A Product Market Fit Show | Startup Podcast for Founders
00:03:32 · Poojan Kumar
[00:03:32] S0: In both the startups I have done, I typically said, most of my things are more applicable to B2B, not B2C. B2C works different. But in B2B, there’s couple of things. If you can go build a quick prototype or whatever, you and your co-founders leave your job, build a quick prototype and show something, that’s one way to go raise capital. Or in both my companies at least, there was no easy way to do that. The initial alpha, beta, whatever you want to call it, did require 10, 15, 20 engineers in a good amount of time, call it year, year and half. In both cases, we had to go raise capital on an idea, on basically the idea, the market, and the team. The idea is to basically show that it’s a unique thing. Nobody is doing it right now. Market is really, if I go and build it, this is a market and this is a problem it solves. The team, just to give the confidence that, yeah, ultimately I’m asking for a multimillion dollar check, but this is the team is capable to go and execute and build on this. In both cases, we basically had gone that route. In Pernix case, we went and raised $7 million Series A with basically a PowerPoint deck with all the three things. Then Clumio did the same thing. Again, as I said, it, it varies based on what you’re doing. In my case, we had to do that because there’s no way to kind of – and there’s no point in building a prototype and showing that we had the background to go and say that, yes, we can build this. Now, it was about going and convincing somebody that, yes, it’s unique and there is a big market to go after.
00:05:07 · Pablo Srugo
[00:05:07] S1: How did you do that? With Clumio, I get it, because at that point, you’re a founder with a large exit. You’re proven. When you’re repeat founder, successful repeat founder, it’s frankly just a lot easier to raise. But with Pernix, to go out and raise $7 million on a deck, I can tell you, I meet so many founders and very few are able to do that. I know that as a founder, I think people listening to this must be like, what did he do? What was the magic? What was the secret to actually getting $7 million? It’s not $1 million. It’s $7 million off of a PowerPoint presentation. Maybe you can take us through what’s your advice, and also what is it that you think you did right, specifically with Pernix to be able to raise $7 million off of a PowerPoint, as you said?
00:05:53 · Poojan Kumar
[00:05:53] S0: It wasn’t easy. I would say that was always a desire. At any point in time, just take a step back, you raise a round of financing. It’s meant to take you from Point A to Point B. The goal was for us to go raise that $7 million of Series A. We had made a plan saying that if we are able to raise that, then I can go and build a shippable product, and then I’m ready for Series B. Basically, get me through the Product Market Fit, and really go raise a Series B to really go scale. I knew that that’s not going to be easy. If I’m not able to do that, I had a backup plan, and the backup plan was go raise a million, million and a half, which I thought was definitely doable just based on the background. Because remember, I had enough close to 15 years of enterprise experience, and it was enterprise idea. I had credibility in the space. You have to be clear in your head and what you want.
00:06:46 · Pablo Srugo
[00:06:46] S1: I think that’s smart, having these two plans, but not necessarily disclosing it. Sometimes founders almost disclose too much, and it then appears a little bit soft. It’s like, I’m going to try raise seven, and they say this, I’m going to raise a seven. But if I can only raise two, here’s what I’m going to do. It’s like, okay, you got to go all in at least in the way you talk about it. That makes sense. My question though is, ultimately, Plan A worked. You did raise 7 million, and I’m curious what you attribute that to. How much of that was your credibility, as you said, having been in the enterprise space? How much of it was the deck and the presentation? Maybe how much of it was just meeting the right investor who just got it?
00:07:21 · Poojan Kumar, Pablo Srugo
[00:07:21] S0: I would say, I think that it’s a combination of everything at the end of the day, but the third factor you pointed out is very important. This is where meeting the right folks is very important. You have to go to folks who understand the stuff. The VCs that have gone both in my previous company, as well as at Clumio right now, are folks who get the space, who understand enterprise B2B very deeply, and are not afraid to make a Series A bet on the right idea and the right team. You really have to go and get to these folks, and you get one shot. I tell the folks, you get one shot. If you’re lucky, you get the second meeting, but you should expect that if you don’t nail the first one and there’s no second meeting. Again, and going to the right set of folks after having honed the pitch, which is again I tell folks, don’t go to your perfect target in the first listing. It’s okay. You’ve got to burn a little, burn a couple folks to perfect it. While I was doing it for the second time at Clumio, it’s a little known secret that, no, I still had to go through a couple of VCs to perfect my pitch and stuff like that before I decided to go to the folks. I was really interested and I knew that these folks, if I can convince them, they have the ability to give me that check. [00:08:37] S1: At Pernix, do you remember how many of those meetings did you do? Did you do 10, 20, 50?
00:08:37 · Pablo Srugo, Poojan Kumar
[00:08:37] S1: At Pernix, do you remember how many of those meetings did you do? Did you do 10, 20, 50? [00:08:41] S0: No. I would say it was still very laser-targeted. It is very important to be very laser-targeted in some of these things. I think I would say if my goal was to raise a million, million and a half seed, I think there’s definitely more options I had, and I could go and optimize. You can optimize for the person. You can optimize for the valuation. You can optimize for a bunch of things, as you know. But this one was more laser-targeted. There was very few of those folks, and I actually went methodically after them. I would say it was definitely less than 10. [00:09:10] S1: Maybe fast-forwarding a little bit. You go through Pernix. You end up raising it a Series A, Series B, Series C, about $60 million in total. You end up exiting. The company gets acquired in 2016 or so, I believe. Correct me if I’m wrong. Then a year later, you start Clumio. What drives you to do that? Did you not think about, okay, I’m going to go take a break for <laugh> a few years sabbatical, some people call it? Or did you know right away, I’m going in for a second one?