Insights into Venture Capital with Udit Naik

Kip ((00:00:02)) - Hey everybody, welcome back to the show. I am pleased, honored, super excited to have Udit Naik with me here today. founder of Zeplin, or rather, nimble Zeplin, limited partner of seven BK Venture Capital and a member of New Fund Venture Group, a venture capital leader. Super excited to have you on here. And, thanks so much.

Udit (00:00:25) () - Thanks. Thanks for having me. And it's definitely a pleasure being on the show. I'm fantastic with this conversation. Yeah.

Udit (00:00:32) () - Well, good. Well, I always kind of start with people's origin stories, so if you just kind of show a little bit of background about who you are and how you came to get involved in venture capital.

Udit (00:00:40) () - Sure. So originally I'm from India, grew up in the city of Mumbai, and I'm part of that generation that started pursuing professional as well as academic opportunities abroad. So, you know, prior to my generation, it was not really possible financially or logistically for people to do it. But, you know, during my generation, we saw a lot of people actually consider that and leave India.

Udit (00:01:08) () - So after I got my engineering degree in computer engineering, I thought, you know what, let's give this a shot and see where life takes me. And I came to University of Maryland to pursue a master's in computer science. And this was in the mid 90s. And as soon as I graduated, we had the, pre Y2K frenzy. And that was right about the time when, Oracle was moving very hard or pushing very hard to get customers to move off of their legacy systems and utilize Oracle products. And their whole, selling proposition was, okay, you don't want the Y2K to cause disruption. So if you're going to spend money and investment in making changes, may as well use the newer generation products. So I started working for them and it was predominantly traveling all the time, going to different customers and, you know, having a knowledge of the entire repertoire of Oracle products that Oracle was selling. So it was very, very intense because there were many times when Oracle Oracle would drop us on, customer sites where customers were going through some severe problems with the Oracle products.

Udit (00:02:27) () - And our job was to, go and not only fix the problems, but also convert the customer from a grumpy one to a happy one. Now the challenge there was that back then, people were not used to seeing foreigners come and tell them what they needed to do on their systems, so that was an additional challenge that was tacked on to me. but I think, you know, I was able to overcome all those hurdles And with every customer that I ended up, meeting, at the end of the session, not only were the problems fixed, but then I had someone who had converted from being a complete xenophobic to somebody who said, I had no idea about this, you know, different cultures, and I've made a friend. So this continued up until Y2K. And then after Y2K, obviously the whole e-commerce dotcom, you know, frenzy picked up. So now it was, you know, a completely different philosophy of, implementation, where now, being competitive was very important because customers had gone past one challenge.

Udit (00:03:34) () - Now they wanted to understand, okay, how do we end up adopting this technology to become really fast because our competitors are doing it? So we did that for the three years and then after nine over 11, obviously travel ended up becoming very, you know, difficult. And by then I had, spent almost like 6 to 6 and a half years with Oracle, and I'd done the same thing again and again, and I thought, okay, it's time for a change. And I went to work for Oracle customers. because one of the things that I had never experienced was that I would always go in and fix the problems and let the customer then take it forward, and then I would never see them again unless something drastic happened. but then when I started working for Oracle customers, now I was part of the daily grind. I was part of the day to day minutia. you know what exactly goes on? every day, all the politics that you know exists in a typical corporate workspace environment. You know, initiatives that take very long to get approved because people don't have the money.

Udit (00:04:39) () - And at the same time there are no benefits. So it was a great experience because then that helped me understand that, not every innovative idea is, palatable for the customer. Right. So when when you're selling any kind of software product, you're always trying to pitch in that, hey, this is great. And because we have built it, you have to use it. But that doesn't really work, you know, all the time because it has to have some, tangible benefits. So I, I've worked for these companies, and I think one of the benefits I got from that experience was that, both the companies that I've worked for had, acquisition related environments. So it exposed me to a situation where, you know, how do you navigate situations where if you have acquired a company and you have to collaborate with people that could potentially end up losing their jobs? How do you get that cooperation? And at the same time, you know, if you want to, cut down on costs and, you know, different companies are using different systems, how do you decide which one to use and then how do you convince people to continue using it? So very, very different set of problems to address.

Udit (00:05:52) () - And at the same time, had very limited resources and limited means because it's basically a typical corporate environment. So it did that for almost like a decade. And after that I realized that every decade I had done something different. So it was now time to do something completely different. And I ended up, looking at what have I not done so far? And pre-sales and customer success was something that I'd never done in my life. Okay. And I would always see all these sales reps who would come in to sell products. And I would always never have like a very high opinion about them because I would always be like, hey, yeah, he's expressing concern and he wants to talk to me, but he just wants to sell and he wants to close the deal, and then I'm not going to see that person again. but when I started working with the sales teams of, you know, the companies that I was employed with, I had a renewed respect for these individuals. And it was predominantly because it is not easy to sell.

Udit (00:06:55) () - And every day you wake up with the reset button because it's not like, you know, you have something that happened the day before that you can continue, you know, moving on. And the worst part is dealing with rejection. And it's a very bitter pill to swallow. And it's not for everyone, but I highly recommend everyone to kind of go through it because that helps you build a very different kind of character. So I had the best times working with sales reps. I learned a lot more. So the sales rep that I worked or partnered with, had decades of experience in technology. I mean, these were like X, IBM, X Microsoft, you know, people who had gone through different trends and technology and, you know, they were like old school people who really, you know, put a lot of emphasis on values and how you should treat a customer. And it's not transactional. It's more of a relationship based approach. and obviously, by my experience, having been on the other side of the fence as a customer, I could actually share a lot of my experience with them and tell them that, hey, if you are doing this and that is wrong, because if I would, I was a customer and if you would have done this, I would have not really been happy.

Udit (00:08:10) () - So it was a good, you know, mutual, beneficial experience. Yeah. So I did that for almost ten years. And then last year I decided that, okay, now it's time for another shift. and this time around, I looked at what have I not done before? And, and I think the first thing that jumped at me is that I haven't gone to work for myself. And, you know, it was very, difficult decision because once you have gotten used to a paycheck for 30 years, the prospect of jumping in and knowing waters and not really having a guarantee is not it's not for the meek. and so I did that. And obviously the learning has been exponential in the last year. So everything that I learned in the 30 years, I think I've learned a lot more in the past one year. Wow. one of the things that I wanted to do was, about ten years ago when I moved to San Diego, I got involved with, Angel investment. just because I wanted to diversify, my investments.

Udit (00:09:14) () - And, I got to meet a lot of young, founders who, you know, had started companies. And, you know, these are like, individuals that haven't really even put in mileage from an employment perspective. And they were like, you know, putting everything at stake and going out on their own. And many of them were failing because they were not making the right decisions. And they didn't have that kind of, corporate experience that would have otherwise reinforced, their whole selling, you know, proposition. So I thought, okay, I'm going to help only those companies that are financially strapped and that are, you know, that have less than, like, 60 to 70 people in the company. And I'm going to do it on a fractional basis. Okay. But that I'm not going to go there and camp out for years and just kind of keep on building the customer. I'm just going to go there, help them, and then get out. And, I decided to focus on just, complete flexibility.

Udit (00:10:14) () - So that way it's not like there was always a pressure that, hey, I got it. Now that I'm paying for this guy, I need to make use of this person. It was more that, okay, you tell me, what is the problem? Are you willing to commit your time because, you know I can help you, but then it's your team that will have to do it. And it's been going, you know, it's definitely had a rough start just because selling is not easy, as you know. And every day you take small wins and you keep moving forward. Oh very good. Here I am, I think, definitely looking forward to it. Still not ready to throw in the towel? I think it's, as I said, like the interaction with the sales reps that I had in the past definitely helped me, come to one realization that every day is a Groundhog Day. He just you have to hit the reset button start. You have to mentally get yourself, you know, in the you know, you have to get the game face on and then go at it.

Udit (00:11:06) () - And then at the end of the day, you just, you know, as long as you put in all the efforts that you could, that's all you can do. You know.

Udit (00:11:12) () - Exactly. Right. Absolutely. Yeah. We talked a little bit before we hop down here just to kind of demystify for people. How do you get involved in venture capital? Like if someone asked you that question, how would you advise them?

Udit (00:11:26) () - Yeah. So I think every state, has angel investment groups. some states actually have a lot more. So like, for example, California, New York, even Florida, for that matter. And now Texas and Washington are also coming up with, a lot of different, angel investment groups, these groups are what we call as, kind of democratic groups, in the sense that you, you give your money to the group, but then you are involved in the process of actually deciding whether you should invest in a group or not. So all you have to do is just find out these groups and then reach out to them, because, most of these groups are not managed by people who are running after individuals to get the investments.

Udit (00:12:15) () - for most part, these groups are, you know, a bunch of 15, 20 people that had like a network. They got started and they put in their money and now they're investing. But it's not like they are not going to refuse new money if that comes in. So if in your state or in your city, if you find some, angel investment groups, research online and if you reach out with them, they'll be more than happy to take you in.

Udit (00:12:38) () - Oh. Very good.

Udit (00:12:39) () - And the angel investment, you know, contributions or funding are also on a smaller, denominations. so it's not like, you know, there's investing millions and millions of dollars. It's usually like 250,000 to $500,000, which is what like a pre-seed or seed company needs just to keep things moving. So between like 15 to 20 people, it comes to like, you know, around five, $6,000, depending on, you know, what the check size is. But it's a great learning experience. And it's not for like the Uber rich or the ultra elite or well-traveled.

Udit (00:13:13) () - I mean, it's anybody can get in. The only thing is that you're never going to see that money when you need it, right? You have to be mentally ready for that. It's not like you, you know, you give the money and then next year you have some kind of a payment that you need to make for any kind of, you know, house related experience or marriage or education. You're not getting that back. And the odds of returns are also the it's almost as good as Vegas, for that matter.

Udit (00:13:41) () - Uhhuh.

Udit (00:13:41) () - Yeah. But at the end of the day, you're helping an entrepreneur. you know, first of all, get started. If you believe in something really strongly. So let's say if you, you know, believe in, like, cure for cancer or something like that, and that helps you feel good that, hey, you're funding something that is directly related to solving a bigger problem. And and then, you know, you get better at identifying what investments are worth diving into and what are some of the lemons that, you know, people come up with that's not really worth getting in.

Udit (00:14:16) () - and especially these days with, you know, the whole AI frenzy, you know, everybody wants to do something with AI, but that's when you need to be a little bit cautious. Yeah.

Udit (00:14:26) () - Yeah. Any any particular strategies for you personally that have proven effective for identifying or capitalizing on high growth opportunities.

Udit (00:14:34) () - So I look at, you know, realistic projections from sales perspective because many of these founders that come in, their initial sales are based on their network of contacts that they had, and they tapped into them. And, you know, that's the way to get a go about getting started. But then if they get like four clients and they get like, you know, half $1 million in revenue, they feel that, oh, I could do this in three months. So now for the next nine months, I just have to repeat it. And now I'll make like $2 million. And that's not that's not the way it works. So I look at people who are grounded and who are upfront and say that, hey, this is where we are now.

Udit (00:15:16) () - We're going to build a team, and this is the max that we can hit this year, and this is the minimum that we can hit this year. So that realism definitely helps. I also stay away from people who say that, okay, we are going to go to IPO. You know, when you ask what exit strategy. Because that's what we want to know. Like how soon can we get our returns back. And any, any, any founder that say that. Yeah. You know, next year series and after that series B and then IPO, we just stay away from that because that's not it. It's great to have that dream. But I think statistics, you know, say otherwise a very like 1% or half a percent never make it to the IPO level. And then from a technology perspective, I especially preferred technologies that are solving problems that do not have any kind of regulatory or, administrative bottlenecks.

Udit (00:16:12) () - Okay.

Udit (00:16:13) () - Just because you don't really know what you know. So like, for example, biotech, pharma, first of all, I don't have enough knowledge in those areas.

Udit (00:16:21) () - but secondly, there's just a lot, you know, you have, like, privacy and things like that. So, a lot can go wrong. And first of all, you don't know anything about that space and what could go wrong. So you better have just not touching it. Yeah. And then, anything that is consumer tech that is geared to, you know, the Gen Zs and is affordable. I prefer that. Okay. Because, you know, it's very easy to market. you don't have to pick up the phone and call a customer. And, you know, you basically just go on social media and you can advertise about the product and it will get picked up. And you have like all these different ways of evangelizing the product. So I prefer that. But the best thing is that you get all kinds of businesses that come asking for money. And when you're part of a network, what ends up happening is that you may not have the expertise, but somebody else might have the expertise, and that person can say that, hey, you know what? Just for my hand, walk with me.

Udit (00:17:19) () - I think this is good. They'll make some money out of it. Yeah.

Udit (00:17:23) () - Oh. Very good. How about as far as challenges go? What are some of the biggest challenges you faced while building businesses and how maybe how you've overcome those?

Udit (00:17:32) () - So I guess I mean, for me personally, I this is the first time I have ventured into forming a business. but I think the it has taken very long to get to this, stage. And it has predominantly been the when we were growing up, I think the whole, financial security and the importance of having a job was so drilled down into our heads that taking any risks was always, you know, considered that, hey, you are going to fail, so don't even bother taking that risk. And do you want to lose all these? You know you want to lose like a strong paycheck that you're getting every two weeks and just venture out in something that you have absolutely no idea about. So that fear was the biggest challenge. And it's basically the fear of unknown.

Udit (00:18:23) () - And it took a while because after seeing so many people do this and a lot of people fail, but then there are people who succeed. You're still looking at people who fail you, never looking at people succeed. So you always think, oh, no, maybe I might be that guy. I don't want to do this. so that has been quite, quite a difficult one to overcome.

Udit (00:18:45) () - Absolutely. How about, just coming from India, coming to the US, just our free market system here. And true capitalism always has. Embracing the free market benefited you and in your business model or your investment philosophy.

Udit (00:19:00) () - And there's no other country in the world that I would rather be in than the United States. I mean, I can hands down, even if I were to go broke, I would rather be broke here. Uhhuh. Broke anywhere else. Because if you have an idea and if you're willing to work for it, this country makes it, you know, less challenging for you to get started.

Udit (00:19:21) () - And there are no bureaucratic hurdles that we go through. there are so many assistant programs. I mean, it's basically meant to help promote entrepreneurship and do some good for the world. And I cannot emphasize enough for people who always complain, what is wrong with the country that, hey, you know, go live in some other country and see how things are and then come back and, you know, say the same thing. But I think it's important to have this capitalistic, philosophy and culture, because that's the only way you're going to promote innovation. That's the only way you're going to help other countries and other entities and other cultures actually come up as well. And even from the investment perspective, we find so many companies that are based out in Europe and for East Asia that are clamoring to start selling in this country. Because, you know, this is where people have the money to, you know, kind of purchase the products and people have the money to spend. So how do you get to that stage.

Udit (00:20:28) () - Well it's only through capitalistic, you know, approaches.

Udit (00:20:32) () - Oh very good. How about any. Just kind of looking at at investment opportunities. Any trends or opportunities you see. You mentioned AI, but that you see out there that you're most excited about or you're trying to position yourself for.

Udit (00:20:46) () - I think, so definitely looking at, you know, climate tech because that is something that is not getting that much love, but it's a serious problem. And, we definitely need to address it. agtech is another one. because what ends up happening is that it gets abandoned by investors because unlike selling to, normal companies where, you know, you just pick up the phone and call and then you, you get a response and then you have a lead with act attack. I mean, you're looking at, you know, people who are based in the most remote parts. Nine times out of ten, they're not going to pick up the phone because they're not even close to the phone. Uhhuh. And you have to go there and, you know, talk to them and, you know, talk about, you know, xenophobic.

Udit (00:21:36) () - I mean, they probably haven't seen people from other states in other countries, right?

Udit (00:21:39) () - Right.

Udit (00:21:40) () - So I think the amount of consumption that we are going through on a food basis and just the sheer amount of challenges that these people have is definitely worth looking into. And it's not getting the kind of attention that it should, from the investment community. So I like that as well. And then beyond that, I think everything else is just it's the same thing, but a different flavor. I mean, look at I, you know, every third company. You feel okay, I thought I saw this before. it's the same thing. Just slightly tweaked or modified. but time and again, you come across some company that is doing something really different, and is not harping so much about AI that you feel that. Okay, what if you were to use AI? How better can quit this product? So I like those kind of companies. Okay.

Udit (00:22:29) () - Yeah. How about when you talked a lot about founders here when you're looking at founders? as far as just kind of leadership goes, any, any leadership traits or things you look for and, you know, again, in founders that you're investing in or even looking at yourself, you know, leadership lessons that you've learned over the years.

Udit (00:22:49) () - Yeah. So I think one of the things that we always like to see in a founder is the willingness to, let somebody else, take the reins and run with it. And the reason I'm saying this is because, I mean, nine times out of ten, I'm dealing with founders who are technical. I mean, they have a technical background, and now they have come up with the product and they feel they can do everything, like they can build a product, they can sell it, they can manage a company. Well, you know, and one of the questions we ask is that are you open to having a CEO of the company? And if the founder said that, no. Why should I get a CEO? I am the perfect CEO. We stay away from those people, because that in itself shows that you're not willing to understand or look at a perspective that is unknown to you. and then from a leadership perspective, we always look for founders who actually have done a great job building like a strong network of not just employees, but like advisors.

Udit (00:23:53) () - Okay. And the way, you know, it turns out, is obviously you have to go out there, you have to socialize, you have to, you know, kind of make sure people know who you are. And I could be wrong in judging a person from a leadership perspective. But if there are 15 people who basically endorse that person, then for me that is a good stamp of approval. Oh very good. So I like that. And then at a personal level, I think I have I used to have roles where I was leading people, and then I think at some point in time I got a little bit, kind of tired of keeping up with people's expectations. Right. because, you know, I cannot bring a change to everybody's lives every year, and you have to work within the confines of the business that you are working in. So I decided to kind of not lead, but try to reflect inwards and see how I could, you know, be a stronger person and be a leader for myself, like, you know, so I have this voice in my head that basically switches between a leader and a personal following, and that definitely helps quite a bit.

Udit (00:25:03) () - And when I help these companies out, I kind of toggle between those two voices and see what really works for them.

Udit (00:25:13) () - Oh, that's very good. How about looking at, just like core values or company culture? How important is that? Is your investing or even just building building the business?

Udit (00:25:26) () - You know, I think so we definitely put a lot of emphasis on, you know, the core problem that people are trying to solve and then what are the values that they're going to stick to? you know, in order to get those, companies going, the main thing that we look for is are people open to, adjusting their expectations just to meet with the values that they have indicated they are going to follow. Right. And when we find that flexibility, we understand that, okay, for them, values are more important. and we want to make sure that we are putting all our money behind these founders to make sure that they succeed. So, for example, there are some companies that say that, hey, we are not going to compromise on our standards when it comes to, you know, the kind of product that we build.

Udit (00:26:23) () - And there are instances where customers come and tell them that, hey, we don't like this. we would like you to change this for us. Now, if their values, one of their values is that. hey, customer satisfaction is our core value, and if they are not really tweaking that, then we feel that, hey, how are you going to, you know, if one customer is asking you for some change and you are not able to make it, how are you going to deal with all these other customers that you feel you're going to get in your bag? So it's definitely important. But oddly, I'm seeing that the new generation doesn't emphasize that much on values. I think for them, it's it's something that is good to have, but it's not something that you need to follow. So I feel that a lot of the younger generation, they I think they have that in their list of things that they should talk about, but they don't channel their, you know, their journey around that specific aspect.

Udit (00:27:23) () - Interesting. Yeah, very.

Udit (00:27:25) () - We get a lot of, we get a diverse range of, founders from an age perspective. And the older they are and they are more focused on values, but they are very, resilient to making change.

Udit (00:27:42) () - Uhhuh.

Udit (00:27:42) () - Yeah. And then the younger ones, you know, the drop of a dime, they can easily make a change, but then they're like, okay, you know what? To help with the values. You know, I knew I was going to do it, but now I cannot stick to it.

Udit (00:27:52) () - So very interesting. Yeah, I think that's I think those trends do play across those generational lines for sure. How about when you're looking at like, you know, you know, a founder's open to a new CEO or open to bringing people on the team to, you know, surround himself or herself with experts, people that are smarter than them and different areas. How do you look at or what's your approach to attracting high performance leaders into your companies or onto teams?

Udit (00:28:27) () - So usually what ends up happening is, when we meet these founders, they already have a very small team that they have built based on their previous jobs or previous relationship that they've had.

Udit (00:28:40) () - And if we feel that there is some, founder that could use some help, we in our group, we have plenty of people that have played those roles and are now currently retired. So the first thing is to, have them chat with these individuals and if they want to, take their guidance for like a short period of time on a monthly basis. And that's how it starts. Otherwise, we reach out to people like you. I mean, you know, like you're in my network tomorrow. If somebody were to, have some kind of a need, I would just say, hey, you know, go talk to Kip. specializes in a specific category of, you know, like, C-level leadership. And we kind of connect them, and then we independently have a pulse into what's going on, because then we can ask you that, hey, do you think this person is going to gel with somebody that you place? And do you think there's going to be some kind of a personality issue that we need to be aware of? Because at the end of the day, it's all about protecting your investment, right? So you want to make sure that, you know, we trust you and we trust your opinions.

Udit (00:29:44) () - And at the same time, you know, you have a broader Rolodex of people than we do. and it becomes much faster, much easier. and then sometimes, it, you know, it happens for the benefit of the company, that we never even thought that we could, you know, get because many of these CEOs have their own connections and they can open up other doors that we never thought we would be able to. but yeah, we have, we have, like, around ten, 15 names across the country, like, you know, depending on where the founder is, we just said, hey, go talk to this guy. Okay. Well, and we connect them.

Udit (00:30:22) () - Oh very good. Similarly, any practices that you guys employ as far as just ongoing growth and development of employees or leaders in your companies.

Udit (00:30:35) () - So thanks to, you know, the YouTube phenomenon. There's no shortage of things that one can learn on their own. Sure. So, I in my previous companies, we used to, get these leadership development consultants who would come in, you know, really conduct very nice programs that you could, participate in.

Udit (00:31:01) () - but then off lately we have seen that even that has become like a luxury now. Okay. And, you know, because obviously it cost money. And, part of the problem is that now with everybody being virtual, it's tough to, you know, create a nice program that can make everybody interactive and not have them getting distracted, while the program is going on. but typically, Like when I was employed and working for companies, that's what we used to do is just have, really state of the art, programs that were created by people who had a very strong reputation in the industry and have them come and, you know, coach us. And then from an investment perspective, I mean, we don't get involved in, telling the founder on what he or she needs to do from a leadership perspective or what kind of program, unless they come asking for a solution. Yeah, we don't really interfere because they don't like it. They like to keep things, you know, like to have a barrier between you.

Udit (00:32:02) () - Give us the money and we'll do the rest. Uhhuh. Interfere in day to day affairs. So.

Udit (00:32:07) () - Yeah. No, I guess that brings a really good point. How can you, you know, start to answer it here, But as a venture capital investor, how involved are you in the operations of the business or, or is it really or write a check, step back where here's a resource if you need us, but we're just going to trust you like how how involved you actually get in the business.

Udit (00:32:27) () - So if you look at, some of the big successful companies that have, you know, gone, and, you know, done their IPOs, They have been funded by, these investment houses that actually have a huge, army of people that help them operationally. And what ends up happening is that if you are a founder and if you were to go looking for money, you have a better chances of success if you go with them, even though you will have to part with a significant chunk of your company.

Udit (00:33:04) () - Sure.

Udit (00:33:05) () - But the minute you go there, you're going to be, you know, showered with all kinds of, you know, benefits from not just people, but even like in their within their portfolio of companies. Let's say if you're looking for some, server or infrastructure related, you know, work, then they have, a, you know, portfolio company that does the same thing and it does for a fraction of the cost. So now you you don't have to go to AWS or any other big vendor. You can just go to that company. And similarly, if that company needs some service that you're offering, then that company comes to you. So now the money stays within sure, that umbrella and it keeps on circulating, circulating and the all the bad things that you would have normally discovered after the fact. Now you're seeing it from the top.

Udit (00:33:54) () - Uhhuh.

Udit (00:33:55) () - So that, I think, really helps. in our case, from an angel investment perspective. we expect founders to send us quarterly reports.

Udit (00:34:07) () - Okay. And to see how things are going. And I'm part of, What? We have a new fund. It's called portfolio Health and Support Group. And part of the responsibility of that group is to, review every quarterly, review the reports, and then come up with an assessment of whether this company is in deep trouble or if this company is going to, you know, make it out alive. with that said, we still do not have the liberty to go in and say that. Hey, guys, this is what you're doing wrong or this is what you need to fix. Unless the founders say that. Hey, I'm in trouble. Can you guys help?

Udit (00:34:50) () - Okay, no. Very good.

Udit (00:34:51) () - But I do feel that if if you are really if you feel very strongly about your product and if you feel that you have a great idea, then going to investment houses that actually have a broader repertoire of qualities will definitely help you a lot more.

Udit (00:35:12) () - That's very, very good advice. Yeah.

Udit (00:35:13) () - You'll accelerate much faster than you would if you were to go with smaller. And it's partly because sometimes people feel like, hey, I don't want to part with, you know, bulk of my company, like, I want to retain the ownership. Yeah. So I'm not going to go to this big hole because they're just going to. And sometimes founders also feel I think they have the misconception that if we go with this big investment institutions and they are going to interfere in day to day matters. I'm no longer the pilot of the plane. Somebody else is going to come in. That's not true. I mean, you're basically being watched and you are you're being advised more frequently than you would like. But why not take that advice and why not? Because at the end of the day, they are not going to give you bad advice. They just want their investment to, you know, become big. So I think it's much easier that way.

Udit (00:36:07) () - Yeah. Yeah. I mean, it's I mean, you can be 100% owner of an entity or you could be a, you know, fractional percentage owner of a thousand X company.

Udit (00:36:19) () - So yeah, just kind of decide what you want and what comes with that.

Udit (00:36:23) () - And most of these founders, I mean I find it a little bit odd, but they don't go through the family and friends round.

Udit (00:36:29) () - Okay.

Udit (00:36:30) () - Which in my opinion is actually much easier because, hey, if you are if your closed circle doesn't believe, and very rarely do I come across, that situation where they've said that. Okay, you know, for the first three years, you bought it from my uncles, aunts, friends, whatever. And then I also not seen enough examples of where founders have put in their own money.

Udit (00:36:57) () - Okay. Interesting.

Udit (00:36:58) () - So, my own money, I guess the closest you can get is where the founder worked without a paycheck for, you know, a couple of years, which, I mean, you can argue that it is your own money, but now, you know, the founder needs, like, half $1 million because he wants to grow.

Udit (00:37:15) () - Uhhuh.

Udit (00:37:16) () - So if you want that much money, then why don't you start with your, you know, relatives and friends and see if you can avoid, you know, kind of parting with your company, but But for sure, they just feel that, okay, let's go get some money from venture capital.

Udit (00:37:31) () - And that's when they start giving away part of their company.

Udit (00:37:35) () - Okay. How about challenges headwinds. What are some of the biggest challenges that you're facing. And, you know, building your your business or even in your portfolio companies. What are the biggest challenges right now?

Udit (00:37:47) () - I mean, I'm a I'm old school. I don't like this whole virtual environment now. I mean, you know, during Covid, it definitely makes sense. And what's happening is that everything is becoming very transactional. So you know, you come on a call, it's only for that specific purpose. you don't really know enough about that person. After the call ends, if you're lucky, that person might come on the computer. I mean, on the camera. for them, they are, you know, behind, you know, the cameras are not on, so you don't really know if they're paying attention to what you're saying. You know, that they're getting distracted by their phones or whatever the case may be. And one of the things that has become even more prevalent is dealing with uncertainty right now, is not something that this generation is used to, because if you actually think about it, if you're stuck in traffic, you open the app and you will know that, hey, this issue is going to get fixed in like four miles.

Udit (00:38:55) () - if you're stuck in bad weather, you open some app and it'll tell you that, hey, you know, just suffer this thing for another five minutes and it's going to blow past, you know, if you order something, you know exactly where that package is. So you know that waiting is not going to be for that, And I think that is now affecting all these young founders that we see. So they cannot deal with the uncertainty. Right? So in order for them to kind of understand that, hey, nothing is certain and you will never know, you'll have to wait is the biggest thing that we struggle with. and I also personally used to struggle with the same concept for a long time, but now I kind of come to terms that, hey, we got spoiled with all the technology that we had at our fingertips, and nobody's going to tell me that, hey, tomorrow all my problems will end. Like you know, I'll start getting the calls back to all the people that I have.

Udit (00:39:55) () - So that's definitely, an interesting challenge to kind of, you know, deal with. And it's not a challenge. It's just something that we brought on, you know, on ourselves because of everything that we got used to.

Udit (00:40:07) () - Yeah. It's very hard to be an entrepreneur if you can't handle challenges and risks and uncertainty and. pivoting and making quick decisions and and making decisions without all the information, I mean. Yeah. No, it's.

Udit (00:40:23) () - And you've I mean, you've been there for longer than I have. I mean, this is just my first rodeo and it's still, you know, fairly fresh, but it's just not, at some point in time, you go to bed and you go, okay, it's tomorrow the day. And I just say, okay, this is it. I don't think I can handle this. You know, it's calling too much. And then on the second notion, it's like once you get one customer, it's not like you're done. Like, right? You're doing the same thing again.

Udit (00:40:50) () - So I'm just waiting for that situation where it becomes so, so normal and then it's like, okay, you know, big deal. It happens. Let's move on. And I think I'm getting there slowly. Yeah.

Udit (00:41:04) () - Yeah. I mean, we just. I was just at. I'm in this entrepreneur group, and we just had a summit, we call it, where we got together in person. And, I mean, there's people with, you know, billion dollar companies, multi hundred million dollar companies on down. And I mean, the common theme is at, you know, thinking at some point the uncertainty will go away, you'll feel comfortable. And the truth is, that never happens. And you have to get comfortable with the fact that that never happens. And then you can succeed and, you know, make your decisions, pivot, grow your business, scale things just knowing that it'll never happen. Where you're where you have all the information, where you feel the risks are are gone.

Udit (00:41:45) () - The uncertainty is gone. It just it never happens, no matter how big, no matter how successful you get.

Udit (00:41:50) () - And the timing is also something that you can never predict, right? You know, it's not like you can plan something and expect it to happen. So we have a lot of we have situations where founders wait till the last minute to raise another round and they feel that, okay, you know what? This should come in fairly quickly, but it doesn't happen that way because, you know, you might. different investment institutions have different ways of evaluating companies. And sometimes they just, you know, close their checkbooks because it's some time of the year where they don't want to make any investments or so they just drag their feet. And that causes, you know, more problems. So founders end up having situations where now they are kind of scraping the bottom of the barrel when it comes to their, you know, money in the bank and then the employees get the wind of it and then they start looking for other positions.

Udit (00:42:42) () - And now all the intellectual capital is now slowly leaning. So they kind of literally go very crazy and hit the panic button. And, and it's interesting at that point in time, they look towards their family and friends to see if they can bail them out, like, okay, you're doing this other way round. That shouldn't have been the case. But yeah. So that uncertainty definitely, you know, creates more havoc for them than I would have thought.

Udit (00:43:05) () - Yeah. How about just kind of measuring the broader economy and economic impacts? How is how is that influencing your investment decisions or, or the portfolio companies?

Udit (00:43:17) () - So I think in the last 12 months we have definitely become very, very selective. Okay. We went from being extremely generous and giving, you know, having all kinds of exceptions when you're evaluating companies to now being so specific that I think nine out of ten companies get, you know, kicked out. I think the economy is definitely on everybody's minds. And it's not, you know, it has nothing to do with the election or whatever.

Udit (00:43:46) () - I think it's just the the euphoria that you see in the stock market and this, you know, this comfort level that people have that, hey, nothing can ever go wrong. Everything will keep going up. You know, you're always going to have AI selling products and people are throwing money. But yet the reality is that it's still, you know, getting more and more difficult for an average person to kind of make ends meet. And, you know, obviously you're aware of the whole inflation situation, but yes, the discretionary spending that we used to see before, we don't see that anymore. And, you know, by that, I mean, like even with the, companies that we invest in, like we used to get companies in the past that had a little bit more, from a salary perspective, they were paying themselves a little bit more than what they are paying now. Okay, because you're trying to stretch the dollars as much as they can before they go back and borrow more, because now the valuations are also being questioned.

Udit (00:44:55) () - so my theory is that, you know, we get a lot of founders who have had like multiple exits in the past. And I'd like to take a look at okay, when When was. When were these exits like during what period? And if the founder has had multiple exits during the period where if money was cheap, then for me, that's not really it's not really an accomplishment because when money was cheap, you could sell, you know, like a hairbrush to a ball ports. And then there was like because, like, I would, I could always use the hairbrush, right? I mean, I don't know if I'm going to grow hair, but it would help to have this in my drawer. I think that's the situation where these people did end up selling their companies. Even if they did not have sales, there was always some other company willing to buy them out and offer whatever money that they wanted to. Now that's not possible. It's just people would rather get 5% in the bank then, but put it in something that is ultra risky and the fact that they are never going to see it.

Udit (00:45:56) () - Yeah. That makes that makes a lot of sense. Those exits when cash is cheap.

Udit (00:46:00) () - Yeah. And I mean, I have like, you know, a lot of people ask me about where they should put their money. And I always tell them that if if your risk appetite is low, then I think fixed income is where I would put it right now, because who's going to give you 5% and, you know, just this market for a while and then see what happens next to you. And then you can always because it's very, alarming to see people get excited about, you know, these AI companies and Nvidia and all these, you know, real big bellwether names, but it's just so expensive that you don't want to put all your savings in something that you don't really know. It's going to continue going out. Right? Yeah. Right.

Udit (00:46:40) () - Yeah. So kind of looking to the future, how do you plan to evolve your business strategies to continue to thrive in these changing economic landscapes?

Udit (00:46:50) () - So right now I think, because I'm doing fractional, I'm doing consulting on a fractional basis, I do see demand, until the economy improves, because right now what's happening is that a lot of companies are laying people off, but they still need that expertise.

Udit (00:47:07) () - But there's just no way to get it, on a short term basis. so I do see that there is going to be a need until the economy picks up and companies feel comfortable having somebody, on their payroll who's not utilized 100%. But I also strongly believe that once people get used to this fractional notion of working, they probably may not beef up their workforce the way they used to before. Like we are going. so we observe, situations where there was a time when people used to measure growth by the number of people that they had in the company, like they would, you know, in the slide deck, they would say, oh, you know, such and such a year we had ten, then we grew to 20, and now we have 40 people. Now they are focusing more on the revenue. And they are saying that we got to we may not have gotten double the revenue, but we made 50% the revenue. We made 50% more this year than what we did last year with half the number of people.

Udit (00:48:07) () - Right. So I think that that is definitely, a trend that we are seeing. and I, I feel like as long as that trend continues, I definitely have a shot at, you know, doing what I'm doing. And then the hope is that I get to that stage where I have enough clients, where prospecting doesn't end up being that time consuming for me on a, you know, daily, monthly, weekly basis. Because right now I'm in that phase where I spend most of my time prospecting and, you know, I have some clients, but then it's not really a full time gig. Sure. So let's see how that goes. And then, you know, some of these things, the way they work out is that if there is a company that you really love, what they're doing and you like the leadership and you like the traction that they have, and if there is a spot for you to kind of contribute on a full time basis, then that can also become a possibility down the road.

Udit (00:49:05) () - if you know, that's something that I would like to consider. But, right now that is not on my mind. I'm just going to continue moving forward with at least working on my working for me.

Udit (00:49:18) () - Yeah. Oh. Very good. How about looking back? You know, what decision or actions would you say have been most pivotal in in your success thus far?

Udit (00:49:28) () - So I think, you know, back when I started my career, obviously, as I mentioned before, you know, it was that whole mindset of you got to go work for a company and then you, you know, work hard and you rise up and then, you know, you start accumulating all these titles. And at some point in time, I decided that that wasn't who I was and I wasn't going to pursue my life around jumping the ladder and feeling good about that. Hey, now I'm a director or I'm a VP or whatever. I focus more on, getting experiences that would put me out of my comfort zone and something that an experience that I would have enough jobs to talk about after I was, you know, done with it.

Udit (00:50:14) () - And I focused on things that people would normally shy away from because it was like, hey, if I do that, it's not like I'm going to get to this level that I'm trying to get at. So, you know, I mentioned earlier that, working with sales guys and going into pre-sales after having spent a lot of time in I.T management. nobody does that. So it's not it's going to look down upon it. Hey, you know, why would you go and become like an engineer? Pre-sales engineer? Like, that's like a demotion. But when you realize that you're thrown in front of strangers every day, has to talk about a product that you know you never built but an engineering team built, and then you need to connect with your audience in a very short period of time to the, to the state where they actually believe. When you tell them that this product is good for you, why? It takes a lot. I mean, it's not it's not easy. And that only comes with, you know, experience.

Udit (00:51:15) () - So for the thing that works for me is that because I've been in my customer shoes. Yeah I can say that. Hey look I, I know where you're coming from. You know years ago I was where you are and, and they say yes, Yes when I tell them, okay, are you going to this? Are you having this? And they say, yes, you know, how did you know that? And that, you know, that connection then just paves the way for, you know, success when it comes to closing the deal? So I do believe that I think depending on how your upbringing is, if you are always going to shoot for like the title or that jump, then there are a lot of other things that you're missing. and even at a personal level, it takes a lot to kind of go back in line and start all over again, just that there's a different line now.

Udit (00:52:04) () - Yes.

Udit (00:52:04) () - And look at yourself and ask yourself that, hey, am I doing the right thing or not? So.

Udit (00:52:09) () - So I think that definitely helped. And as I mentioned, every ten years I've changed. Something really different. And now, you know, it doesn't, You know, change doesn't bother me. And I think adaptability is definitely the key as we get older, because things are much harder to understand as technology evolves. Right? And I would rather have somebody teach me rather than tell them that, hey, you know, I have two degrees and I used to do this, and I meet a lot of people who always like to introduce themselves that likes to be a director here. And I know. Right. And I just tell them, okay, you know, that's that's nice information to have. But right now, what is it that you're going to do that's going to help me? you know, so, and I'm trying hard to teach my kids that as well, that it's okay. I mean, you know, it's okay to aspire for those kind of things, but if you don't get it, that's not the end of it.

Udit (00:53:00) () - There are other ways to kind of, go about doing it.

Udit (00:53:03) () - Yeah.

Udit (00:53:04) () - It's funny, like, I, I ride mountain bikes quite a bit. And when you are, when you're starting from the bottom and you want to get to the hill, you know, the top of the hill, there is no straight line. Like, you have to go through a lot of, like you go up and you go back down and you have to climb back up again and you only see that, hey, I didn't know that there were like seven other inclines that I had to get to before I got to the top. But then it kind of gets you to different vistas and different viewpoints that you would have never seen if you would have just taken the straight line if there was one. So. So I always use that perspective to remind myself that it's okay. Keep going.

Udit (00:53:42) () - That is a phenomenal analogy for business and for life.

Udit (00:53:48) () - I think everyday small wins and if there is no win one day then that's fine.

Udit (00:53:54) () - I mean, you don't kill yourself, but, there are other things to appreciate. And and I measured success based on. Look my look at myself the, you know, last year, years before that and yeah, I mean, I think I have a much better life than, you know, even last month. I mean, I like things that I have right now that I didn't have last month. You know, I have four customers that responded last month. I didn't have that. And if I set a really high bar of success, then obviously I'm always going to be disappointed. But you take the small wins and you keep moving along.

Udit (00:54:27) () - Yeah. You just keep keep moving forward. Yeah.

Udit (00:54:31) () - Unless you have something else that's even better to do. Let's keep doing this. Yeah.

Udit (00:54:37) () - How about looking at legacy? How do you think about working towards building a lasting legacy through your through your business ventures or just through your life personally?

Udit (00:54:48) () - I guess, you know, I don't think I have had that age in my life where I have to think about a legacy.

Udit (00:54:56) () - and it's the one thing that definitely bothers me in this country that we, I think we ignore the old people. Yes. and I do I mean it's definitely at the bottom of my heart. I want to do something for that demographic. and I'm just trying to figure out how we can do it, because I find that you get so much wisdom from that demographic in how one should conduct, you know, one's life and not to beat yourself up. And the kind of struggle that they have gone through are completely different and much more impactful than what we are going through. Like we will complain about, you know, Wi-Fi, speed and all kinds of very trivial things. But, I mean, they are definitely going through some major challenges. So I think from a legacy perspective, I mean, I don't know if I am there yet, but I definitely want to do something where I can, educate the younger generation to take care of the old.

Udit (00:56:00) () - Yes, that's very good.

Udit (00:56:02) () - you know, help them understand that.

Udit (00:56:05) () - Yeah. Maybe this old guy doesn't know how to text or doesn't know how to use the app, but he could definitely use some company. And, you know, go spend some time and, you know, and they will appreciate it. And I think that's definitely something. And I, you know, these days actually recently, just recently, I've been seeing a lot of older people, working at Walmart.

Udit (00:56:28) () - Yes, absolutely.

Udit (00:56:30) () - And just the sheer courtesy that they show when you leave, I'm like, okay, you know what? This was such a warm goodbye. And that is. And, you know, sometimes my wife tells me that, you know, oh, God forbid, if you, you know, if we have to do this at that age. And I'm like, you know what? I would probably do it just so that I can get out and see people. Yeah, I think they are not doing it for money. They're probably just bored and they want to come out and and if they're doing it for money, that's even worse because that's like sad.

Udit (00:57:00) () - But yes, they just seem very happy. And they, you know, they wear the uniform and they so I think those kind of ethics and those kind of values is what I would like the younger generation do have and not forget. Yeah. And with all this, you know, the socialistic ideas that the younger generation is bringing forward, I guess you guys just hang on. I mean, this is not the right direction. And if you feel so strongly about, you know, socialist stuff, then take a look at your grandparents and see if you can hang out with them for a week without any technology, and come back and talk to us, right? Yeah, yeah.

Udit (00:57:37) () - We look at like like the blue zones. We're looking at longevity and what people are eating or the studies on happiness, and just that people used to grow up in multigenerational homes or communities where it was people of all ages. And they they really knew you. They loved you. They knew, you know, your successes, your failures, things you struggle with, the things you're good at.

Udit (00:57:59) () - But they loved you anyway. And people had strong self-esteem and they had a community around them. And there wasn't all this mental health issues and insecurities. And, and we've just gotten so far away from that and just taking the opportunity to go and spend time with older people, whether it's in your family or elsewhere. And you can just learn so many lessons from those and they and like you said, with with Walmart, I mean, the people that really have longevity have community and relationships and they and they're with people and they're talking and laughing and, you know, and just having connections with other people rather than being so isolated.

Udit (00:58:35) () - And, you know, it's, you might find it interesting, but most of the companies that come to us, they don't address this demographic at all. the only companies that could potentially end up addressing this demographic are the ones that are in, you know, life sciences and biotech. Sure. But they are addressing some kind of a medical condition. It's not really, old, age person.

Udit (00:58:58) () - Yeah. And I find that very interesting. And I guess the, the flip side of that argument, which a lot of my colleagues mentioned, is that there is no market in the sense that there is no guarantee that this whole people will buy the product because they are anyway, they are frugal and you know, they're not going to, but it still revolves around making money and not really doing anything good.

Udit (00:59:23) () - hum.

Udit (00:59:23) () - Right. So, you know, the young generation wants to come up with something that helps them make money, not let's do something for the old people that can help them improve their lives. And that's so I think that's what I definitely, like to emphasize. And I'm constantly even educating my kids on not really discounting or disregarding old people. If they say something, there is there is some reason behind it and reflect it. Yeah.

Udit (00:59:50) () - Yeah. Well maybe we'll we'll end with, with this just for yourself personally, what is your personal definition of success? Like what does success mean to you?

Udit (01:00:02) () - I think, you know, obviously success.

Udit (01:00:05) () - You know, there are many different ways of evaluating your your personal, professional, social. I just feel that if you have a better condition today. Overall condition, whether it is, you know, finances or mental or whatever. Then what you had yesterday, then it is success. By that, what I mean is that okay, if you if you were feeling down yesterday because things are not going right and then you decided to do something and today you just got a marginal gain, that is success. And I prefer not to have like really like huge, unachievable bars to feel happy because I think that is you're just setting yourself up for some serious, you know, failure and mental, you know, issues. So I feel that if you pick something that is achievable, attainable, measurable, and at the end, if you did not hit that specific parameter, I still think it's success because now you're one step closer towards achieving it. Like yesterday, you hadn't even started.

Udit (01:01:18) () - Uhhuh.

Udit (01:01:18) () - And that's the way I look at it.

Udit (01:01:20) () - And I just don't beat myself up, by the notion of failure. I just feel like, I think we have kind of become. I don't know at what point it happened, but we just became a, like a society where we just look at other people and we want to set the same bar for ourself. And, you know, if you think about where people say, oh, I was so inspired by this guy, I'm going to do what he's doing. And I'm like, okay, you know what? There are different circumstances for that person. So if it doesn't work out for you, don't kill yourself. I mean, it's great to have some kind of a role model and go after it, but you have to live life and, you know, every day is a new beginning and a new experience. So I think I had always said low marks for success. So that way I would always be happy. I'd say, I think that's if you follow that, then I think all these mental issues or mental health issues will probably not be around as much as you see these days.

Udit (01:02:16) () - Absolutely.

Udit (01:02:17) () - It's getting so competitive that it's very easy to get straight into setting like a really unachievable bar, that defines success and happiness for you. And I think, you know, happiness is a choice and. Right.

Udit (01:02:31) () - Absolutely. Yes.

Udit (01:02:32) () - You, you know, you you can either say that I'll be happy only if I'm successful then there's definitely some disappointment right there. Yeah.

Udit (01:02:43) () - Well good. What would it. Thank you so much. This has been an absolute pleasure. Phenomenal. Everyone listening has learned so much. And thank you for opening yourself up and and sharing and really, really appreciate your time. Thank you.

Udit (01:02:56) () - Thanks a lot. It was great and wish you the very best. And I look forward to hearing, you know, other individuals that you bring on your podcast and learning from their experiences as well.

Udit (01:03:06) () - Awesome. Well, thank you so very much. All right.