyone wants to be an entrepreneur in IIT Delhi. When I was there, there were like a lot of people want to go and do masters and PhDs, or MBAs, there were few people who also wanted to go and do startups or work in startups. So I was, that something I wanted to do because that fascinated me it’s always like I thought it’s easy to create when you have more control and you know you start from scratch.

But when I graduated from IIT, there wasn’t a good startup ecosystem like I don’t think there were any VCs here. If you wanted to engage in startups, work in startups, create startups, to me it was like, ‘I should go to Silicon Valley, that’s the place where startups are, so why don’t I go there?’ So at that time you know, these Silicon Valley companies won’t come to IIT campuses to recruit, so mostly you will go to US to do a Masters or a PhD or something and I was like you know, maybe there has to be a way to short circuit that, like I don’t want do Masters or anything, so I started just applying outside of the campus to startups in Silicon Valley and you apply to 20 of them and one of them will eventually take you, so that’s how I got to Silicon Valley.

Pankaj: Very interesting. When did that journey start, from the IIT campus to the Valley? And also the overall transition from being an engineer to an entrepreneur or a CEO. I am not sure if we can capture this in today’s session but it looks like you have done well on that front. We will also discuss what you haven’t, your struggles but this transition seems to be very interesting, from being an engineer to an entrepreneur or a CEO. Take us through that journey.

Jyoti: Sure. So first of all, the transition does not happen overnight. So people see me as a successful CEO now and people think that the transition happened very quickly. The transition happens, a lot of small learnings and struggles goes through in the transition and many times people ask me, ‘What were the two biggest things that happened?’ I tell them, ‘There’s no two big things, there are probably 200 small to mid-sized things that happened that shapes the transition. It’s not like one or two big things that really shapes it.’ Most startups start with some kind of a passion for a problem. You run into a problem somewhere and think someone needs to solve this problem and there has to be a better way of doing this.

So that’s how I started AppDynamics also, like you know someone has to do this better, like there’s no good solution to this, someone has to do this better which in my case was that people were building software all over the world and someone needs to have a better way to manage and monitor. If something goes wrong in the software and there were no good products to do that at that time. So when you start itching with that passion, I was an engineer, I wasn’t a CEO, I wasn’t an entrepreneur there but once you start running into that passion, like someone needs to solve this, why don’t I try it? And being in Silicon Valley, you see a lot of startups, I worked in three different startups before that and working in startups was a great learning experience for me, so I knew what does it even mean to do product startups and do things, at least as an engineer I have seen those. So I quit my job and started the company and raising the company and things like that.

Pankaj: Where were you working and how did you quit and did you just start the next day or how did that actually happen?

Jyoti: So when I moved to Silicon Valley, I worked in a few startups like my first startup was a very and these are all like very deep technology startups and none of them are very successful, like my last one was successful but the first two were not very successful but you learn a lot from the failed startups than actually the successful startups and in Silicon Valley, the good thing is like, there is almost no stigma for failed startups, so you work there and you learn them, like no one judges you that you work in a failed startup but your learning is really, really nice.

So I was working in my startup number 3 that was acquired by a large company and I had this idea of what AppDynamics does. I started working on it and started pitching to VCs and investors. I still remember, one of the VCs I was pitching to, he asked me like, ‘Do you really believe in this idea?’ and I said, ‘Yes, I do’, so he said, ‘Ok, then why are you still in your job then?’. If I wasn’t willing to take a risk for like maybe six months of salary or income to start something, why should investors take a risk with me there? And that’s a valid question, so the next day I quit my job.

So I was like, I have to be able to answer that questions, so I quit my job the next day and started working on the startup. So, becoming an entrepreneur is easy, it’s like, ‘How do you evolve from that entrepreneur…’ because entrepreneur is really the mental state of making the jump. The jump from doing a job to somewhere like a jump that you need to start something and that’s a decision that you make at some point and you do it but what happens after that is really the hard part.

Pankaj: The other thing that happens is also you start finding a lot of advisors around in the ecosystem and sometimes you are also looking for an advisor. So what has been your journey with advisors? And please be blunt.

Jyoti: I was spending a lot of time talking to advisors and I realised that it’s really not, I need to run a business. The rule I applied at that time was, either you bring me a customer or an employee otherwise I am not doing a meeting with you because what’s the point, you know. You want people who will help you execute because once you know roughly what to do, is all about, you learn better by executing than by talking to a lot of people. But that doesn’t mean that you don’t need advice, you need a lot of advice and learning.

So the rule that worked for me was like, I call it, instead of getting an advisor for everything which is hard, the real good ones are hard to get. Like how do you convince them to be your advisor or spend time with you. So the real good ones are very hard to get anyways. So I call it more of a topic or a problem oriented advice which is like, say if I am struggling with something, I am trying to figure out, ‘We have been selling AppDynamics to the US market and we need to sell it to international markets outside of US, let’s say Europe. How do I get that going?’ So the way I would look at it is, who are the ten people are or ten companies who have done that well and can I ask them specific advice on that particular topic or that particular problem instead of more of a generic advice. In my experience, I have learnt more through that. You know one trick I have used is also interviewing people which is like say, like if you want to learn something about, how do you structure your marketing organisation? If you interview ten candidates for a vice president in marketing and you ask them the same question in the interview, after 10 interviews you will know the answer completely…. So interviews are good place to learn and get advice, for free.

Pankaj: So no advisory equity in your case? Did you dole out any advisor equity?

Jyoti: Only once.

Pankaj: You did!

Jyoti: In the very, very beginning like, one of my mentors, in the very beginning was the professor of Computer Science at Stanford and when I was like just beginning, it was just me, one person and yes that’s the only person I gave advisor equity.

Pankaj: Let’s go deeper into this salesmanship that you refer to, you know the whole Marwari salesmanship that you saw when you were growing up and the small shops that you observed. How much of those lessons were you able to… I mean, I am trying to understand the journey as a salesman. How was that journey?

Jyoti: Sure. First of all, it’s kind of strange like you know, I identify myself as an engineer and a product guy and a lot of people think of me as a sales expert now. I have learned a lot about sales. I can go and write a book on programming but I can also write a book on sales, so that’s an interesting thing. If you look at my growing up in the Marwari shops, the basics of the business are not too different in any business like you need to have a good product, you have to find people to come to your shop like some kind of a demand generation. You have to compete against other neighboring shops… then you have to make sure that the customer service is good so that that the word of mouth will spread or people will come back and repeat customers will happen. So, the fundamental basics of a small shop are really no different than the basics of almost any business. So that part was clear and the other part is that you have to manage your financials and the economics of the business well.

But when I started AppDynamics, like I didn’t know too much of that but I think the other thing is, you don’t have to learn it from Day 1 also, you go through this in many, many stages. For a product startup normally, your stage one is really nothing to do with sales, it’s really about doing product market fit. If you can go and learn the sales execution process but if you don’t have a product market fit, you are really wasting your time. The way I would operate is, what is the definition of the next stage for me to get into? And so what’s the success criteria for me to get out from the Stage 1 to 2? And one of the analogy I use is like a video game. So you start playing a new video game, you go on Level 1. When you are Level 1, you are figuring out some of the basics of what to do and you can initially struggle and then you figure out how to complete that level and then you go to the next level and there is a different set up of problems and then you figure out what to do, struggle and you figure out and then you get to the next level.

I look at the same thing in the startup, what is the next level and what do I need to figure out to get to the next level. So to me the level zero was getting funded. In Silicon Valley you can’t really bootstrap a product company for too long, maybe here (in India) you can because the cost is a little bit lower. But for me the level zero was like, if I can’t get fund and there is no next level, so that was the Step 1. Then it was like, ‘Ok, I need to find the product market fit’ and that took me 18 months to get there and it was nothing to do with learning sales or learning anything at that point but then once you get to that, ‘Ok, now I need to figure out my early sales machine and how do I build early sales? How do I get like you know, I have a product market fit, how do I convert it to a sales model of some kind? How do I hire executive level people for the first time?’

The first time you hire a vice president in a company who is probably 10, 15, 20 years older than you in many cases, even that is a learning but to me it was very clear that the next level is about for me to fill the gaps and bring the right executives who will help me, get me to the first 50 customers or get the sales motion going, so then I would just focus on learning that and you go there and then once you hit like say, a 10 million dollars of revenue, after that you figure out, for me to get to the next level which is like say, 50 million dollars of revenue, it’s a completely different skill, it’s really about sales execution at that point because the zero to ten million is all about product execution – building the best product, getting the product market fit right. The 10 million dollars to 50, 60, 70 million dollars is primarily about sales execution in the market because if you build the right product, you will have that runway to push the product to the right sales execution.

Then after you go to that level, then the set of problems change, like you know for most companies, for us it was also the same, once we hit like 50, 60 million dollars, we have nailed sales execution and how do you build sales machinery and all that, it was more about how do you expand from one product to a multi-product platform because the market wouldn’t be large enough if we don’t do it and our growth will slow down. So like for us to go from 50 million to say like 100 million, 150 million dollars that became the next set of challenges. So it’s like every level you go, it’s like a video game like it’s next level set of challenges and you go and try to learn for that problem. In some cases you don’t know what to do, then you try to hire the best person. Like when I went from that first stage to second, I had a product market fit and I had to figure out how to do selling. I realized that I don’t know anything about it, like why don’t I go and just hire an experienced VP of sales and maybe I will learn by watching and observing and managing the person instead of me trying to make all the mistakes and learn it. So that’s the one thing I tell, that if you can afford it, go and hire an experienced person in some cases because it cuts down the learning curve and you still have to learn. You hire an experienced person doesn’t mean that you don’t have to learn but it cuts down the learning curve and you make less mistakes.

Pankaj: This is very interesting, the way you captured the whole journey with hiring milestones.

Jyoti: All journey in two minutes.

Pankaj: What were the biggest mistakes you made when it comes to hiring across these different milestones that you are talking about or were there any?

Jyoti: There are always hiring mistakes. I think if you get like seven out of ten hires right, you have done a very good job. So you will always have three out of ten wrong in some ways. I think initially when I was just very early on starting, the mistake I was making on was, I will try to hire people like me for every role, like you know people who are like engineers and analytical minded and I would try to hire similar people for sales, similar people for marketing and I soon realised that’s a mistake, it’s a very different personality and different mindset not just the skill set, it’s just the different personality. So you don’t want to hire the same kind of people for everything and you have to get comfortable with working and operating and respecting also those different personalities and different kind of people in your organisation. So that was one learning that I had to do.

The second thing I have also learnt is, this whole concept of culture fit. You have these HR departments always talk about culture fit and I always tell them, ‘Isn’t it our job to mould people in our culture?’ and initially we would do the same thing like, this person doesn’t sound like a culture fit and maybe they worked in a company which is different culture, our company has a different culture. So really the question we should be asking, ‘Do they have the flexibility or are they open minded and they are willing to adapt our culture?’ Not that they are culture fit or not because otherwise you don’t get good people in there.

Pankaj: The other interesting thing I thought is the milestones that you discussed. As you grow 10 million, 20 million, 50, 100 million, your priority keeps changing in terms of when you want to beef up sales, product and so on. End of the day we are building human organisations and there are egos and there are culture clashes. So, as you kept prioritising according to the growth of the company, how did you ensure there is balance and how did you ensure that you pick the best leaders that are suited for the best role? How was managing that internally?

Jyoti: Sure. For the company to move forward at the velocity that you want to move to, almost every function has to operate at its best. Like I will go to an engineering department, for example, and say that, ‘I want you to assume for a minute that our sales is bad and our customer support is bad. I want you to build the product that we can win just on the strength of our product, that we go and do into a competitive situation, our product just on the strength we can build’. I would go to the sales organisation and tell the same thing, like, ‘Assume our product is bad, is worse than competitors, assume our customer support is bad. I want you to build a sale organisation that we can win just on the strength of your sales execution’ and I will do the same thing in our customer support and customer success and if our product is bad and if our sales is bad, can we win just on the strength of how good our customer success is? And the way I looked at it is, if I have these multiple functions in the company who are competitive differentiators and advantages of their own, the world of technology and startups, things change very fast. You know someone came up with a new product, technology shifted, something happened, if you have multiple competitive advantages and not just one, you get some runway to adapt to it or like you know, to change things and to kind of adapt to it and adjust to it, especially if you have missed out on something, so that’s how I would have looked at it that every function has to operate at its best and personal ego should not be a thing, like everyone has to operate and everyone has to drive the business forward.

The good thing in a startup is like, in larger companies these are bigger problems where people don’t know what impact their role does and all. In a startup, everyone’s role kind of matches clearly like (sentence incomplete). As a CEO, you have to create a lot of alignment though. I always talk about the Number 1 job of CEOs to create alignment between all the different functions, that they are all going in the same direction and they are all doing the same thing, they are all marching towards the same goal and vision and once if you do it and if you have the right leaders, you don’t have to do too much after that.

Pankaj: Were you always the CEO of AppDynamics, from the start?

Jyoti: From the start, yes. Until six months before our IPO plan.

Pankaj: So when did you really become the CEO? When did you say, ‘Now I am the CEO’ because there is a lot of debate and dilemma about you know, a lot of times the founder wants to be in the driving seat, so how is that for you?

Jyoti: For me, I talk about those different stages. As a founder, you are the CEO from Day 1 of your business but it’s really, you are responsible for getting to the outcomes of that stage. So in the stage 1 or stage zero which is really about getting the company off the ground and raise some capital. If you are the founder or the CEO of the company and it’s a two person startup, you can’t raise capital that you are not doing a job as a CEO because that’s your important part in addition to building the product and as an engineer whatever you are doing.

The next stage is finding the product market fit, so your job as CEO is to get to that outcome. So as a founder, if you don’t learn to achieve that by either acquiring those skills or surrounding yourself with people so you can learn to acquire those skills, you have not done your job well. So when you go to the next level, it’s the same thing like now you have to figure out sales execution, you go to the next level, you have to figure out you know strategy for a product market and you are getting close to an IP, you need to figure out operational efficiencies and things like that and along the way there are different things you need to achieve. So to me, all of these questions are like, should the founder be the CEO or not, doesn’t really matter to me, it’s like are people learning to get to the next level, are they learning the skills needed to the next level. If they are not, then they are not the best person for that role at that point.

Pankaj: Is there something like IPO CEO or an exit CEO or a founder CEO? What I am trying to understand is, in a company’s journey, these changes happens sometimes looking at, ‘Ok, we are going for an IPO, let’s get a new CEO or we are looking to exit or sell off… Do these things really matter? I am asking you because you have seen it.

Jyoti: I think none of this matters. I think what you want is, you want the founder-CEO to learn to get to the next level ideally. As long as they want to do it and they enjoy it and they are willing to do it. So that’s the first part but so the part where you want them to learn and adapt to the next level and they have to desire and want to do it also because sometimes it’s not just about ‘Can you learn this or do you want to learn something or do you want to be doing something?’, so those two have to fit but in some cases, even after the best attempts someone may not achieve the ‘What needs to be learnt for the next level’, that’s the time you think of doing it. Anything formulaic like some kind of formula of like this happens and you do that is all, it’s all about the person. Like, every CEO is different, every founder is different, there is no formula. Every time someone thinks of a formula, it’s a mistake, it’s a people thing at some point, there’s no formula to it.

Pankaj: Ok, let me shift gears now. This is over $3 billion dollar question and which you have answered in many forums, of course. Tell us something we don’t know about the exit. A lot of times, I mean, of course we are only looking at it from outside and wondering how and why it happened but take us through the core of that journey. Why did you do whatever you did?

Jyoti: So first of all, whatever you have heard from outside is most of the story. We are not looking to sell the company, like we are not looking actively for a buyer. We were going public. So our office in San Francisco and our first 50 employees flew to New York and they were in New York to ring the bell two days later. So that was all real. We had a good relationship with Cisco, they were a customer for a long time, they knew us well and we were in conversations with them to form a strategic partnership that we could sell the products jointly in the market. So it’s not that you know, suddenly it was like the first time we ever met them and they came out of the blue two days before.

But a few days before the IPO, they were like you know, ‘Hey, we are excited about this strategic partnership that we have been talking about and you know, why don’t we acquire you instead of going public’ because Cisco is going through this challenge of, ‘How do they transition from a hardware business to mostly a software business?’ and more of a subscription oriented business over time and they were convinced that you know something like AppDynamics could become a core foundation of that transformation for them. So it wasn’t just acquisition of AppDynamics business or AppDynamics revenue and all of that, it was also a kind of a key strategic element of their transformation from a hardware business to a software business and they didn’t want to risk it.

So they said, like, ‘If you go IPO, we don’t know if we would be able to make this work or not so why don’t we do this before your IPO’ and they made an offer, and you know as board of directors, shareholders, it’s your fiduciary responsibility to look at every offer and we looked at the first offer and said, ‘No.’ They made a second offer, we looked at it and said no to that as well and then they made the third offer and at that point it started to become like, it was the right thing to do for shareholders but there is also a part of like, when you think of and these are hard decisions, like you would think, a lot of people did tell me that, ‘You had an offer for almost $4 billion, you know, it’s probably a no-brainer to take it’. We had like 16 hour of a board meeting and intense discussion and fight on like, ‘Would we do it or not?’ to make that final decision. These are not easy decisions but to me the important factor is like you know, who are the stakeholders in that outcome?

Financially for me, if we had gone public or we went IPO or either of those parts, it won’t have made a difference in my life, at some point, it won’t have made a difference. To most of our VCs and investors also probably not that much but the key thing that I was looking at like you know, we had 1,500 employees almost, all of them had stock and if we didn’t make the right financial decisions, the impact on their life would have been pretty significant. So we also had to keep that in mind, like if we went public and this was an offer which was almost like two and a half times of what we would have IPOed at and if we took all the market risk and all of that for the next 3, 4, 5 years and our employees didn’t get that shareholder value they would have got, we had done the right thing for them. So those factors become important factor and personally for me that was a very big factor about why I supported that? And don’t think that I take a lot of pride in this because at AppDynamics, we are 400 employees who made more than a million dollars, so it’s life changing for so many people and that’s a big fulfilling part of what we do as entrepreneurs.

Pankaj: What did you do as an entrepreneur after the exit? Tell me the insights.

Jyoti: I tried to retire. So after the exit, I didn’t join Cisco in an operational role and you know someone who is asking me, how I pulled that off, but you know…

Pankaj: That’s a secret.

Jyoti: So I only just joined as an advisory role not an operational role there. So not too much to do, they had a good team in place and everything was you know, to take care of the integration and everything. So it was a good question on what to do after and the first thing I did was to try to retire and do nothing. So I did travel to a lot of places, Safari in Africa, we went hiking in Bhutan and all sort of things that were on my list to do, so we kind of got a lot of things from the list and then spend a lot of time sitting on a beach doing nothing and all that. But at some point you start, ‘Ok what do you want to do? Like, I am still quite young, I can’t retire’.

Pankaj: How old are you?

Jyoti: I am in my late 30s. But I can’t retire. If I would imagine myself sitting on the beach for the next 10 years, 15 years, 20 years and doing nothing, that just wasn’t exciting to me. And I was like, ‘What do I enjoy?’ So the question for me was like retire, second is like you know, become more of like a passive investor and advisor in companies and the third is like, operate and do things. And I was like, I really enjoy, that’s what I enjoy. And people will come and tell, ‘That’s not a good idea. Maybe your next company would not be as successful as the previous company’ but I don’t care. At least the one thing that I have the luxury to do whatever I enjoy. I really don’t care if the next company is as successful or not. This is what I enjoy so I am going to do it. So that’s the reason I just started this thing I call a Startup Studio where we experiment with multiple ideas and products so that we can build companies from them and we spin out, then companies with ideas are interesting and we have spun out our first company in which I am co-founder and CEO right now, the company called Harness and it’s exciting, it’s interesting, it’s fun like you know, to do all of that again.

Pankaj: Jyoti, I will come back to what you are doing now. But the other thing is that the entrepreneurial journey is also this fatigue that sets in and you know some people call it Founder depression, fatigue, I mean you name it. So have you had that kind of, we have an interesting audience. See, you are popular. What I am trying to understand from you is, did you face moments when you said, ‘Ok, this is getting to my nerves, whatever’. How did you deal with depression and fatigue?

Jyoti: A founder’s journey is a hard journey. So anytime people jump into entrepreneurship and the first thing I ask them is, ‘Are you ready for it? It’s not easy.’ Once you hear the success stories, it sounds easy and glamorous. People make it look easy also at some point but it’s really hard, you know it takes a long time, long commitment. There are moments all the time, it’s like, ‘Why are you doing this? Like this is so hard, this is so stressful. That happens a lot and it happened to me also. I think, when I initially started very early on, I was like, ‘I will try, if it doesn’t work after a year, I can always get a job back as an engineer that I was doing, so what’s to lose there?’

So initially I started with more of that mindset. The mindset started to change after sometime. After sometime, the mindset started to become more like and a lot of it is also to do with your employees because once you start recruiting people and you make them promises, you convince them that, ‘You should come and join me in this journey or this dream’ and you have done that to like a hundred people and you start feeling the responsibility now and it’s like you have made the promises, it’s almost like it’s your duty now, your responsibility in some ways which could be tiring but at least that becomes a motivation after a point. Like you don’t want to let so many people down, so in most times if we go with the mindset that failure is not an option and you have to find a way forward, you can find a way forward and then every step is the new thing to do but there are depression moments. There are moments when things are very hard, you want people with whom you can talk to, even though it’s a lonely job.

In my case I didn’t have a co-founder which one thing I really think was a bad idea, it just happened, I didn’t plan for it but the first person I hired, he kind of became a de facto co-founder and so at least I had you know, you want someone with whom you can talk to but everything and that’s really very, very important because there are so many hard times but what can you do, you have to go through it. If I have to do it again, I would probably look at like better life balance and work-life balance because when I was doing AppDynamics, I didn’t really care about it and I was just so obsessed with especially things like not taking care of your health because you are like, ‘Who has time to go to a gym or things like that!’ and that’s one thing you realise is a mistake because you can’t sustain your body after some time. Like, if you are not sleeping, you are not eating well, you are not working out, at some point your body will break, so I had that. So more than a mental depression, I had my physical depression that my body was just breaking down and so I had to do a re-set like, this can’t sustain and I did not just for me, I did it for lot of our team because a lot of our team was doing the same thing. So I would buy gym memberships for a lot of our team or get a trainer for them, that this is a long journey like you have to go and get a better balance otherwise we are all going to get sick and fall down there. So you have to get some better balance and things.

Pankaj: Final couple of questions. What role did or is your family playing in your life especially when you are now again taking the plunge in entrepreneurship? Has that changed? I don’t know when you started up, the involvement of the family or in terms of the decision-making – should you do or should you not. How has that changed now like you rightly said, you have the kind of a cushion, has that changed?

Jyoti: You know, I would say for most of us, it’s not as risky as people think it is. It’s like what is the risk like? In most cases, you will almost find, if you are good at whatever you do anyways, you will always find the same job back anyway again. You know, at least in US and in Silicon Valley that’s not an issue, say if like, I was working in a job and I failed in doing a startup on something and I applied for the same job again, I will most likely will get that or a similar job again in some other company I will most likely get it.

So even though it sounds like you know, it’s a big risky decision, it really wasn’t. Like, actually the way I looked at it, like say, if you are working in a job, your career ladder and I am working at this level, if I actually do a startup for a year, I would learn a lot and maybe I will come back in a slightly higher role. So it wasn’t really a risky decision. Everyone asked me like you know, how do you take the risk? To me, it’s really the decision is more about, are you willing to commit that much time and energy and passion because startups are very hard to do without the time commitment and the energy commitment and the passion commitment kind of thing. So you have to have a supportive family, your spouse, your significant other has to be supportive of you doing a startup. If they are not, then it would be a problem.

Pankaj: Final question before we ask everyone else to ask you questions. What is on top of your mind now? Now that you are building these new companies and back being an entrepreneur again. Is it the financial reward of a potential exit or an IPO or whatever it is or is there a higher sense of purpose?

Jyoti: You know, honestly I can’t spend the money I already have. So it’s not financial return that I am looking for.

Pankaj: We can help you with that.

Jyoti: No, but I am just saying that financial is a way to measure that you do something successfully, so that is always there. The only thing that drive me is, I enjoy that journey. The startup journey is a hard journey but it’s very fulfilling. It’s like you start from scratch and everyone is telling, ‘This market doesn’t have much potential or something like that’, like half the people don’t believe in whatever you are saying and you kind of, you are convinced of something, you try to do it and you go through hurdles and you go through challenges. Think of like, you know, let’s say, I played a video game that I really enjoyed. Why won’t I play it again? To me, that’s what really drives me, it’s a lot of fulfilment and there is a lot of fulfilment in, I also like making a difference in lives of people. Like a lot of employees, you can make a lot of difference in their lives, so that’s also fulfilling from a personal side of things but if I can build another company which is a great product in the market, solves a big problem and it’s financially successful, that would be great, I would love doing it, I will enjoy doing it and that’s what I want to do.

Pankaj: Godspeed with that. Thank you so much. You know, I suddenly see a lot of people here. We had a nice, private chat. So can we have some questions, if you have any?

Questions & Answers

Question: Hi, my name is Subhash. Well, clearly, Jyoti you have been an Outlier and I think I appreciate Accel and Pankaj to have brought that out today. I run a venture development firm where we help very young startups to sort of figure out their journey and one of the things among other things we have been struggling with them is they have to look at global markets. Almost not everyone but there is a lot of them that they should be looking at global markets because probably it’s my personal conviction that they should be looking at not just the Indian market and so on. Now, I wouldn’t want to miss the opportunity to talk to someone like you and not ask this question but how much of that Silicon Valley would you consider as a necessary ingredient for, not just starting a company or raising funds or finding a product market fit or scaling your operations but also to get an exit which has been a massive elusive thing for a lot of the startups for this country. How much would you attribute to that Silicon Valley theatre or and would you advise that for more and more startups to look at that very seriously?

Jyoti: You know, for startups in India to get to execute in the global market is probably the number one question that I have been asked in my trip and one of my purposes for this trip was to spend a lot of time in the startup ecosystem and almost I can see that’s the number one challenge that people are trying to address and I can see that. I do think like you know, there will be product companies who will figure out how to do global markets. You know there are some who are already starting to, there will be more over time, it’s a matter of time.

In Silicon Valley, yes, it helps because you have a better eco system for people, people know a little bit of how to do, what to do there, people to talk to and all of that but another difference in Silicon Valley, you don’t really have an option when you starting a startup, you are going for a global markets. So not having an option, the success from Day 1 means that. Here, the definition of success is Day 1 could be like, getting success in Indian market in some ways and now you are going from that to a transition to a new market and there is always a risk like if you get a product market fit in Indian market, that may not necessarily translate into a product market fit in a US market. In Silicon Valley, your product market fit from Day 1 would be US market, right? So that’s the one advantage coming out of Silicon Valley.

But I also think like you know, there are two distinct kind of businesses, there are businesses which could start from India, product companies, SaaS companies and sell to global markets and they are no different than a Silicon Valley company. You know the R&D here and probably in most cases the bulk of sales eventually will be globally spread out the way a Silicon Valley company would have and those will happen more and more at some point. And there is a second class of companies that are going after the Indian market to begin with and then they expand into adjacent markets, Middle East and Asia pacific and I would almost question like, ‘Do all of those companies necessarily have to go to US market’ and from a VC perspective you always have to chase the billion dollar global company as an exit, right! Because if you build a business and maybe the hundred million ARR or two hundred million ARR (annual run rate) is, that’s not the right outcome because these could be a healthy business growing to be like 20 million, even up to $50 million ARR and focusing on like India and the Asian and Middle East kind of markets. And is it always necessary that the success is the global market multi-billion dollar exit? And there is a livid of the disconnect also I feel, that it’s like, I do feel the venture capital ecosystem also has to maybe start distinguishing them between two sets of strategies or two sets of startup strategies and they don’t necessarily have to become morph into one set of strategies.

Question: Hi Jyoti, very inspiring talk. So, I am a one year old founder and found the advice very useful but one question that keeps me awake at night is this. While you are in this product market fit stage especially at scale, what are some of the most important things that you should solve for? So figure out 0 to 1: What do you need to get from 1 to 100, is there something that we should be thinking about and some things that we shouldn’t be thinking about at this stage?

Jyoti: I would say that the second part of what you shouldn’t be thinking about is very important. There is no point thinking about like hundred at that stage. If you are at 1, yes you want to think about 100 too at a very macro level, so you want to have the right vision, the right goal for 100 and you know what you want to probably roughly achieve at 100 but most of the time you want to think about 1 to 10 because if you don’t do 10 then 100 is not going to happen anyways, right? So if you are at the product market fit stage, you want to make sure that you are building for a wide enough market because if you are building for a very small market, the amount of effort is the same and your business will not grow too much. Whatever you are building, depending upon like, we talked about the global market where the success is measured in a 100 million ARR and a billion dollar outcome but whatever your market is, you want to be able to sustain for many years. So if you got your V1 product market fit, the early thing and that product, it will only sustains you for 12 months or 18 months and after that like you know, your market was too small, that could be a problem because then you will run into that wall of finding product market fit again, so for us, when I would and I don’t know if I did this deliberately but at least it was part of it subconsciously but I get a product market fit, can I push the company at least to like say 30, 40, 50 million dollars of business like which will take me three to four years but at least to have the product market fit for that long and is my market large enough for that and is my market large enough for that? And after that I had to expand into multiple products but that’s one factor. The second factor is also, in that product market fit stage is kind of the business case that you can execute on sales very well if your business case is very clearly defined. On like, why should someone buy your product? So may have like you know, your product is solving the problem but if you can articulate the business case, that ‘You should buy our product because we will get 2X more efficiency in this and this and it will solve you this much money and that’s the business case’ or like, ‘We are 40% cheaper than the competitor and we have the same product and that’s our business case’ or whatever your business case is, if you can identify that now once you are bringing sales people, it becomes much easier for them to go and execute on that business case because they need the product and the business case, to go and execute and build the sales force.

Question: Thanks for being here. It’s a great opportunity to get to see you in person. I am a founder of a developer focus startup, so as an engineer, I really want to know, how do you envision the future of developer tools and developer focus software because that’s something that you have deep expertise in? And if there’s one person from whom I would like to know this answer, it is you, so I really want to hear your opinion.

Jyoti: I don’t know the answer, man. No one knows, the world changes very fast. The only thing that I can tell you is like people will be building more software. There is just more and more software, if you look at like the people in the developer-software ecosystem as professionals, like your developers, testers, and operations engineers, there are like 15 million or so people and it’s increasing every year. The need for software for every business is increasing, every business is becoming more software business. So if you think about like, these are 15 million people who are building and operating, running software in the world and these are some of the most expensive people in the world. 15 million people, like they average salary in developed and non-developed countries is $100,000 a year. Like in US, you have to pay much more than that these day, so that is $1.5 trillion dollars a year, and these 15 million software professionals are driving the world forward everywhere and so much money is being spent. So now if you can take a small fraction of it and create efficiencies for those, there will always be opportunities to monetize them but you have to think of like, ‘Can you create efficiencies for those?’ and those efficiencies whose translate for the efficiencies for the businesses who are relying on those.

So you know, I am always passionate about developer productivity and developer tools and things like those because that’s how I look at it, like you know, what’s the out of the world population of 6-7 billion people? Those 15 million developers are the most highly paid and they are driving the world forward in most ways and there are lot of opportunities for them, always.

Question: One question on the new startup. See when you are first time founder, you are very scrappy and a lot of creativity comes because of the constraints and you don’t have a lot of money to spend. Now that you have infinite amounts of money, how do you ensure that, see the temptation to hire the best people or get into a good office and all of that will be there. How do you know or distinguish, are these things going through in your mind as you are building again? How do you keep the scrappiness of a new startup? Can you share some thoughts?

Jyoti: You know it’s a very good question and in some ways it is a challenge. It’s when you are first time doing a startup, all the constraints are there, scrappiness is there, all that, some of those constraints are lesser though, so I think about it like, ‘How do I create the same pressure or the sense of urgency and the same challenge?’ and now it’s maybe all set goals that are much more than when I did my first startup and will set goals much more aggressively, so that will create the pressure. So it’s kind of like if I had a goal for like when I was doing AppDynamics, in first year of sales, ‘I am going to do this much’ and which is a very good number, I would try to do 2X of it, so that will create the desire for scrappiness and pressure to o scrappiness again. So that’s how I am roughly trying to do it. You know, it’s still hard, the harder thing is impatience because when you have done a company again and you know you are operating at a much larger level and now you start from zero again, you get impatient, you want to get to the level 3 and 4 and 5 very fast but you can’t really accelerate things to fast, so there’s a bit of that impatience but also the team. I also realized like you know, ‘Yes, I have that problem’ but let me surround myself with the team that they don’t have that problem, so actually I don’t look for, in my team, most of the people are not coming from a very successful exit and some of that is by design. I don’t want everyone coming from a very successful exit and we are building this new thing. I do realise that I have the drawback that my scrappiness and hunger maybe less, so I want to surround myself with people like who’ll push me because they are scrappier and hungrier than me. So that’s how I am addressing but it could be a problem and I do realize that I do need to work on it not becoming a problem.

Question: Hi Jyoti, my name is Amaya. Thank you for sharing some great insights about your story. So I wanted to ask you, what are the areas I can develop the tools, is one that you mentioned. But what kind of founder and area you know, in terms of stage or whatever is something that you would get excited to mentor or advice or invest in?

Pankaj: What idea would you advise?

Jyoti: You know, if it’s an interesting big problem, yes. For many people, like developer tools is a boring thing but for me it’s interesting because I was a developer. So I look at it like whatever I can get passionate about and so I really have a broader set of things. Prashant mentioned, MindTickle. It’s a sales enablement, you know it’s nothing to do with developer tools but I used that product like, AppDynamics was a customer of that product, that’s how I met them and our sales people were loving that and I was like, ‘This is so great’ because we were struggling with those problems. So that became like, I got involved in helping them because I got exposure to a product that I really loved. So it could happen with anything. I am deliberately keeping an open mind on like what I should be involved with. The only thing is like, because I am doing my own things as well, I have finite amount of time and instead of like, how many companies and startups I could be involved in, let’s say, an advisor or a mentor in a small way, is very limited. Maybe I can take like one or two or three with the time I have. So whatever advice I have to share from my experiences more in broader forums, like a broader forum or a writing or blogs and all, so it’s just more scalable. So that’s how I look at it but you know, any problem if it’s interesting, I don’t mind helping.

Question: Hi Jyoti, thank you so much for a very inspiring talk. I just wanted to understand from a market fit, business use case to a scale up stage, what are the two or three things that you recommend?

Jyoti: You mean to a market fit to a scaling up the business?

Question: Yes. Absolutely.

Jyoti: Once you find the product market fit, really it comes down to and I have talked about it, the most important thing comes down to, figuring out, how can you build a reputable ‘go-to’ market model. You know reputable and predictable in some case also and it starts from how can you generate demand in a reputable manner for your product? Then once you generate demand, can you have a reputable sales process or sales people that will do it. And both startups like after the product market fit, they go through this period of almost like an efficiency dip because initially the founders are selling in the product market fit phase and the founders are selling., it’s very efficient selling, like your cost is pretty low and once you hire the first time, you will hire someone else to sell your product and they would never be as good as you in selling your product initially and you will get a dip in efficiency. But if you don’t take the dip, you would never be able to scale because you want other people to be able to sell it. For me, I remember, initially for every deal at AppDynamics, I was involved, like as a founder, you are doing every deal, it doesn’t matter how small the deal was and at some point, I set a conscious goal like if a deal is less than $50,000 for us, I want to not be involved by design and sometimes it’s hard for us, like if you are used to be in every deal, for you to take out of those. And at some point, those deals starting to happen and then I set the goal, moved the bar, that if the deal is less than $100,000, I don’t want to be involved and then it became $250,000 and then became $500,000 and then like one day, there was a million dollar deal happened that I didn’t even know about and that was like a great milestone to have because then the system was scaling because you had a machine going on, that will do things and you didn’t really have to be a part of it. So you have to kind of start building on, how do you build a reputable scalable machine and it’s a combination of everything. You have a basic product but you have to build a sales machine, you have to build a demand generation machine, you have to build a customer support and success machinery around it, so you just keep bolting units to scale. That’s really what scale is all about and that also includes people like recruiting, bringing talent so that you don’t get constrained from a scaling perspective.

Question: Hi Jyoti, this is Prasanna. The question I have is, startup before AppDynamics, I think it got acquired you said. How did that affect the choice of what you did, that’s one. And second, you said, you know it got shaped by the first few customers that you spoke to, so how did that affect the choice of the customer and how important is a good first customer or first few customers in building a really a world class product? The reason I ask is, again in the Indian context, either if you building for global audience or for an Indian audience, the quality of that customer determines in some ways is the quality of your product and where you eventually get to. Would love to hear your thoughts on that.

Jyoti: So, I will answer the second question first. The first customer and the quality of those customers, my advice normally is, try to not limit to one first customer, try to create a pool of like say at least, 4-5 because you don’t want to be influenced too much by one particular customer. It’s the same thing like, in the early stages to find the product market fit, volume helps because volume and averaging helps in, for you to get enough data points that you are not getting influenced too much by one strong data point or from like one customer, two customers. So in AppDynamics, we did a good job on that, we talked to many customers not like a few and that created more volume or data on like what works, what does not. And also like when we set the goal, it wasn’t like, ‘Get out customer number 1’, you always have some who is customer number one but really like, it’s like the first five customers and so there is a little bit of that. So you have to be conscious that you don’t want to narrow yourself to one customer or two customers too much. You also don’t want to build things, you want to listen from customers and you want to adapt and do a lot but you don’t want to lose your point of view on your conviction. Like that’s how you started that startup. You have a point of view and a conviction of where the world is going, so you want to learn from customers that, ‘What is the better way of getting there, you adjust and adapt a little bit but you don’t want to lose that like that conviction on where the world is going then why should you exist as a company at that point. So, it’s really that balance that you have to do.

Question: I have just one off-beat personal question. So Jyoti, when you are in India, what is something that you miss about the Valley and when you are in Valley what’s something that you miss about India? It can be business or personal or whatever.

Jyoti: Sure. At the personal level obviously you know, for anyone who is in US, I am foodie guy, so it’s pretty simple, when I come to India, all I do is eat food and I eat a lot and you always miss that, good food from here. I also really like, lot of things are becoming very similar to Silicon Valley like when I come to, like a place like Bangalore, in terms of the startup energy, excitement, you go to a coffee shop and people are discussing startups, it doesn’t feel too different from Silicon Valley anymore. Like the energy level, the excitement level, you know it’s very, yes people would say, ‘Yes, they are very different’ but in many ways they are very similar. I feel more different going from Silicon Valley to New York than from Silicon Valley to coming here to Bangalore and talking to like the lot of the startup people here in some ways because culturally they are very similar kind of the energy levels there.

Pankaj: Thanks so much.

Jyoti: Thanks, everyone.

(Kanika Berry has a Masters in Business Administration and has been a communications specialist for over eight years.)

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