Building on a Technology Theme Across Multiple Successful Startups
Introduction: When we think of great technology founders and operators, we usually think of the company where they hit it biggest. For example, when we think of Marc Benioff we think Salesforce, or when we think of Larry Ellison we think Oracle.
But when we look closely at the stories of billion-dollar tech founders, we often find these founders iterating within a technology area for years, even decades, before identifying the proprietary insight that catalyzes the billion-dollar company. This iteration can take the form of a founder (or founders) working at an established company for a long period and gaining experience. It can also take the form of a founder building multiple startups in succession, all of which provide the learnings for the startup that reaches billion-dollar scale.
A recent example of this is Jay Chaudary, founder of Zscaler. Jay founded multiple successful security software companies throughout his career, including SecureIT (acquired for $70m), Ciphertrust (acquired for $274m), and AirDefense (acquired by Motorola). Jay’s security software experience yielded a proprietary insight: that rapid cloud adoption and workforce mobility would require a new approach to cloud security. This insight yielded the spark that catalyzed Zscaler, which went public and has reached a $27B market cap today.
In this post, we interview a founder, Krishna Dunthoori, who shows signs of being on the entrepreneurial path of building a large success story by iterating within a technology theme. Dunthoori’s focus is Digital Adoption Platform (DAP) software, enabling enterprises to extract maximum from their technology. In Krishna’s words, “It’s not the software, it’s how you’re using it”. This theme formed the basis of his first successful venture, Excers, and is now the theme of his second company, Apty.
In addition to providing insights into how a founder executes on an iterative approach across multiple startups, Jay’s story is inspirational because of the uncommon path he has taken. Beginning with his upbringing in Hyderabad, to pursuing graduate studies in Germany, to coming to the U.S. as a consultant, to eventually launching two startups located in Texas, Krishna’s story illustrates how hard work combined with risk-taking can yield exceptional results.
Summary: Apty is a provider of Digital Adoption Platform software, offering on-screen guidance, usage analytics, and insights for improving software and process adoption for large enterprises.
Year Founded: 2017
Interview with Krishna Dunthoori (KD):
Q: Krishna, thank you for joining us today. Let’s start with your background. Where did you grow up, and what was your early life like?
KD: I was born and raised in India, in Hyderabad. My dad was a government servant. I have a few siblings, and I’m the younger one. I did all of my studies in India, in my native language. I didn’t write a full paragraph or sentence of English until I was 19 years old. All my schooling was done in my native language, Telugu.
In 2000, I moved to Germany for my Masters. Everyone else was going to the U.S. and the UK, but my family couldn’t afford it. A university in Germany, Braunschweig University in Wolfsburg, offered me a full scholarship. Here I was, never been to an airport before, never been on a plane before. The first time I went to an airport was when I was leaving the country. Q: What was your experience in Germany like? KD: I landed in Germany, did my masters, and as you can imagine, there were pretty tough times. As a student, I was a pizza driver, and I worked in restaurants. The toughest job I had was cleaning the snow in train stations. There are high-speed trains that come every half hour. Either you’re freezing to death or you’re blown away.
Q: When did you do this job?
KD: Usually between 4 and 6 am. We would put salt at night to make the cleaning easier in the morning. I cleaned snow in Wolfsburg railway station probably 100 times. I was there for 3 winters. I eventually moved to Frankfurt, where I got my first job, working for a telco company. I was always fascinated by technology, and I was always good at it. I started as a junior programmer.
Q: Let’s focus on how you got started with computer science. When did you first get interested in programming, was that back in India?
KD: In India, high school, I studied sciences. When it came time to take the placement exams, I didn’t get a medicine seat, but I got a veterinary seat. I was supposed to be a veterinarian. I spent a week and decided that being a veterinarian wasn’t for me. At the time, our local state government the Indian government was launching a new program for computer science. I worked hard and got a seat. I did a Bachelors in Computer Applications in India.
When I started programming, I was always focused not just on writing code, but figuring out what is the real problem that we’re actually solving? That helped me when I took my first job in Germany. Although I was the youngest person on the team, I was able to articulate solutions, and they really liked that. I worked there for almost 4 years.
Q: How did you eventually get to the U.S.?
KD: When I was working in Germany, I was traveling across Europe as a consultant, helping clients with projects. When I was working in Bonn, a team from an SAP implementation company in the U.S. came. One guy from that company asked if I wanted to come to the U.S. At the time I had no intention to do that. But I applied for an H1 visa, and by September 2005 I was in the U.S.
I was working for an SAP implementation company in Atlanta, SDG. I learned a lot there. I did this for 1.5 years. I became a solutions architect, focused on CA. There was a tool called Clarity that Computer Associates had acquired. It was a robust tool, but it wasn’t doing what it was supposed to for the clients. I observed this because I was implementing the product for a few clients. That put the seed for my first company in my head.
Q: What was the insight that sparked your first company?
KD: I realized that I could bridge the gap by writing specific add-ons. I never understood buying a product for $500,000 and spending $3 million to get use out of it. There had to be a better way.
Q: How did you start building Excers, your first company?
KD: I hired a few developers, including developers in India. I started getting pings from a few customers. So I registered a company. Here I was, with no sense of how to build a company. A mentor of mine at GAR Technologies, who was a citizen, helped me a lot.
Q: What were the early days of Excers like?
KD: In 2010, we had $30,000 of revenues. In 2011, we had $450,000. In 2012, we did $3.8 million in sales.
Q: You reached almost $4 million in year 3?
KD: We went from 2 people to 55–60 people in the U.S. and in India. By 2016, we reached $12.8 million in revenue.
Q: Could we step back and discuss how you perceive risk as a founder? What is your risk-reward framework?
KD: Well, there is no reward without risk. And I was always working on multiple projects. When my wife got pregnant with our first kid, because I was traveling a lot, I decided to take a stable job. I joined the International Bank as a consultant to take care of the Clarity implementation. The idea of working 9 to 5, that actually killed me. I used to go to my wife every night at the dinner table, and I would say “I’m not enjoying this. Nothing is moving here. I’m in charge of this big implementation, but no one comes to a meeting.” What gave me confidence in the risk-reward framework is that I could always get a job. I also decided not to take money from anyone else. I was ready to take risks, but I didn’t want to take risks with other people’s money. My wife and I postponed the idea of purchasing our first home, and I put $50,000 in the company.
Q: Was your wife supportive of that decision?
KD: She was. I’ve known her since high school. She knows me very well. She knew I wouldn’t be happy in a 9 to 5 job. Looking back on my 9 years building Excers, I don’t think I could have gotten this experience anywhere else. I decided not to do an MBA. When I started the company, I didn’t take a salary for almost two years. I had to have faith in what I was building.
Q: When you believe in what you’re doing, it drives you to focus on the long-term…
KD: Call it stupid, naive, confident, brave. When you’re doing it, you’re just doing it. There were many times where we were so focused on the work, that we forgot to invoice the customer! It’s as if it happened yesterday.
Even through the Great Recession, we always had more revenue than expenses. I actually started the company in a Recession, people thought I was crazy. When something gets into your head, you feel like you’re wasting your time doing something else. I was always confident I could find a job. And I knew where the line was. I wasn’t going to borrow money, or sell what I had.
Q: How did you evaluate whether a market is attractive? How much do you think about the size of the market opportunity?
KD: By the time when I started Apty, the idea came from the need itself. When I was assessing the market, when I understood that there were 1500 customers on one tool, Clarity, and the average license cost is $200,000 and average implementation is $1 million, and less than 20% of customers derive any value from the software, I knew the market was big enough. You can apply similar logic to all of the major software implementations. If you look at it this way, the market for Apty is huge. This is a universal problem because it is consistent across software.
Q: You put yourself in the shoes of the customer, and you’re deeply immersed in the problem, and you’re trying to solve your own need…
KD: When you have a large problem, it’s common to think that you need a large solution to solve the problem. In reality, it’s not the technology at all, it’s how the technology is being used.
Let me share a story. When I was at the International Bank, we spent almost $4.5 million to implement a Clarity software solution. This was outrageous to me, but I had to go along with it. 8 months later, it wasn’t working. There was a big meeting, and we still needed to get data manually. I said, “You have an elephant in the room here, that you have been feeding for 1 to 2 years. After this big implementation, you can’t trust the data.” I realized that if this problem was happening there, it was happening everywhere.
Q: One of the characteristics of great founders is that they iterate on a theme across their career. And each company they start, the market opportunity gets a lot larger. The theme I see in your career is extracting value out of IT spend, by enabling employees to use software more effectively.
KD: In the last 10 years, software has become ever more available. Now, any group within a company can purchase software. There may be 15 Salesforce instances, 20 Jira instances. This creates shelfware. Our tagline is “It’s not the software, it’s how you’re using it.”
Q: How do you think about geography when it comes to starting companies?
KD: India was logical for development and back-end operations teams, given my background. This enables our companies to save money, and we can put more toward marketing and sales. In India, it’s easy to find technical acumen, full-stack programmers, for example. But it was challenging to find resources with good business acumen for the North American market. So I focused on building teams with my sales leaders in the U.S. and product heads and execution teams in the U.S.
There are some challenges not being in Silicon Valley, but times are changing. People are more available and receptive to places outside of Silicon Valley. This is particularly the case during COVID. Silicon Valley is great, but it also can be a mold. You can be who you are, and build a great company from anywhere.
Q: What are some of your key lessons for founders?
KD: You need to really focus on the value proposition. Ideas are cheap, people have ideas all the time. If you’re trying something and you’re not sure about what decision to take, you should make a decision and fail quickly. Don’t make the same mistakes for too long. When it doesn’t go, you have to know where the line is. If you wait too long, you won’t have a business anymore to run. If you are trigger happy, you will never be able to come out of the vicious cycle. Don’t wait too long, and don’t wait for a second after.
Q: This was a real pleasure speaking with you and learning about your journey. Thank you.
Key Learnings from Krishna Dunthoori:
- Deeply immerse yourself in the customer experience to identify the most important pain point: Many founders adopt an approach of looking for a problem to solve before launching a startup. This is generally a flawed approach because the largest problems are often only evident to individuals who are immersed in them. Rather than searching for a problem to solve, deeply immersing oneself in the experience of the customer eventually can lead to the insight that forms the basis of a startup. This enables the founder to live in the future, envisioning a better technology approach to a customer’s emergent needs. In Krishna’s case, he was very familiar with the large amounts of money being wasted in Clarity implementations, because he had lived this himself. This enabled the formation and growth of Excers. As he scaled Excers, he realized that the same process that he had applied to automate enterprise adoption of Clarity could be applied to many more software products. This became the basis for Apty.
- Beginning with a services company may be a good step in eventually building a high-growth software startup: Starting with a service company before launching a high-growth startup can have several advantages. First, services companies provide a cash revenue stream that enables software development, potentially avoiding the need for raising venture capital at the beginning. Through providing a service, founders identify manual processes that can be automated through software, which naturally leads to a product company. A first-time founder can also establish credibility in the mind of the customer. In Krishna’s case, his services company, Excers, provided him with domain expertise and credibility in the area of digital adoption platforms, which eventually led to his founding Apty.
- If you want to be a founder, no job is too small or unglamorous, and resourcefulness is vitally important: A key trait that Krishna demonstrates throughout his life is a willingness to do whatever it takes. He demonstrated this quality during his graduate studies in Germany, when he cleaned snow in train stations between 4 and 6 am, on more than 100 nights, to afford living expenses. He demonstrated it again during his career as a consultant, doing whatever it took to complete projects on behalf of his clients, a quality that eventually got him to the U.S. And he demonstrated it again as a startup founder, founding Excers with $50k of his own capital, scrappily hiring engineering talent in India, and resourcefully putting the pieces together as a first-time founder. While being a technology founder may appear glamorous, in reality building a company is a long, arduous journey. And when you’re the founder, in the words of Harry Truman, the buck stops with you.
- It may take multiple startups before you’re able to prove out your complete vision: Krishna’s overarching insight is that the proliferation of software in the enterprise requires enterprises to change how employees adopt software. When he began his first company, Excers, he focused on one specific software application: Clarity. It wasn’t until his second company, Apty, where Krishna was able to begin to apply his larger insight: using software to extract value from a much broader range of software applications. It may be the case that Krishna’s eventual third startup enables him to address an even larger potential market within digital adoption. The key to successful iteration within an entrepreneurial theme is to broaden the addressable market with each successive startup that you create. That creates the opportunity to gain leverage from previous learnings, while also providing the opportunity to build a massive company if your insights turn out to be correct.
- You don’t necessarily have to take risks with other people’s money when you’re launching a startup: The perception of most founders nowadays is that raising capital from VC firms is the mark of early success of a venture. This isn’t necessarily the case. In fact, bootstrapping a business can be a viable option for a founder, enabling both segmentation of risk, as well as limiting dilution in the early days. In Krishna’s words, “I was ready to take risks, but I didn’t want to take risks with other people’s money.” Krishna also established a line that he wouldn’t cross. He would only invest a certain amount of capital, wouldn’t go into debt, and required signs of success of the entrepreneurial venture within a specific timeline.