03: Shruti Ghatge | Zomentum
Co-Founder at Zomentum | Enabling Sales for IT Channel Partners.
Ingredients for Success:
Question the norm. When crafting a founding team, the first instinct is to hire technical talent to begin building a product. Shruti and Rahil decided to go the route of not writing a single line of code for 18 months! They did this by hiring a designer, building mock-ups, and selling their product assembled through design tools.
Trust is a two-way street. All leaders hope to create a cohesive, transparent working environment. Shruti takes the additional step by behaving in a way that produces this culture - she shares detailed customer data and key financials with the entire company. This has solidified transparency and trust as core tenets at Zomentum.
Cut your losses. Shruti made two tough decisions when scaling Zomentum: turning her focus from Southeast Asia to the US market even though she had paying customers, and firing one of her first employees when he wasn’t the right fit. These were hard decisions, but she took the long-term view in both cases. And it paid off.
Throughout her career, Shruti had the opportunity to work closely with entrepreneurs, initially at Exfinity and at Accel thereafter. These experiences allowed her to discover facets of different industries while working with ambitious entrepreneurs in the startup ecosystem in India. With time, Shruti realized that at the end of the day, her role allowed her to support her partners and founders – but, she wanted more. “I wanted to make things happen and be the driver of change in a company.” Soon enough, Shruti caught the ‘bug’, and today, runs Zomentum - a cross-border SaaS company that enables IT channel partners with a suite of tools to optimize and grow their businesses.
Ideating, Launching & Problem Solving
Shruti’s foray into entrepreneurship was calculated. Within the confines of an investing role – a job that is highly coveted – it requires worthy reasons to jump ship on your own. “When I was working closely with Shekhar and Dinesh at Accel on vertical and cross-vertical SaaS companies, I had one critical realization: the best product doesn’t necessarily win, it’s the product that can get in front of the most customers that tends to do so. With that in mind, I asked myself: was it possible to democratize product distribution? It was important for me to find a way to allow the most effective product get in the hands of the right buyers.”
This all made sense to me – Shruti’s wide-ranging purview of SaaS companies allowed her to uncover an inefficiency in product distribution. But, what I was more curious about was Shruti’s decision to target SMB channel partners – a rather ‘unsexy’ group of clientele. “Looking at the market, enterprise customers have relatively large, defined budgets when buying and implementing technology solutions. Consumers, on the other hand, have much smaller transaction values and don’t expect the white-glove treatment that enterprises enjoy. If you look at SMBs, their ticket size is similar to that of consumers and they expect enterprise-grade white-glove treatment. But we can’t ignore them: it’s estimated that this segment will spend nearly $680 billion on IT purchases in 2021 alone. Given the sufficient market size, we decided to tame the SMB beast. And the only way, in our view, to help SMBs is through channel partners that bundle ticket items and provide white-glove services. Our eventual goal is to help SaaS companies of all sizes grow their sales through our channel partner network.”
Partner in Crime
With an idea in mind, finding the right, complementary co-founder was the next step for Shruti. And let’s be honest - finding a founding partner is a big deal. You need to get along, share similar values, respect one another, and be excited to build a company over the course of 5-7 years together. Luckily for Shruti, Rahil’s specialized experience and unique viewpoints have contributed to a strong co-founding team. “I was speaking to many potential partners at the time, but things with Rahil just clicked. It made sense once we realized how his previous experience was relevant to what we were trying to build. Before Zomentum, Rahil had worked at Rubrik and Twitter in the Bay Area. At Rubrik, which went from $0 to $300 million in revenue in 2 years, Rahil noticed that their growth was driven by channel partners and not by a sales team. The company created a network of plug-and-play channel partners for itself – that’s our vision, on a much larger scale, for Zomentum.”
As natural as the fit seemed, Shruti and Rahil still wanted to make sure the vision they had was aligned with a sufficient market need and that they worked well together. “We spent close to six months on customer interviews and research. Once we zeroed in on the key pain point and solution in mind, we moved to other formal conversations like discussing equity splits and roles. But this wasn’t complicated – we shared similar values and understood what we bring to the table.” Typical of any co-founding team, delegating tasks was important for the team, too. Today, Shruti is the point-person for any business development initiatives, while Rahil continues to cover product.
Walk the Talk
It’s easy to underestimate culture. For one, it’s intangible. Second, if the product isn’t top-notch, and if clients aren’t happy, then how does company culture matter? Fortunately, for Shruti and Rahil, they both understood the importance of this intangible element, and how it could make or break their startup. “We’ve always believed that culture is day 1. When we were initially building out the team, our first sales/BD hire was not a great fit; we were overpaying and his work ethic wasn’t in line with our expectations. Seeing this, we made the decision to let him go in his first few weeks on the job. We didn’t want to make the wrong hire, especially at our early stage.” This mindset in hiring is key; Shruti understood the power of compounding, and how one ‘bad seed’ could impact the culture of her company in the long-run.
Digging deeper, I wanted to understand what the culture is like at Zomentum. For I, too agree, that it’s a vital component to the success of any business. “Rahil and I decided early on that we wanted to hire people that take ownership and figure things out themselves. In fact, I’ve gotten feedback from employees that I drop them in the deep end when solving problems. It’s those that rise to the occasion and overdeliver that are a great fit for Zomentum.”
During our meeting, I also noticed Shruti’s commitment to walking the talk - she does what she asks of others. “Another core tenet of our culture is transparency. We show everything – from customer sign up data to churn information – to our team. Everyone has access to key data, and we expect the same level of transparency from our team.”
Being Unconventional
Most founders I’ve spoken with have a single ‘quirk’ that makes their approach to the company-building process unique. For Zomentum, it’s the fact that they didn’t write a single line of code for 18 months post-launch. “There’s this notion that you need top-notch technical talent to start a company. And I can see why people prefer hiring engineers from the start – it’s much easier to measure progress. What we did was we focused on product design; I used InVision to create the mock product and started doing webinars. Lucky for us, everyone on these webinars thought the product was real – we used to see 100% engagement and a typical conversion of more than 60% to beta customers post-demo!” Unsurprisingly, Shruti was ahead of the game – today we are seeing the proliferation of low-code tools and design platforms that help founders put a mock user journey together seamlessly.
Another unique aspect of Zomentum is its product development process, which has evolved with time. “Early on, we created an advisory board/committee of 8-10 customers that we spoke with over Zoom every two weeks. We discussed their key pain points, built an InVision mock-up based on their requirements, and on the next bi-weekly call, presented the product to understand if it addressed their needs. That worked well for us – but, today we take a mixed approach in building the product. We sit at the nexus of being proactive and reactive, by actively ideating for our customers while also gaining insights from the advisory committee.” Steve Jobs’ mantra of building for customers without communicating with them has garnered popularity amongst tech communities; the customers don’t know what they want, the saying goes. But it is refreshing to hear Shruti’s calculated, mixed approach to working with her partners.
Visitor in Foreign Lands
We’ve seen this phenomenon before, where Indian startups, leveraging the high-quality engineering talent of the region, sell into developed markets like the US where the willingness-to-pay for products is higher. “At Accel, the playbook for SaaS companies was typical – startups would build for clients closer to home (in this case, India and Southeast Asia), and then move into the US eventually. But what we found was that even though we had a paying customer in Indonesia 5 days post-launch, we didn’t work with them because the solution wasn’t repeatable. Given our venture-funded model, we needed repeatability. We learned this quickly and decided to scrap our Southeast Asia growth plans, focusing directly on the US instead, where customers were ready to engage with us.”
My initial guess was that launching into the US from India would come with stark challenges, given the cultural differences and execution risk associated with building for a market that one isn’t too familiar with. “It was daunting. I remember one of our first conferences in the US where there was an audience of 2,500 potential customers. We had an American BD rep with us, but I decided to go on stage to present. I figured that being a woman in a male-dominated industry, coupled with my Indian accent would be a differentiator for us; the audience won’t forget our presentation. And I was right! We had several members of the audience come up to us to request more details on what we were building – it was an eye-opening experience for me.”
Going Venture
Raising venture money is synonymous with putting gas to the pedal; with getting on a treadmill and not stopping until you reach the (metaphorical) finish line. Zomentum, undoubtedly, is a business fit for VC funding. “Given the large market we are targeting and disproportionate results we are seeking, raising from VCs makes sense. The opportunity we are focused on could be open for a short window and we need to move quickly – raising from investors allows us to do that. Also, our business model isn’t conducive to bootstrapping; for SaaS businesses, you need 18-24 months to build the product and speak to customers, without expecting much revenue in return.” This approach is in stark difference to Dhvanil’s startup, where we discussed the ‘low competitive intensity’ in his industry that allows him to take a more patient approach to fundraising.
Given Shruti’s unique insight from being on both sides of the table – an entrepreneur and investor – I was looking for best practices when working with and raising capital from early-stage partners. “It’s critical to find investor-stage fit. Don’t bring a Series B investor on board for your Seed round, and vice-versa. They are looking for different things and operate with varied mindsets. The Seed investor is open to product iterations and alterations in company positioning – the B round investor is usually not.” Another interesting aspect of Shruti’s board is that Shekhar, her ex-boss at Accel, is now working with her in a different capacity. “That was a big shift for us. We had to reset the relationship. We’ve always had that understanding and so there’s been no points of friction.”
Moving Quick
Zomentum has grown impressively and the team has raised from high-profile VCs, including Accel and SAIF Partners. In addition, the company is targeting a fragmented, large market, with over 200,000 channel partners in the US alone. This makes it conducive to potential competitive threats, one would think. Surprisingly, that doesn’t seem to be the case. “We haven’t seen many other players that are operating in our area of focus. Maybe it’s because the market is quite unsexy, we’ll have to wait and see. For now, as Rahil says, it’s our internal speed of execution that’s our only competition.”
Regardless of any oncoming threats, the team at Zomentum can find comfort in their traction thus far. With revenue growing 30% month-on-month, a wide-ranging customer base across four continents, and upwards of 50% demo to paid customer conversion, there’s enough to be happy about for Shruti, Rahil, and the team.
Check out www.akshaym.me for more writing.