Alok Nandan of Emergent Ventures on the importance of identifying buyer pain in B2B SaaS

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In this episode, Elias Rubel is joined by Alok Nandan, General Partner at Emergent Ventures founding partner at Akra Venture Labs, a fundraising pitch tool for Founders. Alok shares his thoughts on giving VCs a more complete picture of your company, getting the meeting, and making it count.

Episode Outline

[04:39] How Salesforce is applying AI and data science in their products

[07:16] Alok’s journey into independent consulting and helping early-stage founders

[11:13] How to bet on founders and help them succeed

[12:04] Steps in domain expertise and identify the pain point of the buyer

[14:34] The process of getting prospects through the funnel

[16:35] Lessons from the school of hard knocks

[19:22] The importance of a peer group of folks who are on a similar journey

Alok’s Inspirations:

Ankur Jain

Contact Alok




Elias Rubel (00:02):

Hey there, all you cool cats and kittens and welcome back to another episode of best in SAS where each week we take you behind the scenes for conversations with some of Silicon Valley's best and brightest operators and investors. Crack a beer, get comfortable and join us on our quest to find the patterns and playbooks that accelerate the sprint to 10 million of that good stuff, that repeatable stuff, that stuff we call ARR.

Elias Rubel (00:31):

Okay. So today I'd love to welcome to the show Alok Nandan is the general partner at Emergent Ventures. He has over 15 years in technology, deep learning machine learning and has recently led rounds at and Excel in addition to more than 20 investments out of their first fund at emergent ventures. Aloke welcome to the show.

Alok Nandan (00:55):

Thanks Eli. Glad to be here.

Elias Rubel (00:58):

So I'm, I'm really excited you have a tremendous background, both as an operator, having been through the tempo. AIX was acquisition to Salesforce and of course many others, but now as an investor focusing specifically on enterprise startups. So I would love to dive deep with you just on some of the patterns that you found, both in your time as an operator and now as an investor around that initial sprint from a million in ARR, kind of just post product market fit. Obviously that number is a little bit different for each company based on the sector they're in and as they sprint to 10 million ARR and that kind of first big milestone. So maybe we could start with some of your experiences as an operator and, and the patterns that you've found over time there.

Alok Nandan (01:43):

Yeah, sure. Thanks. thanks for the introduction. So yeah you know, the last gig where I was an operator was at temple AI and, and this was a early stage company based out of the Bay area and what we were building. This was you know, back in 2013 timeframe when Citi had just come out of and, and you know, this is pre Alexa, pre Google home and all that. And so our thesis was to build a city for the enterprise, cause city at the time was trying to, you know, answer questions like, what's the score of the game today? Or what was the weather? It could not answer, what does my day look like? Or who am I meeting for coffee next Tuesday. So that's what we were trying to answer. And during our journey of trying to find a product market fit we noticed that a lot of salespeople started downloading and we were on the app store.

Alok Nandan (02:39):

There's early days of the app store as well, right? So we were on the app store and a lot of salespeople in different you know, companies like Accenture, HP started to download the app and they started to use for their sales you know conversations, right? So we had things like, you know you could interact with the calendar using voice, right? So just like you interact with city using voice this was a professional you know, use case for salespeople. And, and so during the product market fit phase you know, we sort of saw, you know, realtors using it and, and, and consultants and sales people. But we zeroed in on the sales because that was sort of a repeatable use case and it was sort of horizontal in the sense that every sales people in every type of accompany of would need something like this because they need to optimize their time and they need to make sure that they're on time at the right location.

Alok Nandan (03:34):

If it's a field sales person up, it's inside sales, they need to be on it, on the calendar. Right? So that was sort of the first aha moment for us in the, in the, you know, sort of pre product market fit phase. Right? And then we sort of doubled down on that and went after the went after the sales use case and we got some early traction there and an early monetization. And, and before we could get to, you know, a double digit you know, in HRRs you know, Salesforce noticed us. And around that time, Salesforce had acquired another company called relate IQ. What they were doing was a data science on email and we were essentially doing data science on calendar. And so we got merged in with the relate IQ acquisition. And after that we relaunched it as a new product suite within Salesforce called Salesforce IQ, which was essentially email, calendar and CRM in one app. And now you know, it's in the market, it's selling quite well. So I'll just you know, that's a quick story sort of how we got from a pre product market fit founders, a real use case, double down on that and, and, and sort of really started to take off and, and you know people noticed us.

Elias Rubel (04:49):

Yeah. I was an early relate IQ fan boy. I loved that product. It was just so, it felt very ahead of its time, it just as far as bringing everything into one place and kind of showing you the full context of your relationships. So it's really cool that they've been able to take that product. I'm assuming under a lot of your leadership and, and merge that with the tempo AI product and then see success.

Alok Nandan (05:14):

Yeah. And now it's a, it's a, it's part of Salesforce Einstein, which is sort of their AI group. So some of my team is still there. It's part of the Salesforce Einstein group. So, so Samsung has really doubled down on this whole AI and data science and they're applying not just to the sales use case, but service, you know, marketing and so on and so forth. Yeah.

Elias Rubel (05:34):

So before we talk about your, some of your investments and, and the patterns that you've seen watching those grow and unfold and coaching those, those founders I'd love to hear just kind of how, how you made the transition from product, product focused early stage, then getting acquired and then deciding you were going to make the leap to emergent and starting that. Yup. Yup. Sure.

Alok Nandan (05:58):

Yeah. So I'm an engineer by training. You know, I, I, you know studied computer science and I started my career in Microsoft up in Seattle straight out of school. And my first gig was as a product manager in their windows server group. And then eventually I transitioned to the cloud group, which is sort of a startup group within Microsoft. This is early days of the cloud. In 2007, 2008 and every vendor had their own definition of the cloud. And so there was like heavy dimes and you know initially we were just a couple of product managers and toady engineers and now it's, it grew and grew and grew. And when I left, there were about a thousand engineers in, in that division, in the cloud division. So from that, I, I, you know, I moved to the to the Valley in 2012 and, and kind of move to the you know, startup scene.

Alok Nandan (06:46):

I joined a company called Umi networks, which was a, you know I call it a Salesforce for advertising operations. So it was a sass product that helped video ad networks and video publishers you know monetize their inventory and, and, and, and that company, I joined them and they about 50 people, they went public on the New York stock exchange and went about 500 people in two years. So that was sort of my first foray into startup. And after that I was bitten by the startup bug. And so a friend of mine was starting temple and I joined him when it was a sort of a, you know, a couple of people in the garage sort of thing. And, and you know a temple you've, you've building the city for the enterprise. For about two and a half years, three years before we got picked up by Salesforce at Salesforce.

Alok Nandan (07:36):

I was there for about a year, did the integration and you know, I, I, you know, after having worked in a couple of startups, I really wanted to get back into, into the startup world. And so I left Salesforce and I basically started helping early state startups with product market fit. So I used to get a lot of inbound sort of questions and you know, queries about how to sort of get to product market fit. So I started independent consulting and helping early stage founders think through their product market fit queries and, and, and, and I did that for about a year and a half. And during that time I met my partner at emergent you know, he was he was in some other funds like Blumberg capital and nexus before we started this. And he was looking for a guy like me who could roll up his sleeves and actually help the founders you know the early, early sort of product and go to market strategies. So I joined forces with them. And that's how I ended up in venture capital. It was not a planned, I never planned to be a VC. It was just a completely you know, serendipity. And I continued to do what I was doing. Which was, you know, helping founders get to product market fit except, you know, instead of doing it one company at a time, I'm doing it like two companies at a time or maybe three companies at a time sometimes. Yeah,

Elias Rubel (09:03):

Sure. So how, how do how does that handoff work? I mean, you get, get them to product market fit and then what does that transition to, you know, obviously the, the growth plans and the ways that the way that they behave changes once they get to product market fit. I'm curious how, you know, as you're at, you're advising these companies and, and helping champion their growth, how that transition process goes.

Alok Nandan (09:26):

Yeah, it's a, it's an interesting one, you know, because as an operator for 15 years, you know you tend to sort of your wire to sort of immediately if you see a problem, your natural instinct is to immediately jump in and start to sort of look for solutions. Whereas as an investor, you have to sort of be a little more patient with the founders and you have to help, you know, you really take on the role of a coach right. And, and you have to sort of help the founders really work through the problem themselves. And as they're working through it, they will realize where they need help as opposed to sort of bringing in the operator mindset and immediately jumping in and start to firefight that you know, I, I learned it the hard way.

Alok Nandan (10:17):

You know, when I did that with one of the companies, I, you know, the, the founder sort of you know started to push back and say, you know, you know, you know, if we can do this ourselves or we want to do this this way, right? So, so, so that was a learning for me and a challenge for me as to not immediately sort of dive in and start trying to solve the problem, but let it, let it sort of marinate with the founder for awhile. Let him think through the solutions and then come to you and sort of ideate and, and, and discuss and you can sort of suggest which one is the best way given your experience.

Elias Rubel (10:56):

Sure. No, that makes perfect sense. So I'm curious, are there are there patterns that have emerged out of the successful portfolio companies who have made that transition and have started to grow and, and chase down that 10 million Mark in RR? Are there certain patterns or behaviors that you've observed as an investor that tends to lead to success as they move towards that number?

Alok Nandan (11:22):

Absolutely. You know one of the things that emergent that we look for is a sort of, again, we are early stage, right? So the stage we come in, there isn't a lot of data around revenue or even product market fit sometimes, right? But so what we really bet on is the founders, right? And the founders, usually, especially in the space we operate, which is enterprise, we'd really look for a founders who have some sort of domain expertise or some unfair advantage in the sense that they've either worked on that problem before in, in the prior companies. And, and so they are intimately familiar with the pinpoint and, and, and, and then they sort of you know, go and strike out on their own and they want to solve, they have this burning desire to solve it. You know solve that pain point, right?

Alok Nandan (12:10):

So there's a, there's a pattern there where usually the successful founders deeply understand the pain point. Either they come from the other side and the felt that pinpoint, or they have tried to solve it in other organizations and failed, and now they want to solve it in their own company. And, and then really at the early stage the founder, it's, it's mostly the founder selling, right? And they're really selling their expertise because at that time, sometimes there isn't a product to show. Right. And so the buyers, they really get impressed by the founders expertise and, and understanding of the problem. You know, even before they look at the solution. So that's another pattern, which is the founders selling the first three, four deals and, and they're really selling part of it is their own expertise. And then essentially if they are successful, they will be able to productize that expertise into, into into a solution that can be repeatable. Right? So those are two things. One is sort of a domain expertise and sort of really identify with the pain point of the buyer. And the second is at the early stage you cannot get a surrogate. You cannot get, bring in an IE and say, go sell this. Here's all the material. You really need to have the founder selling the first three, four, or five deals.

Elias Rubel (13:31):

Okay. So after those first three, four or five deals, I mean, that makes perfect sense. And certainly the pattern we see as well, when you begin to operationalize that, the founders efforts, right? They're, they, they do bring in a VP of marketing, VP of sales certainly not all at the same time, but, and they're trying to take what they've been doing as a founder, kind of with the magic wand, so to speak, of, of being able to go in and show expertise, system expertise and closed deals and now they're trying to hand that off and operationalize it so that they can begin building out their kind of demand engine, if you will. Are there any common stumblings like things that you see founders do that ultimately are either distractions or slow them down and, and are kind of lessons that they almost need to learn by, by going through them on their own or having someone such as yourself help them avoid those?

Alok Nandan (14:27):

Yeah, no, that's a great question and I'm glad you're asking that Eli. And part of the reason that I'm talking to you is because a lot of founders, especially first time founders and founders who come from product or tech backgrounds, they actually underestimate the demand gen side of things. And, and, and essentially, you know, because the first few deals is essentially their own network you know people they know and they call and they kind of get into accounts. But beyond that to really scale the engine, you really need Vale oil demand gen engine to work. And, and, and most of the you know at least the founders I work with are come from a tech or a product side of things. Some of them have been exposed to marketing or sales at scale, but most of them have not.

Alok Nandan (15:17):

Right? And so they really underestimate the demand gen effort to scale both top of the funnel as well as sort of you know getting getting prospects through the funnel as well. Right? So they underestimate how much top of the funnel they have to generate, and then they underestimate how long sometimes it takes for people to go through the pipeline. Right. And, and that's sort of enterprise sales, right? So they don't have a handle of sometimes the sales cycle because the previous two, three deals have been mostly relationship based sales and, and, and, and they already are familiar with the pinpoint. So the sales cycle may be shorter, but if they go to a completely new account where they don't know people, the time it takes for the prospect to go to the funnel is sometimes longer than they anticipate. And at an early stage, that can be sort of the death knell of a company. Right? So those two things, underestimating how much effort it takes to do demand gen and then how long it takes for a new prospect to go to the funnel.

Elias Rubel (16:23):

Certainly. And how have you, and obviously is, is a delicate dance, right? As you mentioned earlier, you don't want to give them a hundred percent direction because in some sense they need to figure this out on their own and feel like they have some agency there. But at the same time, obviously these are your investments and you want to see them be as successful as possible. I'm curious how you clue them into that without, you know, hitting them over the head with it, so to speak. Cause you know, everybody, not everybody, but a lot of these early founders who haven't done this before, assume that there'll be the exception to the rule. We're like, Oh no, our sales cycles, not, not 90 days or 120 days, it's, it's 30. And like, how do you, how do you handle that?

Alok Nandan (17:10):

Yeah, so that's a great question. So one of the things that I, you know, again, I've learned it from the school of hard knocks and, and so one of the things I suggest to a founder these days is try to find peers obviously the peers that are in that same stage of the journey as you are. So if you're a series a funded company try to find one or two peers who are founders who are in the same state CDC. But you know, another one that I've found useful is I suggest them to find peers, which are one step ahead or sometimes even two steps ahead. So find a peer who's in CDSB or the CDC stage, right? Because the challenges they are facing now, you will face six months or 12 months from now. Right. and, and, and so that's the other thing that I have been consciously in nudging our founders is, is, is finding a peer group of folks who are in the similar journey as you sometimes one step ahead or sometimes two steps ahead and some of them perhaps in the same stage as you.

Alok Nandan (18:17):

Cause it's not just about go to market is also about fundraising. It's about building a team and the culture and so on. Right? So that's sort of a a strategy that I've been I've noodled for a while and now I'm actively sort of suggesting it.

Elias Rubel (18:33):

Nice. So this, this kind of, as we wind down the conversation, this has been incredibly helpful. I'm sure that there are plenty of founders and operators out there where this, this whole conversation is going to resonate. I'm curious, you know, we all have folks in our lives professionally who either our peers or mentors who we really just respect the work that they've done and think that they're a great example of excellence in their own specific field, whether it's a sales leader, a marketing leader, CEOs or other investors. I'm curious who those folks are for you that you either look up to or really respect and would like to give kind of a shout out to you on the show. Sure.

Alok Nandan (19:12):

You know, I mean AMA, AMA sort of at the at the risk of sounding too sort of self you know, congratulate you. But I'm, I'm, I'm an, all of my partners actually Encore and Anthem anchor's been a VC for about a good decade. He started his career in Blumberg capital which did investments in the U S and Israel. And then he was in a fund called nexus. There's just you know, us and India investments. And so I've really learned a lot over the past three years, just sort of being his apprentice. And, and venture is a very sort of you know, apprentice kind of a game. You can't really read a lot on the books. You can only learn it from the practitioners. Right. And I've been lucky to have such incredible partners in the farm who have been there, done that to the past decade or more.

Alok Nandan (20:02):

And I'm learning on a daily basis from them besides that. You know, I've been lucky to be part of a couple of startups. You know like I said, you need there's a founder, a giant who took the, who started a company into the company, public on the NBC, the very few founders, you know, who have sort of seen that journey all the way and, and have stayed humble and he's one of them. And, and so you know, I, and, and, and, you know, sort of, he's also sort of active active in our ecosystem, helping our founders as well. So that's another person I look up to. And then the founder of temple Raj, he's a close friend and he's doing another company now. He's been a sounding board you know, to out a lot of what I've been doing over the past. So those are the people who I've sort of worked with in the past decade, and I'm incredibly grateful that they've given me the opportunity. And at the same time, I'm sort of learning and soaking up everything from them as well. Yeah.

Elias Rubel (21:03):

Fantastic. Well, thank you for sharing all of these nuggets of wisdom and, and certainly the folks that you've mentioned, I think it'll be great for the audience to check out their backgrounds and their stories as well. So look, thanks for being on the show.