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About The Guest
Shirish Nadkarni is a serial entrepreneur with 20+ years of experience in creating consumer businesses that have scaled to tens of millions of users worldwide. He was the co-founder of Livemocha, the world’s largest language learning site with 15+ million registered members.
Livemocha pioneered the concept of social language learning and was later acquired by RosettaStone. Prior to Livemocha, Shirish was the founder of TeamOn Systems, a mobile wireless e-mail pioneer that was acquired by Research in Motion in 2002. The TeamOn technology served as the core foundation for Blackberry Internet E-mail, which had over 50 million users at its peak.
- 00:00 – Intro
- 04:30 – Shirish Nadkarni’s Origin Story
- 07:15 – What Was The Point Where Shirish Decided to Build His Own Company?
- 11:00 – How Does Shirish Research Market Fit Product?
- 14:08 – If Given The Chance, Would Shirish Have Started His Company Differently?
- 15:33 – Shirish’s Advice For People Who Are Doing Research On Product Market Fit
- 23:49 – How To Plan To Sell Your Company?
- 25:50 – Shirish’s Time At Blackberry.
- 27:19 – How Did Shirish Start His Second Company?
- 30:23 – Lessons Learned Starting Multiple Companies.
- 33:28 – What Are Some Strategies To Raise Funds For Startups?
- 36:19 – How Do Founders Reach More Investors For Fund Raising?
- 37:55 – How to Select A VC As A Partner?
- 39:17 – What Is The Standard Agreement With A Venture Firm?
- 40:03 – Why Is Strong Company Culture Important To Build Or Grow A Company?
- 44:47 – Who Should Read Shirish’s Book?
- 46:27 – How Can People Connect With Shirish Nadkarni?
- 47:16 – What Was The Biggest Challenge Of Shirish’s Career, And How Did He Overcome It?
- 47:50 – How Important Is Being Able To Pivot As An Entrepreneur?
- 48:31 – Who Was Shirish’s Mentor?
- 49:28 – A Book Or A Podcast Recommendation By Shirish
- 50:15 – What Is One Thing That Shirish Would Tell His 20-Year-Old Self?
- 51:01 – What Is One Big Misconception About Start-ups?
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What is the Success Story Podcast?
On this podcast, you’ll find interviews, Q&A, keynote presentations & conversations on sales, marketing, business, startups, and entrepreneurship.
The podcast is hosted by entrepreneur, business executive, author, educator & speaker, Scott D. Clary.
Scott will discuss some of the lessons he’s learned over his own career, as well as have candid interviews with execs, celebrities, notable figures, and politicians. All who have achieved success through both wins and losses, to learn more about their life, their ideas, and insights.
He sits down with leaders and mentors and unpacks their stories to help pass those lessons onto others through both experiences and tactical strategy for business professionals, entrepreneurs, and everyone in between.
Machine Generated Transcript
company, software, email, blackberry, startup, founders, Microsoft, book, customers, people, product market fit, spoke, hubspot, coffee, grow, point, workout, raise, find, vcs
Scott D Clary, Shirish Nadkarni
Scott D Clary 00:00
Welcome to success story the most useful podcast in the world. I’m your host Scott D. Clary. The success story podcast is brought to you by the HubSpot Podcast Network. The HubSpot Podcast Network has incredible podcasts like the gain grow retain podcast the podcast is hosted by Jeff Bruns, Bach and J Nathan. Now gain grow and retain is built to inspire SAS and technology leaders who are facing the day to day challenges of scaling host Jeff and Jay share conversations about growing and scaling subscription businesses with a customer first approach. If any of these topics sound interesting to you, you’re gonna like the podcast creating more brand advocates SAS as a predominant model for business, customer success at scale, or the challenges of integrating new tools with CSM some of these topics pique your interest, you’re gonna love the podcast you’re gonna love gain grow, retain, go check it out wherever you get your podcast, remember gain grow attain on the HubSpot Podcast Network. today. My guest is Shirish Nadkarni. He is the author of from startup to exit Trish is a serial entrepreneur. He has had an incredible career. I’m going to read through some of the things that he’s done. Some of them you definitely know. So he’s a pioneer in email technology and online education. He has developed consumer technologies that have been used by 10s of millions of users worldwide. He successfully founded three companies and achieved exits with two publicly held companies. These are some of the accomplishments he co founded live Mocha, the world’s largest language learning site with over 15 million registered members. Live mocha was selected as Time Magazine’s Top 50 sites in 2010 and won the prestigious English speaking union award presented by Prince Philip, Duke of Edinburgh live Moca was acquired by Rosetta Stone. He is the founder of team on systems and innovative developer of wireless email technologies. He successfully negotiated acquisition by Research In Motion rim Blackberry, the team on technology was the foundation of the BlackBerry Internet email, which serviced over 50 million mobile users. He contributed to RIM’s early growth in the wireless device market through partnerships with T Mobile. He launched rims first smartphone device the BlackBerry 7100 with a phone form factor, he established MSN as an industry leading web portal. He was responsible for Microsoft’s entry into two of the largest application categories in the intranet, email and search successfully negotiated acquisition of Hotmail and partnership with Inc Tomi Corporation. He reestablished Microsoft as an undisputed market share leader in Windows development tools, and he was responsible for Microsoft’s early entry and leadership in PC based email marketing. He has been working in tech for a long time to say the least. So we spoke about his career. Candidly, we spoke about all the things that he’s done, and then I tried to pull out some lessons from them. So some of the actual lessons that we went into how to research so that you can establish proper product market fit, how to properly plan your company, plan your steps and your milestones in your company as a founder. So when you do get offers, you understand what you want to do how you want to be acquired, we spoke about differences and similarities lessons learned as he transitioned between different companies. We spoke about raising funds. We spoke about finding investors proper fit investors. We spoke about how to select a VC as a partner. We spoke about how to structure agreements with venture capitals. We spoke about culture, we spoke about target market, we spoke about challenges and entrepreneurship. An absolutely incredible conversation if you are an entrepreneur or if you are a techie or if you just love listening to somebody that has worked through so many different industries. As the Internet has matured, this is an incredible podcast for you. So let’s jump right into it. This is Trish Nadkarni. He is serial entrepreneur, but more recently the author of from startup to exit
Shirish Nadkarni 04:29
Alright, great. First of all, Scott, great to be here with you. Thanks for having having me on your show. So I’ll tell you a little bit about my story. I’m based here in Seattle, Washington. But I came to the United States in my late teens and I did my undergraduate education here in the United States. And then after getting my MBA from Harvard business school, I joined Microsoft, this was in like in 1987, right after they had gone IPO. So this is the very early days of Microsoft, they had probably about 1000 employees. And I was 26 years old. And I was given the responsibility for launching Microsoft’s software in the email category. Email today is, you know, pretty widespread. And everybody uses email. But at that time, in 1987, only very large companies used email, and they use it on, you know, mainframe systems, hardly anyone had a PC based email solution. So I was very fortunate to have launched the whole category of email, you know, on the PC and the Apple Macintosh back in 1987. And then, I’ll talk a little bit more about my history at Microsoft. But I also got to do the Hotmail acquisition at Microsoft, which was a pretty large acquisition at that time, about $400 million. And that became MSN, Hotmail and grew to over 300 million users around the world. So that’s a little bit about my history, early days. And then I became a tech entrepreneur, I’ve started three companies and had successful exits for two of those companies. And that’s what prompted me to write my book.
Scott D Clary 06:34
So we’ll talk about some of the lessons that you’ve learned over your career, which I’m pretty sure has formed the basis for what you write about. Now, even walk me through, like, walk me through as you left, as you left working for somebody, and you know, when I was looking at, I was looking at, you know, your, your resume and your, your history, you’ve worked with some of the biggest names like, these are, these are iconic brands that you’ve worked with, including if I’m not mistaken. The first company you founded team on? Yeah, it was acquired by Blackberry. Yeah, you’ve worked with like, all you’ve worked with the biggest names in tech. So I, what point in your career did you pivot and start your first company leaving? Was it after the Microsoft? Or was there other things that you did in between?
Shirish Nadkarni 07:22
Oh, no, this was after I had done about a 12 year stint at Microsoft. So I had amazing experience that at Microsoft, I always wanted to be a tech entrepreneur. But in the early days of the PC industry, it was hard to be an entrepreneur, because you had to not only produce software, you had to package it into, you know, five and a half inch floppies and create a box and then find a find retail distribution like Egghead, you may remember Egghead in those days. So not really easy to find customers for your, for your software. But in by the late 90s, the Internet was in full swing, and you could actually develop applications in the cloud that could be distributed straight to your customers. So it was a lot easier to get started. And I had great experience at Microsoft, you know, working on MSN and launching Hotmail, you know, once we had acquired it. And so I felt that there was a big opportunity to create an email solution, which was business or enterprise grade. And, you know, provided to the cloud as opposed to installing servers in your, in your company. And so that was the genesis of my first company T mon systems, which was a business grade or enterprise grade email and calendaring solution that could be deployed by companies, typically small and medium sized companies.
Scott D Clary 08:57
And how did you how did you start team on? So walk me through? Were you you were not? Or were you a technical co founder or founder rather?
Shirish Nadkarni 09:07
No, I was a business guy. I had a technical background, certainly. But I was, you know, it has been decades since I’d written code. So I had to actually find a technical co founder, which was pretty challenging. Obviously went to my friends who I knew at Microsoft, but the Microsoft stock was doing incredibly well at that time. And didn’t want to leave. They didn’t want to they don’t want to leave. They don’t want to lose their health insurance. So finally, I was introduced to my co founder SIBO Roy, he was working in the Bay Area and us working on nightscapes email, software. So he was the perfect CTO to book with me. But even he was reluctant to leave the company. And so we came came to an agreement meant where he would work part time. And I would find an outsourcing company to go build the software, and he would manage it. And then he would move to Seattle, and join the company full time once we had raised our initial round of funding. And that’s what happened, I raised about 15 million in in 1999. And he joined my company, and then we started recruiting company in recruiting people locally for the company.
Scott D Clary 10:29
And some of the, obviously, some of the lessons that you learned in that first, in that first company you founded are things you speak about in the book. Well, one of the things that are obviously, like a big issue for startups is the fact that nine out of 10 of them fail, mostly because they don’t find proper product market fit. So how did you? How did you find that proper product market fit? What was your What was your strategy for that? And also, just a follow up question, I want you to give some context, did you? Did you raise that money pre revenue? Or did you wait until you were actually you found product market fit you were selling to the market before you raise that? 15?
Shirish Nadkarni 11:07
Yeah, that’s a great question. No, the this was during the crazy days of the.com, boom. And based on my reputation, having worked for Microsoft, obviously was a big help. I had, you know, we had only developed beta software. And I started running, raising money. And I raised, you know, $15 million in funding on a pre revenue basis. So we didn’t have any revenue at that point, and raise it on a pre money valuation of 23 million. So it was totally crazy times, at that time to be able to do that kind of money without really having any kind of revenue, customer traction. But to answer your first question about product market fit, what we discovered that took us about six months to kind of iterate through various versions of our software, we were able to sign up a lot of users, but we didn’t really get good retention. I think that was because people were still uncomfortable, you know, using email in the cloud, and relying on some other company to store very sensitive corporate information, which is your, you know, email information. And so it became clear to us that the original idea was not working. And so we decided to pivot our solution to providing mobile access to your existing email. This was the time when BlackBerry was getting started, they had about a couple of 100,000 users. And it was a small, you know, form in like a pager form factor, BlackBerry, instead of the, you know, the smartphone form factor. And at that time, you know, regular phones, but becoming internet enabled, and you had something called a web browser on your phone, which you know, as a small screen allows you to access the internet. And so we decided that, you know, that, Hey, why do you need a specialized device like Blackberry, which can be expensive? Why not enable access to your email on your phone, and that’s what we did, we, we basically reverse engineered all the proprietary email systems like Microsoft Exchange, and Lotus Notes and AOL mail and Hotmail, and so forth. And we would allow you to access that email from your phone, wherever you are.
Scott D Clary 13:36
Understood, okay. And so your your products, so that’s a that’s a pretty crazy startup story. So you the fact that you raise 15 million for revenue. So you you were you were playing with investors money while still trying to figure out product market fit? And you’re iterating? I’m just curious, would you have done it differently? If you could redo it? Was that a lot of stress? With the 15? Freeway,
Shirish Nadkarni 13:57
it was a lot of stress, you have a lot of responsibility to your investors? Yeah, I think I would have done it differently, I would have done a lot more, you know, market research initially, to validate whether the idea made no sense at that time, you know, today, you know, the idea of demand is something that is widespread. So it was a matter of timing, the so the idea was great, but the timing was not right. Because it took quite some time for companies to become comfortable with using software on the cloud. And, you know, we were one of the first SAS software, you know, introduced into the market at that point. And so, whenever you introduce a new concept, it takes, you know, takes time for companies to adopt it. So I wish I’d done a lot more market research to really understand hey, you know, is this something that is ready, you know, in terms of market acceptance or
Scott D Clary 15:01
And what? What advice would you have for somebody who after you’ve learned and you’ve gone through this, to find that product market fit or to validate that idea before you take it to market?
Shirish Nadkarni 15:13
Yeah, I talked about that in my book, from startup to exit, whole chapter dedicated to, you know, achieving product market fit. And so
Scott D Clary 15:24
it’s not an easy, it’s not a quick, easy.
Shirish Nadkarni 15:28
Yeah, what I recommend is, obviously, conduct a lot of customer interviews. And don’t even talk about your solution first, or ask the customer, you know, the like your solution. First, First, understand what are the top three or four problems that they have in the domain that you are kind of researching. And if your problem that you addressing is not in the top three or four, then right there, you may want to pivot and understand, Okay, let tell me more about the top three or two or three problems and maybe there is a solution I can build, that is more of interest to you. Because if your solution, if your solution is not addressing a top three or four problem, then even though they may be addressing an you know, need, it may not be top of mind to customer. And as a result, your sales cycles will be extremely long, because the customer is going to say, I’m going to first address my critical problems. And then I’ll get to some other problems that you know, I need to address. And so first, you know, focus on, you know, the top three or four problems, make sure that your solution tackles that. And the other thing that I recommend is actually testing, even before you build your software is actually creating a website and using Google sem or Facebook ads, drive users to that website and see if you can get customers to register for your solution. Because that will tell you, you know, when you actually start marketing a solution, what kind of uptake Are you going to get? And are you going to get enough users and it’s going to it’s going to cost you how much it’s going to cost you to really acquire those users and can you build a profitable business where your lifetime value for your customer is far greater than the cost of customer acquisition? So those are two things I highly recommend that people follow in terms of a method methodology for achieving product market fit.
Scott D Clary 17:31
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Shirish Nadkarni 19:27
Yeah, so once we decided to pivot to providing mobile email software, then we started marketing to wireless carriers because they had to install our software and make it available to their customers. And we got traction with T Mobile, which is based out of fear in Seattle. They were very interested in the solution that we were providing. And then we also started talking to BlackBerry because BlackBerry at the time was limited in its in its access to only Microsoft email software, whereas we provided access to a whole range of proprietary email systems. And so as we started discussions on licensing our software to them, they came to the conclusion that this was very strategic for them, and they would be better off acquiring our company. And so they in 2002, they made an offer to acquire team on. And we decided to at that point that given that, you know, Blackberry was becoming quite, you know, well known. And because they had existing relationships with wireless carriers around the world, that we could get much wider distribution for our software through Blackberry, as opposed to trying to do it on our own. And this was also a time when, you know, the.com, bust happened. And so raising money was very, very hard at that point. So the sale to BlackBerry made a lot of sense for the company. And we did extremely well, you know, our technology became known as BlackBerry Internet email. And it grew to about 15 million BlackBerry users over time. And so had really widespread usage within the BlackBerry community.
Scott D Clary 21:16
What are and when you were going through that process? So they were thinking about licensing it? And then the conversations started around whether or not we should just acquire this software? What were some of the things that you were thinking, because when you’re when you build a company is there’s different ways to exit? Right? You can go for another funding round, you could technically IPO it, or you could just sell it to a company. So why did you? I think you sort of alluded to it, because the.com Bust it was it was harder to potentially take it in other directions. Is that the reason why you decided to sell to BlackBerry? Or what other considerations should you think about when you’re trying to exit a company?
Shirish Nadkarni 21:55
Yeah, that’s, that’s a great question. Because a lot of founders have to come to that decision point, in some point, whether they are actively selling the company, or whether somebody approaches them for an acquisition. In our case, as I said, you know, funding was very difficult to raise, we did have actually an offer, from our existing investors to continue to fund the money fund the company. But the terms were not very attractive for us. Because valuations had come down significantly at that point, because of the.com Bust. And second consideration was the fact that BlackBerry had, you know, relationships with all the major carriers around the world. And so, you know, we would have been much more successful getting distribution for our software, through BlackBerry than trying to do it on our own. And that ultimately worked out, you know, for us, because, as I said, you know, our technology reached about 50 million BlackBerry users, you know, within a few years, and was critical. And it was also critical for Blackberry, because they were able to not only reach large enterprises, but also small businesses, you know, who could use BlackBerry because of our software.
Scott D Clary 23:19
Were there things that a founder should think about when they’re starting to get offers or they’re starting to get approached or even during the life of the company that can help them get a better valuation, when they’re exiting is are things the way they structure the revenue or the way they are certain customers they go after that they should think about,
Shirish Nadkarni 23:38
I would say the best, the couple of things that founders need to consider. Ideally, your company, there’s a saying that your company should be bought, not sold. So you want to be in a position where your company is getting offers for acquisition, as opposed to you going out there and start trying to sell your company. And you should typically look to do an acquisition when the economy’s doing really well. Versus when the economy’s doing poorly, because at that time, it’s very hard to sell your company. So first of all, you know, the economic circumstances should be, you know, should be amenable to helping you sell the company and get the best price. And the second thing that I advise in my book is that you should think about hiring an investment bank that specializes in your vertical, whatever market you’re addressing, and they can line up a number of acquirers and create competition between those acquirers and help you get the best price. Because we have only one acquirer at the table. It’s a lot more difficult to get a good price, then it’s either something or nothing, versus a situation where you have two or three acquirers. Who are competing to acquire a company and you can get the best price for your company as a result?
Scott D Clary 25:05
Did you did you work with an investment bankers? Yes,
Shirish Nadkarni 25:08
yes. We, once we got interest from BlackBerry, we hired an investment bank to help us with the sale of the company. Yes.
Scott D Clary 25:18
Very smart. Yeah. Okay. So then so then you, you sell the company to BlackBerry. Do you work for BlackBerry for a while? Or Yes, I did.
Shirish Nadkarni 25:25
I BlackBerry was a great company to work for I work there from 2002 to 2006, approximately. And I, not only did we integrate at the team on technology with blackberry to create something called BlackBerry Internet email, which, as I said, reach 50 million BlackBerry users over time, but also launched a number of BlackBerry devices through to through T Mobile. I, for example, launched the first BlackBerry device that was that had a phone form factor, as opposed to a PDA, you know, form factor. And that was brims entry into kind of the phone, the traditional phone business as opposed to just a, you know, smartphone business. So it was a great time to be at Blackberry. They’re growing very fast. And they were kind of the the top device that everybody wanted at that time, and was known as Crackberry. If you remember, because
Scott D Clary 26:32
I do. Device. Yeah, it had quite a run at quite a run. Quite a
Shirish Nadkarni 26:37
run. Yes, yes. Sad to sad that they had, they got taken over by iPhone and Android, but they had quite a run for about a decade.
Scott D Clary 26:48
So you eventually eventually finished up at Blackberry. And then you started another company, because you just you were you couldn’t sit around, you couldn’t sit around. So you had to start live MOCA. So walk me through, walk me through the second, the second entrepreneur story, the second startup story and how that came about.
Shirish Nadkarni 27:09
Yeah, it came came about, you know, based on two factors. One was, you know, I was traveling in Spain with my family and just landed in Morro Bay in in Spain. And we rented a car from the app from the from the airport, and it was dark, and we got lost. And we ended up at a gas station and I stepped on the car to ask people around me how to get to the hotel. And unfortunately, everybody spoke only Spanish at that time. Things are different today. But this was in you know, 2006 2007 timeframe. So I turned to my kids who had been learning Spanish for a couple of years in middle school. And I said, Okay, you know, ask them for directions in Spanish. And not Not surprisingly, they couldn’t really speak any word of Spanish, and became clear to me that the way that you know, kids learn Spanish in high school and middle school is really not the way to learn. And the way to learn in a foreign language is by practicing with native speakers. So that was kind of one. One thing that stuck in my mind. The second thing was, at that time, Rosetta Stone started becoming popular, and they had these kiosks in airports. This was in 2007. But they’re selling their boxed CD ROM based language learning software. And it’s it’s stuck. Stuck struck me that in a day and age at that time, broadband internet was quite prevalent, that why do you need this, you know, piece of CD ROM software on your PC, why not just stream it from the internet. And you could create an online learning program that could not teach you a foreign language. And so we came up with this concept of social language learning where everyone was not just a student, but also a teacher. So I could be learning Spanish, as a native English speaker and I could, you know, help somebody in China learn English, whereas somebody in Mexico could be learning English and teaching me how to speak Spanish. So that was the genesis of live MOCA. And we were the first of its kind on the internet. And we grew very rapidly to over 15 million users in over 200 countries around the world.
Scott D Clary 29:51
And and what was what was different or what was the same when you started live? Moca Was this another idea that you took to in was pre revenue or did you bootstrap it at this point, because I’m sure you had some, some cash coming from the past exit. So walk me through the the inception.
Shirish Nadkarni 30:09
Yeah. In this case, we had launched ly mocha. And we got really good press and the investment community. This was pre the financial crisis, the investment community was investing in startups. And so we were lucky to have raised funding at that point, we raised about $6 million in funding from a local VC firm here in Seattle. And then started, you know, rapidly growing the the, the our user base. From that point on.
Scott D Clary 30:50
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Shirish Nadkarni 33:47
Yeah, um, a critical piece of that fundraising strategy is to really tell a compelling story about what kind of transformation is happening around the world that is going to make your company successful. And in our case, the key transformation that was happening at that time was globalization. Everybody was talking about globalization, you know, they’re talking about how, you know, jobs were being created in countries like China and India and Brazil. And as a result of that, there was an immense need for people around the world to learn English. So whether you were in China or India or Brazil, or any, you know, country where jobs were being outsourced to. It was critical for people in those countries, you know, they wanted to get ahead, then learning English was their ticket to success. And so, you know, I kind of painted a picture of a billion plus people around the world wanting to learn English and how the Internet would enable us to reach people all around the world without having to sell these, you know, sending out boxes and create distribution, for software and all that all that could be done very easily, you know, through the internet. So that’s one of the critical pieces that you have to kind of talk about. And then you have to show, you know how your solution is really unique. And it’s going to capture the imagination of, you know, the potential customers, and then finally comes down to the team, you know, you know, I had prior success and having sold demand to BlackBerry. And so that gave me some credibility that I had achieved some level of success. And that I could potentially repeat that again with my mocha.
Scott D Clary 35:48
And did you have to? Did you have to reach out to many investors? Or did you only have to reach out to a select few? Is it a volume game? At any point?
Shirish Nadkarni 35:56
No, it’s not a volume game. Typically, you reach out to between five or 10. Investors, and either you or you find traction, or you don’t at which point you need to kind of, if you really can get your story across, you know, that, you know, five to 10 investors, then you need to kind of pull back and say, what’s going on? What’s going on? What’s wrong with my pitch? And really, you know, talk to existing investors, other entrepreneurs, and understand what’s going on? Is it external factors? Is it your pitch that is not resonating? What’s going on? That’s not because you know, you just got to be otherwise, just banging your head on the wall and getting bloody in the process and wasting a lot of time and energy, when you could be focusing on building a company.
Scott D Clary 36:49
Every day? No, sometimes I feel like when I speak with founders who are fundraising, it seems like almost a full time job to do the fundraising. And they can’t focus on their company, because they’re spending so much time looking for money.
Shirish Nadkarni 37:03
Yeah, that’s what I’m picking the right time also to pitch your company is very important. So it all again, depends on the investment climate. But generally, when you have some real traction, to show, that’s when you should go out and raise your next round of funding.
Scott D Clary 37:24
And the other point that you discuss, and you speak about in the book, I thought is an interesting point. And I mean, I agree with his point a lot is that you have to be careful who you select as a VC partner. Yeah. Walk me through why that is?
Shirish Nadkarni 37:37
Yeah, I mean, there are, you will find that there are two categories of VCs out there. There are those who have who have been prior entrepreneurs have deep operational work experience, and they know what it takes to build out in a great startup. And those that are, you know, who have MBAs or financial background, but don’t really have expertise in how to build a company. Now, not both sets of people are really smart. Usually, we’ll find that there are a lot of smart people. But I found better success with VCs who have prior startup experience, because they really understand you know, what it takes to build a startup, they’re more patient, they have better advice to offer you they have more connections so that you can leverage those connections to build your company and build partnerships, and find people who can advise you on your startup. So I typically encourage founders to go find VCs who have deep success and deep operational experience to back them up.
Scott D Clary 38:46
And do you do when you when you structure those agreements? With the with the venture partner? Is that part of the actual agreement where they may they may offer some strategy or they may make introductions? Or is this sort of like an unspoken handshake agreement just because you know, the experience that they have?
Shirish Nadkarni 39:03
No, it’s an unspoken handshake agreement. Typically what happens is when you get investment from a VC firm, then one or two partners from that form, will join your board. And so by joining a board, they are committing to spend a certain amount of time with your company and advising advising on your strategy and, and operational issues. So that’s an unspoken agreement. Yes.
Scott D Clary 39:31
Very good. And the last thing that that I pulled out from this book that I thought was important was the emphasis on company culture and the importance that plays in growing a startup and I think that everybody, I think anyone’s going to disagree that having a strong company culture is important, but in a startup environment, why is it even potentially more so?
Shirish Nadkarni 39:54
Yes, it’s actually not a very common for fun to take the time to create a company culture. And oftentimes the company culture will simply reflect in how the founders, you know, work. So when I was at Microsoft, for example, you know, Bill Gates then define a culture and said, these are our cultural values. We basically all emulated bill, and we were super, like, Bill, we were all, you know, super hungry, super aggressive, which you know, certain Microsoft Well, for a long time, but also got Microsoft into trouble with the Justice Department. So I definitely advise founders to take the time to work with the management team to come up with a set of values that they want to, you know, promulgate to employees within the company and take every opportunity to really discuss those values, whether it’s, you know, new employee orientation, or whether it’s company meetings, they highlight certain accomplishments and kind of relate those accomplishments back to their values. Those are the things that are really important. And the reason that the culture is important is because at some point, the company is going to outgrow you, and you will not have the opportunity to work with everyone. And so you want to make sure that the culture defines the guardrails and the process by which, you know, your employees will make decisions and how they’ll interact with each other, how they interact with customers, how they interact with partners. And if you want a certain type of behavior, then you need to define that culture and really, make sure that your employees understand your values. You know, Amazon is a great example. They have, you know, 14 different principles that they’ve articulated, which are, you know, and in fact, the hiring process, they make sure that the hiring people based on those principles.
Scott D Clary 41:56
I just want to take a second to thank the sponsor of today’s episode HubSpot. Now, you may have heard me speak about leveling up in the past how we can level up our careers or businesses or customer experience. I wanted to take a minute and focus on that last because when we level up our customers experiences, we transform our customers into evangelists and help our business and our careers grow like crazy with new features dedicated to helping your sales teams improve your customer experience, HubSpot is on a mission to help millions of companies grow better starting with yours. Conversation intelligence tools help your teams get real time insights into calls with automatic recording transcription and call analysis with more visibility into customer conversations, coaching and customer feedback becomes that much easier, easy share meeting links, let customers see availability and book meetings for you all from the HubSpot platform. This cuts out endless cycles of scheduling email, learn more about how you can transform your customer experience with a HubSpot CRM firstname.lastname@example.org. Very smart. I think I think that’s actually a good point. I mentioned that culture is important. But you’re right, I think that something when you’re a startup founder, you may not see the value in it day one, just because you’re so distracted with all the other stressors that are going on in your life. But think long term think longevity, like you have to get that you have to get that right from day one. Or that can that can damage you in the long term for sure.
Shirish Nadkarni 43:25
Yeah, I mean, the example of Uber, you know, Uber, was super successful, because they were very, very aggressive. You know, Travis Kalanick, who’s the founder and CEO of for long time, was very, very aggressive in in, you know, in fighting the, the taxi industry. But unfortunately, the aggressive culture really created a lot of problems for them. And ultimately, he was fired from his from his position. And so, you know, really have to be very careful about how you define your culture and how that changes, you know, over time, maybe you need to be aggressive initially, but then as you grow your company, you know, the tone of the company, you know, might might need to change as well.
Scott D Clary 44:16
And one thing that I just wanted to ask you, because you put this book together, and even as I was I was reading through, it goes through literally every part of building a company, which is like incredibly impressive. Who is, you know, here will show it here, if somebody is watching or you know, it’ll be in the show notes as well. But who is this book for? What is the most important thing that you want somebody to take away after they read this book?
Shirish Nadkarni 44:40
Yeah. So the book is, is meant for anyone who has an interest in either becoming an entrepreneur or understanding how the startup industry works. So it’s designed to be especially for founders or aspiring founders, is designed to be a guidebook that you can one read from start to finish and understand the whole journey. But also can be a guide books, reference. So, you know, have a couple of chapters on fundraising and how term sheets are negotiated. What does each term mean etc. While you might forget, after you read the book, that specific portion, but you know, when you get ready to negotiate your term sheet with VC partner, you may want to go back to the book and read Okay, what does you know participating preferred mean? Or what does anti dilution clause mean? All those terms are covered extensively in the book.
Scott D Clary 45:48
Very good. And then I actually forgot to mention, so I’ll leave it in the show notes. But the book is called from startup to exit. And then this actually brings me to my next point, if people do want to get the book, or they want to connect with you, yeah, best website, social media, where do you want people to go, you can drop as many handles or websites as you’d like.
Shirish Nadkarni 46:07
Yeah, so the the main website I have is Shirish nadkarni.com. So that’s spelled Shi, Ri, sh, na DK, AR and ai.com. And you’ll find me very active on LinkedIn, Shirish, en Shi, RI sh, and as well as the same handle on Twitter, as well as I’m very active on those particular channels.
Scott D Clary 46:35
Very good. Okay. So to finish off these interviews, I just like do a couple rapid fire questions to pull out some insights from your career. So as long or as short as you’d like, whatever, is fine with me. So the biggest challenge that you had in your career, what was it? And how did you overcome it?
Shirish Nadkarni 46:51
The biggest challenge was with my first company with T mon systems, as we discussed, you know, my, my initial foray with the product was not successful, and then we had to pivot. And we were successful in pivoting our company and finding a good solution, which ultimately led to the acquisition by black bear.
Scott D Clary 47:11
And I think that’s actually a really important point that I think we’ve we’ve kind of glossed over the fact that you’ve mentioned the the word pivot a few times. How important is being able to pivot as an entrepreneur?
Shirish Nadkarni 47:23
Oh, yes. Is it it’s always has to be at the back of your mind, as you’re doing, you know, testing for product market fit. You know, you need to continually understand your customer pain points, how are they using your software? Are they engaged with your software? Are you retaining your customers, all of these things, you have to really understand and have ideas in your back of mind as to how to take the product forward, whether it’s, you know, whether it’s fine tuning it, or whether it’s a complete pivot, those are things that you need to be thinking about all the time.
Scott D Clary 48:01
You’ve probably had a lot of people that have impacted you over the course of your career, if you had to pick one person who had an incredible impact, who was that person? And what did they teach you?
Shirish Nadkarni 48:10
I would say my, my mother was very impactful. To me. She always believed in me and encouraged me to do things beyond what I thought my capacity was. So she she really pushed me hard and gave me the freedom to, you know, and also encouragement more so to pursue things that I thought were a stretch for me. And that’s how I kind of grew over over time. And when I call it company, United States, she did not raise any objections, she encouraged me to do that, even though it meant that, you know, we would be separated and not be able to see each other for long periods of time.
Scott D Clary 48:57
If you could recommend a book or a podcast that you’ve read, or consumed lately, what would it be?
Shirish Nadkarni 49:04
For for the book, I read one of my favorite books is called positioning by I think the author is elverys. And it’s incredibly smart book about how to think about positioning your product in a variety of different ways. And my favorite podcast is how I built this by Guy grass.
Scott D Clary 49:35
Yeah, I’m trying to get there. I’m trying to get
Shirish Nadkarni 49:37
one day One day you will be on that list. Yes. Yeah,
Scott D Clary 49:42
exactly. Exactly. Okay, so if if you had to tell your 20 year old self one thing, what would it be?
Shirish Nadkarni 49:51
I would say start sooner. I started my first company when I was 40 years old, which is not you Not too old. But I tell young people these days that, especially graduating from colleges that, hey, you have, you know, you have all the freedom in the world, little amount of risk. You know, stay in your parents basement if you need to save money, but you know, go start something or go join a startup, because this is the time to do it. And you will have all the energy and excitement in the world to do it.
Scott D Clary 50:30
What is a big misconception about startups or entrepreneurship?
Shirish Nadkarni 50:37
I would say a big misconception is that, you know, you need to work 8090 hours a week. Certainly, there are some number of people who do that, but I think you can do a start up. And still, you know, I had, you know, young kids growing up when I was doing my startups, and I still managed to find time to spend with them, help them with their homework and so forth. I worked long hours, but you don’t necessarily need to sacrifice everything to achieve, you know, success it is. I mentioned that to people that it’s a marathon that you need to run fast. But you need to pace yourself, you can bonus about in the first first innings because you need to continue going for a long period of time.
Scott D Clary 51:29
Very smart. And last question, what does success mean to you?
Shirish Nadkarni 51:34
Success to me the thing that I get the most gratification from is getting the message out about whatever you’re doing to a large community of people and and and delighting them with what you have done. So whether it’s a product, the team Elana ly, mocha, maybe these you know 15 million BlackBerry users or 15 million line mocha users on my book. I want to get the word out and and help people know and be like them, and help them in their journey as much as possible.